Roopak Jain, Delhi V. ITO, New Delhi

ITA 5592/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7222 (ITAT-DELHI)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 17-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 30-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUMIT GOEL CAS
• Keywords: Gift; Peak credit
• Section: 143(3); 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-3 : NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO.5592/DEL/2015 ASSESSMENT YEAR : 2011-12 ROOPAK JAIN, 1/2475, VARDHMAN VILLA, MODERN SHAHDARA, DELHI. PAN: AEFPJ8484C VS. ITO, WARD -48(3), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJKUMAR GUPTA & SHRI SUMIT GOEL, CAS DEPARTMENT BY : SHRI RAJESH KUMAR, SR. DR DATE OF HEARING : 17.08.2016 DATE OF PRONOUNCEMENT : 30.08.2016 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A) DATED 21.08.2015 FOR THE ASSESSMENT YEAR 2011-12. ITA NO.5592/DEL/2015 2 2. THE ASSESSEE IS AN INDIVIDUAL AND FILED ITS RETU RN OF INCOME ON 12.3.2012 DECLARING INCOME OF RS.1,69,630/-. THE A SSESSEE HAD DEPOSITED A TOTAL AMOUNT OF RS.39,76,168/- IN TWO B ANK ACCOUNTS DURING THE YEAR I.E., ICICI BANK LTD. AND DENA BANK LTD. T HE AO INQUIRED INTO THE SOURCES OF THESE DEPOSITS AND, THEREAFTER, ADDE D THE SAME AS UNEXPLAINED SOURCES U/S 68 OF THE ACT IN HIS ORDER PASSED U/S 143(3) ON 3.3.2014. THE ASSESSEE CARRIED THE MATTER IN APPEA L WITHOUT SUCCESS. FURTHER AGGRIEVED, THE ASSESSEE IS BEFORE US. 3. AFTER HEARING THE RIVAL CONTENTIONS, I FIND THAT ADMITTEDLY, THE ASSESSEE DOES NOT MAINTAIN ANY BOOKS OF ACCOUNT. U NDER THESE CIRCUMSTANCES, NO ADDITION CAN BE MADE U/S 68 OF TH E ACT AS HELD IN THE FOLLOWING CASE LAWS:- I) THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT , PUNE VS. BHAICHAND H GANDHI 141 ITR 67, HELD AS FOLLOWS:- INCOME-CASH CREDIT-BANK PASS BOOK IS NOT A BOOK MAI NTAINED BY ASSESSEE OR UNDER HIS INSTRUCTIONS CASH CREDIT FO R PREVIOUS YEAR SHOWN IN ASSESSEES BANK PASS BOOK NOT SHOWN IN CASH BO OK OF ASSESSEE FOR THAT YEAR CANNOT BE TREATED AS INCOME OF THAT PRE VIOUS YEAR I.T.ACT, 1961 SEC.68. WHEN MONEYS ARE DEPOSITED IN A BANK THE RELATIONSHI P THAT IS CONSTITUTED BETWEEN THE BANKER AND THE CUSTOMER IS ONE OF DEBTO R AND CREDITOR AND ITA NO.5592/DEL/2015 3 NOT OF TRUSTEE AND BENEFICIARY. THE PASS BOOK SUPP LIED BY THE BANK TO ITS CONSTITUENT IS ONLY A COPY OF THE CONSTITUENTS ACC OUNT IN THE BOOKS MAINTAINED BY THE BANK. IT IS NOT AS IF THE PASS B OOK IS MAINTAINED BY THE BANK AS THE AGENT OF THE CONSTITUENT NOR CAN IT BE SAID THAT THE PASS BOOK IS MAINTAINED BY THE BANK UNDR THE INSTRUCTIONS OF THE CONSTITUENT. HENCE, THE PASS BOOK SUPPLIED BY THE BANK TO THE AS SESSEE CANNOT BE REGARDED AS THE BOOK OF THE ASSESSEE, THAT IS, A BO OK MAINTAINED BY THE ASSESSEE OR UNDER HIS INSTRUCTIONS. THEREFORE, A C ASH CREDIT FOR THE PREVIOUS YEAR SHOWN IN THE ASSESSEES BANK PASS BOO K BUT NOT SHOWN IN THE CASH BOOK MAINTAINED BY THE ASSESSEE FOR THAT Y EAR, DOES NOT FALL WITHIN THE AMBIT OF S.68 OF THE ACT AND AS SUCH THE SUM SO CREDITED IS NOT CHARGEABLE TO TAX AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. II) THE HONBLE DELHI HIGH COURT IN THE CASE OF CI T VS. MS.MAYAWATI REPORTED IN 338 ITR 563 (DEL) HELD AS FOLLOWS:- AS THE ITAT HAS COME TO THE CONCLUSION THAT SECTION 68 HAS NO APPLICABILITY TO THE FACTS OF THE PRESENT CASE AS T HE ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNTS. IF THAT BE SO SECTION 68 DOES NOT APPLY IN THIS CASE FOR THE SIMPLE REASON CHEQUE REC EIVED FROM MR.PANKAJ JAIN HAS BEEN DEPOSITED IN HER BANK ACCOUNT IN THIS REGARD. THE ITAT WAS OF THE OPINION THAT BALANCE SHEET/STATEMENT OF THE AFFAIRS CANNOT BE EQUATED TO BOOKS OF ACCOUNT BECAUSE A PASS BOOK OF THE BANK CANNOT BE TREATED AS A BOOK OF ACCOUNT OF THE ASSESSEE BECAUS E THIS IS PROVED BY THE BANKER, WHICH IS GIVEN TO ITS CUSTOMER AND IS ONLY A COPY OF THE CUSTOMER S ACCOUNT IN THE BOOKS MAINTAINED BY THE BANK. THE BANK DOES NOT ACT AS AN AGENT OF THE CUSTOMER NOR CAN IT BE S AID THAT THE BANKER MAINTAINS THE PASS BOOK UNDER INSTRUCTIONS OF THE C USTOMER (ASSESSEE) THE RELATIONSHIP BETWEEN THE BANKER AND CUSTOMER IS ONE OF THE DEBTOR AND CREDITOR ONLY. THEREFORE, A CASH CREDIT APPEARI NG IN ASSESSEE S PASS BOOK RELEVANT TO A PARTICULAR PREVIOUS YEAR, IN A C ASE WHERE THE ASSESSEE DOES NOT MAINTAIN BOOKS OF ACCOUNT, DOES NOT ATTRAC T THE PROVISIONS OF SECTION 68 . KEEPING IN VIEW THE ABOVE IN THE INSTANT CASE NEITH ER THE GIFTS RELATING TO IMMOVABLE PROPERTY CAN BE COVERED UNDER SECTION 68 NOR THE GIFT OF RS.2 LACS RECEIVED BY THE ASSESSEE CAN BE COVERED UNDER THE PROVISIONS. IN VIEW OF THE ITAT ALL GIFTS SATISFIED THE REQUIREMEN T OF A VALID AND GENUINE GIFT. THE ASSESSEE HAS FULLY EXPLAINED THE SAME AND THEREFORE IT CANNOT BE SAID THE ADDITION CAN BE SUSTAINED EVEN U/S 69 OF T HE INCOME TAX ACT . IN ITA NO.5592/DEL/2015 4 THIS MANNER THE ITAT HAS DISMISSED THE APPEAL OF TH E REVENUE DEPARTMENT. 3. THE ITAT LUCKNOW B BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. KAMAL KUMAR MISHRA 143 ITD 686 (LUCKNOW TRIB.) AT PARA 7 AND 8 HELD AS FOLLOWS. 7. THE AFORESAID PROVISIONS OF SECTION 68 OF THE ACT CAN ONLY BE INVOKED WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERE D BY HIM IS NOT, IN THE OPINION OF THE INCOME-TAX OFFICER, SATISFACTORY. IN THAT EVENTUALITY, THE SAID SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX A S THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. MEANING THEREBY MAI NTENANCE OF BOOKS OF THE ASSESSEE, IN WHICH CREDIT ENTRY SO FOUND, IS A CONDITION PRECEDENT FOR INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. NOW THE QUESTION ARISES WHETHER THE PASSBOOK ISSUED BY THE BANK WITH REGARD TO THE ACCOUNTS OF THE ASSESSEE CAN BE TERMED TO BE THE BOOKS OF THE A SSESSEE FOR THE PURPOSE OF SECTION 68 OF THE ACT. THIS ISSUE WAS EXAMINED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BHAICHAND N. GANDHI (SUPRA) AND WHILE ANSWERING THE QUESTION I.E. WHETHER ON TH E FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFI ED IN HOLDING THAT CASH CREDIT FOR THE PREVIOUS YEAR SHOWN IN THE ASSESSEE' S BANK PASSBOOK ISSUED TO HIM BY THE BANK, BUT NOT SHOWN IN THE CAS H BOOK MAINTAINED BY HIM FOR THAT YEAR DOES NOT FALL WITHIN THE AMBIT OF SECTION 68 OF THE ACT AND AS SUCH THE SUM SO CREDITED IS NOT CHARGEABLE T O INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR, THEIR LORDSHIPS OF THE HON'BLE BOMBAY HIGH COURT CATEGORICALLY HELD THAT P ASSBOOK SUPPLIED BY THE BANK TO THE ASSESSEE COULD NOT BE REGARDED A S BOOK OF THE ASSESSEE, THAT IS, A BOOK MAINTAINED BY THE ASSESSE E OR UNDER HIS INSTRUCTION. THE RELEVANT OBSERVATIONS OF THE HON'B LE BOMBAY HIGH COURT ARE EXTRACTED HEREUNDER:- ' IN BALADIN RAM V. CIT [1969] 71 ITR 427, IT HAS BEEN HELD BY THE SUPREME COURT THAT IT IS NOW WELL SETTLED THAT THE ONLY POSSIBLE WAY IN WHICH INCOME FROM AN UNDISCLOSED SOURCE CAN BE ASSE SSED OR REASSESSED IS TO MAKE THE ASSESSMENT ON THE BASIS THAT THE PRE VIOUS YEAR FOR SUCH AN INCOME WOULD BE THE ORDINARY FINANCIAL YEAR. EVEN U NDER THE PROVISIONS EMBODIED IN S.68 OF THE SAID ACT IT IS ONLY WHEN AN Y AMOUNT IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVI OUS YEAR THAT THE ITA NO.5592/DEL/2015 5 SECTION WILL APPLY AND THE AMOUNT SO CREDITED MAY B E CHARGED TO TAX AS THE INCOME OF THAT PREVIOUS YEAR, IF THE ASSESSEE O FFERS NO EXPLANATION OR THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY. AS THE TRIBUNAL HAS POINTED OUT, IT IS FAIRLY WELL SETTLED THAT WHEN MONEYS ARE DEPOSITED IN A BANK, THE RELATIONSHIP THAT IS C ONSTITUTED BETWEEN THE BANKER AND THE CUSTOMER IS ONE OF DEBTOR AND CREDIT OR AND NOT OF TRUSTEE AND BENEFICIARY. APPLYING THIS PRINCIPLE, THE PASS BOOK SUPPLIED BY THE BANK TO ITS CONSTITUENT IS ONLY A COPY OF THE CONST ITUENT'S ACCOUNT IN THE BOOKS MAINTAINED BY THE BANK. IT IS NOT AS IF THE P ASS BOOK IS MAINTAINED BY THE BANK AS THE AGENT OF THE CONSTITUENT, NOR CA N IT BE SAID THAT THE PASS BOOK IS MAINTAINED BY THE BANK UNDER THE INSTR UCTIONS OF THE CONSTITUENT. IN VIEW OF THIS, THE TRIBUNAL WAS, WIT H RESPECT, JUSTIFIED IN HOLDING THAT THE PASS BOOK SUPPLIED BY THE BANK TO THE ASSESSEE IN THE PRESENT CASE COULD NOT BE REGARDED AS A BOOK OF THE ASSESSEE, THAT IS, A BOOK MAINTAINED BY THE ASSESSEE OR UNDER HIS INSTRU CTIONS. IN OUR VIEW, THE TRIBUNAL WAS JUSTIFIED IN THE CONCLUSIONS AT WH ICH IT ARRIVED.' 8. IN THE CASE OF ANAND RAM RATIANI VS. CIT (SUPRA), THE HON'BLE GAUHATI HIGH COURT HAS ALSO HELD THAT PERUSAL OF SECTION 68 OF THE ACT SHOWS THAT IN RELATION TO EXPRESSION 'BOOKS', THE E MPHASIS IS ON THE WORD 'ASSESSEE' MEANING THEREBY THAT SUCH BOOKS HAVE TO BE THE BOOKS OF THE ASSESSEE HIMSELF AND NOT OF ANY OTHER ASSESSEE. IN THAT CASE, THE BOOKS OF ACCOUNT OF THE PARTNERSHIP FIRM WERE NOT TREATED AS THOSE OF THE INDIVIDUAL PARTNER AND ACCORDINGLY THE ADDITIONS MA DE IN THE HANDS OF THE INDIVIDUAL PARTNERS ON THE BASIS OF THE BOOKS O F THE PARTNERSHIP FIRM WAS DELETED. 4. EVEN OTHERWISE, THE ALTERNATIVE CONTENTION OF TH E ASSESSEE THAT THE PEAK CREDIT HAS TO BE TAKEN INTO ACCOUNT BY CONSIDE RING BOTH THE BANK ACCOUNTS HAS MUCH FORCE. ON A PERUSAL OF THE CASH CREDIT OF THE PEAK SUBMITTED BY THE ASSESSEE, THE ADDITION CANNOT BE S USTAINED. ON THIS GROUND ALSO THE ADDITION CANNOT BE SUSTAINED. ITA NO.5592/DEL/2015 6 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.08.2 016. SD/- [J. SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED, 30 TH AUGUST, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.