Sri JV Naga Raju, Visakhapatnam V. The Addl. CIT, Range-2, Visakhapatnam

ITA 257/VIZ/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2805 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 21-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Assessee Lawyers: C V S MURTHY
• Keywords: Peak credit; Set aside
• Section: 68

Judgement Text

ITANO.257 OF 2010 JV NAGARAJU VIZIANAGARAM PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 257/VIZAG/2010 ASSESSMENT YEAR:2006-07 J.V. NAGARAJU, VIZIANAGARAM VS. ADD. CIT, RANGE-2 VISAKHAPATNAM (APPELLANT) PAN NO: (RESPONDENT) APPELLANT BY: SHRI C.V.S. MURTHY, CA RESPONDENT BY: SHRI J. SIRI KUMAR, (DR) ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 08-02- 2010 PASSED BY LEARNED CIT(A), VISAKHAPATNAM AND IT RELATES TO THE ASSESSMENT YEAR 2006-07. THE ASSESSEE IS CHALLENGIN G THE DECISION OF THE LEARNED CIT (A) IN CONFIRMING THE ADDITION TO THE E XTENT OF RS.6,40,000/-. 2. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE IS WORKING AS A DEVELOPMENT OFFICER WITH LIFE INSURANC E CORPORATION OF INDIA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEPOSITED CASH AGGREGATING TO RS.9,20,000/- IN HIS BANK ACCOUNT ON VARIOUS DATES. THE ASSESSING OFFICE R ACCEPTED THE EXPLANATION OF THE ASSESSEE THAT THE DEPOSITS FOUND CREDITED FROM 15-9- 2005 TO 3-10-2005 AGGREGATING TO RS.1,20,000/- WERE MADE OUT OF A WITHDRAWAL OF CORRESPONDING AMOUNT MADE ON 1-8-2005 . THE EXPLANATIONS GIVEN BY THE ASSESSEE WITH REGARD TO THE OTHER DEPO SITS WERE NOT CONVINCING TO THE A.O AND HENCE HE ADDED THE BALANCE AMOUNT OF RS.8,00,000/- TO THE RETURNED INCOME. IN THE APPEAL FILED BEFORE THE LEA RNED CIT (A), IT WAS SUBMITTED THAT THE ASSESSEE HAD SOLD 4.14 ACRES OF AGRICULTURAL LAND ON 4-4- ITANO.257 OF 2010 JV NAGARAJU VIZIANAGARAM PAGE 2 OF 4 2005 FOR A CONSIDERATION OF RS.2,28,700/- AND OUT O F THE SAID SALE PROCEEDS DEPOSITS AGGREGATING TO RS.1,80,000/- WAS MADE ON 1 9-4-2005 AND 20-4- 2005. THE LEARNED CIT (A) ACCEPTED THE SAID EXPLANA TION AND GRANTED RELIEF TO THE EXTENT OF RS.1,80,000/- AND CONFIRMED THE BA LANCE AMOUNT OF RS.6,40,000/-. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION U/S 68 OF TH E ACT TREATING THE BANK DEPOSITS AS CASH CREDITS. HE CONTENDED THAT THE PRO VISIONS OF SEC. 68 DOES NOT APPLY TO THE FACTS OF THE CASE, SINCE THE ASSES SEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT. IN SUPPORT OF HIS CONTENTIONS, TH E LEARNED AUTHORISED REPRESENTATIVE PLACED HIS RELIANCE ON FOLLOWING CAS E LAW. I) MS.MAYAVATHI VS. DY.CIT 113 TTJ 178 (DEL) II) CITVS. BHICHAND H. GANDHI 141 ITR 67 (BOMBAY) ALTERNATIVELY THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAS ADDED THE ENTIRE CASH DEPOSIT S WITHOUT CONSIDERING THE WITHDRAWALS MADE ON THE EARLIER OCCASION WHICH IS NOT THE CORRECT METHODOLOGY TO DETERMINE THE TOTAL INCOME. THE LEAR NED AUTHORISED REPRESENTATIVE FURTHER CONTENDED THT THE ADDITION I S TO BE RESTRICTED TO THE AMOUNT OF PEAK CREDIT ONLY, WHEN THERE IS A SERIES OF CASH WITHDRAWALS AND DEPOSITS. INVITING OUR ATTENTION TO THE PEAK CREDIT STATEMENT WORKED OUT BY THE ASSESSEE, WHICH IS PLACED IN THE PAPER BOOK FIL ED BY THE ASSESSEE, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT TH E ADDITION SHOULD BE RESTRICTED TO THE PEAK CREDIT AMOUNT OF RS.23,300/- ONLY. 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY PLACED RELIANCE ON THE ORDER OF THE LEARNED CIT (A) . 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE UNDISPUTED FACTS ARE THAT THE IMPUGNED ADDITION PER TAINS TO THE DEPOSITS MADE IN THE BANK ACCOUNT OF THE ASSESSEE AND THE AS SESSEE DOES NOT ITANO.257 OF 2010 JV NAGARAJU VIZIANAGARAM PAGE 3 OF 4 MAINTAIN ANY BOOKS OF ACCOUNT. THE FACT THAT THE I MPUGNED ADDITION WAS MADE U/S 68 OF THE ACT IS ALSO NOT DISPUTED. THE P LEA OF THE LEARNED AUTHORISED REPRESENTATIVE IS THAT THE ASSESSING OFF ICER COULD NOT HAVE MADE THE IMPUGNED ADDITION U/S 68 OF THE ACT AND IN SUPP ORT OF HIS PLEA, HE RELIED UPON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN T HE CASE OF BHICHAND H GANDHI, REFERRED (SUPRA). WE HAVE GONE THROUGH THE SAID DECISION AND WE REPRODUCE BELOW THE HEAD NOTES OF THERE OF AS REPOR TED IN THE ITR.: WHEN MONEYS ARE DEPOSITED IN A BANK THE RELAT IONSHIP THAT IS CONSTITUTED BETWEEN THE BANKER AND THE CUSTOMER IS ONE OF DEBTOR AND CREDITOR AND NOT OF TRUSTEE AND BENEFICIARY. TH E PASS BOOK SUPPLIED BY THE BANK TO ITS CONSTITUENT IS ONLY A C OPY OF THE CONSTITUENT'S ACCOUNT IN THE BOOKS MAINTAINED BY TH E BANK. IT IS NOT AS IF THE PASS BOOK IS MAINTAINED BY THE BANK AS TH E AGENT OF THE CONSTITUENT NOR CAN IT BE SAID THAT THE PASS BOOK I S MAINTAINED BY THE BANK UNDER THE INSTRUCTIONS OF THE CONSTITUENT. HENCE, THE PASS BOOK SUPPLIED BY THE BANK TO THE ASSESSEE CANNOT BE REGARDED AS THE BOOK OF THE ASSESSEE, THAT IS, A BOOK MAINTAINE D BY THE ASSESSEE OR UNDER HIS INSTRUCTIONS. THEREFORE, A CASH CREDIT FOR THE PREVIOUS YEAR SHOWN IN THE ASSESSEE'S BANK PASS BOOK BUT NOT SHOWN IN THE CASH BOOK MAINTAINED BY THE ASSESSEE FOR THAT YEAR, DOES NOT FALL WITHIN THE AMBIT OF SECTION 68 OF THE I.T. ACT, 1961 , AND AS SUCH THE SUM SO CREDITED IS NOT CHARGEABLE TO TAX AS THE INC OME OF THE ASSESSEE OF THAT PREVIOUS YEAR. BY FOLLOWING THE ABOVE SAID DECISION, THE DELHI TRI BUNAL HAS ALSO EXPRESSED A SIMILAR VIEW IN THE CASE OF MS. MAYAVATHI, REFERR ED (SUPRA). THUS, ACCORDING TO THE ABOVE SAID DECISIONS, THE BANK PAS S BOOK DOES NOT CONSTITUTE BOOKS OF ACCOUNT OF THE ASSESSEE AND HEN CE THE ASSESSING OFFICER COULD NOT INVOKE THE PROVISIONS OF SECTION 68 FOR T HE PURPOSE OF MAKING ENQUIRY/ADDITIONS IN RESPECT OF DEPOSITS FOUND CRED ITED IN THE BANK PASS BOOK. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID N OT BRING TO OUR NOTICE ANY OTHER DECISIONS WHERE A CONTRARY VIEW HAD BEEN EXPRESSED. HENCE WE ARE INCLINED TO ACCEPT THE PLEA OF THE ASSESSEE IN THIS REGARD. IN VIEW OF THE FOREGOING, WE ARE OF THE VIEW THAT THE TAX AUTHORIT IES ARE NOT CORRECT IN LAW IN INVOKING THE PROVISIONS OF SECTION 68 IN THE FAC TS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, WE SET ASIDE THE ORDER OF L EARNED CIT(A) AND DIRECT ITANO.257 OF 2010 JV NAGARAJU VIZIANAGARAM PAGE 4 OF 4 THE ASSESSING OFFICER TO DELETE THE ADDITION MADE I N RESPECT OF THE BANK DEPOSITS. SINCE WE HAVE DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, WE DO NOT FIND IT NECESSARY TO ADDRESS THE ALTERNAT IVE PLEA OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE:28-09-2010. COPY TO 1 SHRI J.V. NAGARAJU, DEVELOPMENT OFFICER, LIC OF INDIA , BHOGAPURAM 2 THE ADD. CIT, RANGE-2, VISAKHAPATNAM 3 4. THE CIT 2, VISAKHAPATNAM THE CIT(A), VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM