Income Tax Officer, Basti V. Shri Arvind Kumar Chaudhary , Basti

ITA 288/LKW/2013

• Counselvise Citation: 28823714 RSA 2013
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 25-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M P SRIVASTAVA
• Assessee Lawyers: P K KAPOOR
• Keywords: Unexplained cash credit; Rejection of books of accounts; Depreciation
• Section: 5(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 288/LKW/2013 ASSESSMENT YEAR: 2009 - 10 INCOME - TAX OFFICER BASTI V. SHRI. ARVIND KUMAR CHAUDHARY BASTI PAN: ABUPC0866F (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. M. P. SRIVASTAVA, D.R. RESPONDENT BY: SHRI. P. K. KAPOOR, C.A. DATE OF HEARING: 20.12.2013 DATE OF PRONOUNCEMENT: 10.01.2014 O R D E R PER SUNIL KUMAR YADAV: THI S APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON A SOLITARY GROUND THAT THE LD. CIT(A) HAS ERRED IN DELET ING THE ADDITION S MADE UNDER SECTION 68 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED IN SHORT 'THE ACT') ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 2 . DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. D.R. HAS PLACED HEAVY RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER BESIDE S PLACING RELIANCE UPON THE JUDGMENT S OF THE HON'BLE APEX COURT IN THE CASE OF KALE KHAN MOHAMMAD HANI F VS. CIT (1963) 50 ITR 1 (SC) AND THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. G. K. CONTRACTOR : - 2 - : (2009) 19 DTR 305 (RAJ). THE LD. D.R. HAS FURTHER CONTENDED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED AND PROFIT WAS ESTIMATED . B ESI DES , IT WAS ALSO NOTICED BY THE ASSESSING OFFICER THAT THERE ARE CERTAIN DEPOSITS IN THE ORIENTAL BANK OF COMMERCE. SINCE THE ASSESSEE COULD NOT FURNISH VALID EXPLANATION, THE ASSESSING OFFICER HAS RIGHTLY MADE ADDITION OF THE SAME UNDER SECTION 68 OF THE ACT. THE LD. D.R. HAS FURTHER CONTENDED THAT THE LD. CIT(A) HAS DELETED THE ADDITIONS WITHOUT HAVING VERIFIED THE GENUINENESS OF THE CASH CREDIT. 3 . THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A). IT WAS ALSO CONTENDED ON BEHALF OF THE ASSESSEE THAT THE BANK DETAILS WERE AVAILABLE WITH THE ASSESSING OFFICER WITH REGARD TO THE CASH DEPOSITS. T HE CASH DEPOSIT S IN THE BANK RELATED TO THE DEPOSITS MADE IN EARLIER FINANCIAL YEAR. THEREFORE, THE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION HAVING NOTED THAT THE DEPOSITS DO NOT RELATE TO THE CURRENT YEAR. THEREFORE, THE ADDITIONS UNDER SECTION 68 OF THE ACT CANNOT BE MADE. 4 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE R IVAL SUBMISSIONS, WE FIND THAT THE LD. CIT(A) HAS DELETED THE ADDITIONS HAVING OBSERVED THAT THE DEPOSITS IN BANK WERE NOT MADE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE OPENING BALANCE NOTED BY THE ASSESSING OFFICE R WAS ADDED UNDER SECTION 68 OF THE ACT. THE LD. CIT(A) HAS EXAMINED THE COMPLETE FACTS WITH REGARD TO THE DEPOSITS IN THE BANK BEFORE DELETING THE ADDITION. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE AS UNDER: - 5(2) I HAVE EXAMINED THE FACTS AND CIRCUMSTANCES OF THE CASE. I HAVE CONSIDERED THE FINDINGS OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. THE APPELLANT SUBMITTED THE : - 3 - : COPIES OF THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE WITH OBC, BASTI. THE APPELLANT IS MAINTAINING TWO ACCOUNTS HAVING A CCOUNT NUMBER 08051131000607 AND ACCOUNT NUMBER 08055011000121. THESE ACCOUNTS WERE MADE AVAILABLE TO THE AO BY THE BANK MANAGER OF OBC, BASTI. I FIND FROM EXAMINATION OF THESE TWO BANK ACCOUNTS THAT THE TWO OF THEM ARE ACCOUNTED FOR IN THE FINANCIAL ACCOU NTS AND THE TOTAL CASH DEPOSITS IN THE TWO ACCOUNTS ARE NOT RS. 36,75,500/ - . IT WOULD BE INCORRECT TO SAY THAT THE AIR INFORMATION IS VERIFIED IN SO FAR AS THE BANK ACCOUNTS DO NOT HAVE CASH DEPOSITS OF RS, 36,75,500/ - . THE AIR INFORMATION REFERRED TO BY THE AO IN THE ASSESSMENT ORDER IS THEREFORE NOT VERIFIABLE AS CORRECT. 5(3) MOREOVER, I FIND THAT THE AO HAS ALREADY REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE PROFIT. THE HON'BLE ITAT, MUMBAI, BENCH 'F' IN THE CASE OF ITO VS. NARESH H. SHAH, (MUMBA I TRIBUNAL) ITA NO. 3187/M/2010 VIDE ORDER DATED 15.07.2011 HAS EXAMINED THE ISSUE WHERE IN ABSENCE OF COMPLETE BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS, THE BOOKS OF ACCOUNT WAS REJECTED AND THE INCOME OF THE ASSESSEE WAS ESTIMATED AND THE AO FU RTHER MADE ADDITION ON ACCOUNT OF UNSECURED LOANS, DISALLOWANCE OF DEPRECIATION, EXPENSES, ETC., IT WAS HELD THAT ONCE THE BOOKS OF ACCOUNT ARE REJECTED AND TOTAL INCOME OF THE ASSESSEE WAS FINALLY ASSESSED ON ESTIMATED BASIS, NO FURTHER ADDITION CAN BE MA DE. HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. G.K. CONTRACTORS, 19 DTR 305 HAS HELD THAT IF THE BOOKS OF ACCOUNTS ARE REJECTED THEN NO SEPARATE ADDITION CAN BE MADE ON ACCOUNT OF CASH CREDIT UNDER SECTION 68 OF THE ACT EVEN THOUGH THE ASSESSEE HA S FAILED TO DISCHARGE ITS ONUS OF PROOF IN EXPLAINING THE : - 4 - : AMOUNT SHOWN IN THE BOOKS OF ACCOUNTS AS MARKET OUTSTANDING. FURTHER, BANK PASS BOOK IS NOT BOOKS OF ACCOUNT FOR THE PURPOSE OF SECTION 68 OF THE ACT. IN CIT, POONA V. BHAICHAND H. GANDHI 141 ITR 67 (BOM.) IT WAS HELD THAT THE PASS BOOK SUPPLIED BY THE BANK TO THE ASSESSEE CANNOT BE REGARDED AS THE BOOK OF THE ASSESSEE, THAT IS, A BOOK MAINTAINED BY THE ASSESSEE OR UNDER HIS INSTRUCTIONS. THEREFORE A CASH CREDIT FOR THE PREVIOUS YEAR SHOWN IN THE ASS ESSEE'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 ACT, AND AS SUCH THE SUM SO CREDITED IS NOT CHARGEABLE TO TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEA R. 5(4) IN VIEW OF ABOVE DISCUSSION I DO NOT FIND JUSTIFICATION IN ADDITION OF RS. 36,75, 5 00 / - UNDER SECTION 68 OF THE ACT ON THE BASIS OF AIR INFORMATION WHEN NO SUCH DEPOSITS AS REFERRED TO BY THE AO IN THE ASSESSMENT ORDER EXIST IN THE BANK ACCOUNTS FOR THE YEAR UNDER CONSIDERATION. MOREOVER, THE ADDITION F OR DE POSIT IN BANK ACCOUNT COULD NOT HAVE BEEN MADE UNDER SECTION 68 OF THE ACT. FURTHER, ONCE THE BOOKS OF ACCOUNTS HAVE BEEN REJECTED AND PROFIT HAS BEEN ESTIMATED, NO FURTHER ADDITION CAN BE 3 6 ,7 5,500/ - IS THEREFORE DELETED GIVING RELIEF TO THE APPELLANT. 5 . SINCE THE BANK DEPOSITS WERE NOT MADE IN THE IMPUGNED ASSESSMENT YEAR, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A) AS HE HAS PROPERLY ADJUDICATED THE ISSUE IN THE LIGHT OF THE P ROVISIONS OF THE ACT. ACCORDINGLY WE CONFIRM THE ORDER OF THE LD. CIT(A). 6 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. : - 5 - : ORDER PRONOUNCED IN THE OPEN COURT ON 10.1.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10.1.2014 JJ: 0701 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR