SHRI KANWALJIT SINGH SANDHU, TARN TARAN V. INCOME TAX OFICER WARD-1, TARN TARAN

ITA 82/ASR/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5599 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 11-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 147; 68; 148; 144; 142(1); 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. RAVISH SOOD, JUDICIAL MEMBER AND Dr. M. L. MEENA, ACCOUNTANT MEMBER ITA No. 82/(Asr)/2018 Assessment Year: 2009-10 Shri Kanwaljit Singh Sandhu, Village Warian Purian, Naushehra Pannuan, Distt. Tarn Taran [PAN: BMNPS7287K] Vs. Income Tax Officer, Ward-I, Tarn Taran (Appellant) (Respondent) Appellant by : Shri K.R. Jain, Adv. Respondent by: Shri Trilochan Singh P S Khalsa, DR Date of Hearing: 17.12.2021 Date of Pronouncement: 24.12.2021 ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals)-I, [for short CIT(A)], Amritsar dated 24.11.2017, which in turn arises from the order passed by the Assessing Officer u/s.144/147 of the Income Tax Act, 1961 (for short ‘Act’) dated 29.11.2016 for Assessment Year 2009-10. 2. The assessee has assailed the impugned order on the following grounds of appeal before us. ITA No.82-ASR-2018 2 “1. That the order of the Ld. Income Tax Officer is wrong, illegal and against facts. Likewise CIT(A) is not justified while confirming the same. 2. That the assessee was person not residing in India, the Ld. AO grossly erred in assessing the saving bank account deposits amounting to Rs.12,13,7002- with ICICI Bank, Tam Taran as his income whereas the said deposits were made by assessee in his own account out of the agricultural activities held in India being the owner of agricultural land. 3. That no service of notice u/s 148 and 142(1) was ever effected on the appellant and such proceedings initiated and assessment completed u/s 144 is illegal and without justification. 4. That no reasonable opportunity was allowed while completing the assessment. 5. That no proper satisfaction has been recorded by the AO while initiating proceedings u/s 147 of the Income Tax Act. These are based on borrowed information. 6. That approval for initiation of proceedings have been granted by the designated officer in a mechanical manner and as such proceedings initiated are bad in law. 7. That the Ld. AO has erred in law and on facts while making addition u/s 68. 8. That even on merits no addition is called for in view of the decision in the case of Gurpal V ITO (2016) 71 taxmann.com 108 (Amritsar) (Trib).” 3. Briefly stated, the case of the assessee was reopened by the Assessing Officer u/s. 147 of the Act, for the reason, that as per information in his possession the assessee had made cash deposits of Rs.12,13,700/- in his Savings Bank Account maintained with ICICI Bank Ltd, Tarn Taran. 4. During the course of assessment proceedings, the AO called upon the assessee to explain the nature and source of the cash deposits in his aforementioned bank account. However, as the assessee failed to furnish the requisite information, therefore, the AO held the cash deposits of Rs.12.13 lakhs as an unexplained ITA No.82-ASR-2018 3 investment in the bank account as per the provisions of Section 68 of the Act. Accordingly, the AO vide his order passed u/ss. 144/147 of the Act, dated 29.11.2016 assessed the income of the assessee at Rs.8,53,720/-. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, not finding any infirmity in the view taken by the AO the CIT(A) upheld his order and dismissed the appeal. 6. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. 7. At the very outset, the ld.Authorized Representative (for short “AR”) for the assessee submitted that the addition of the cash deposited in the bank account by the AO u/s. 68 of the Act could not be sustained in the eyes of law. Elaborating on his aforesaid contention, it was submitted by the ld.AR that as the provisions of Section 68 of the Act can be invoked only qua any sum found credited in the “books of an assessee maintained for any previous year, as regards which the assessee fails to offer any explanation, or the explanation so offered by him is not in the opinion of the AO satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. It was the claim of the ld. AR that as the bank account of assessee can by no means be held as books maintained by him for any previous year, therefore, no addition qua the cash deposits made in the bank account of the assessee could validly be made u/s. 68 of the Act. In support of his aforesaid contention the ld.AR had relied upon the judgment of the Hon’ble High Court of Bombay in the case of CIT vs. Bhaichand N. Gandhi (1982) 11 Taxman 59 (Bom). 8. Per contra, the Ld. Departmental Representative (for short “DR”) relied upon the orders of the lower authorities. It was submitted by the Ld. DR that as the ITA No.82-ASR-2018 4 assessee has failed to explain the nature and source of the cash deposits in his bank account, therefore, the AO had rightly made an addition of the same to his returned income. 9. We have heard the Ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. AR in order to support his aforesaid claim. We have given a thoughtful consideration to the issue before us and are persuaded to subscribe to the claim of the ld. A.R that as the bank account or bank passbook of an assessee cannot be held as his 'books of account', hence, no addition in respect of a simpliciter cash deposit made in the said account could validly be made under Sec.68 of the Act. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand H. Gandhi (1983) 143 ITR 67 (Bom.). We find that a similar view had been arrived at by a coordinate bench of the Tribunal, viz. ITAT, Mumbai in the case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum), wherein it was observed as under: "8. We have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities as well as the material produced before us. We will first deal with the objection raised by the Id. A.R as regards the addition of Rs.10,53,000/- which was made by the A.O under Section 68 of the 'Act' in respect of the cash deposit in the bank account of the assessee. We find substantial force in the contention of the Id. A.R that an addition under Section 68 can only be made where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee either offers no explanation about the nature and source as regards the same, or the explanation offered by him in the opinion of the assessing officer is not found to be satisfactory. That before adverting further, we herein reproduce the relevant extract of the aforesaid statutory provision, viz. Section 68, which reads as under: "Cash Credits. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] officer, satisfactory, the ITA No.82-ASR-2018 5 sum so credited may be charged to income-tax as the income of the assessee of that previous year..........." That a bare perusal of the aforesaid deeming section therein reveals that an addition under the said statutory provision can only be made where any sum is found credited in the books of an assessee maintained for any previous year. Thus, the very sine qua non for making of an addition under Section 68 presupposes a credit of the aforesaid amount in the 'books of an assessee' maintained for the previous year. We not being oblivious of the settled position of law that a statutory provision has to be strictly construed and interpreted as per its plain literal interpretation, and no word howsoever meaningful it may so appear can be allowed to be read into a statutory provision in the garb of giving effect to the underlying intent of the legislature, thus confining ourselves within the realm of our jurisdiction, therein construe the scope and gamut of the aforesaid statutory provision by according a plain meaning to the language used in Sec. 68. We are of the considered view that a credit in the 'bank account' of an assessee cannot be construed as a credit in the 'books of the assessee', for the very reason that the bank account cannot be held to be the 'books' of the assessee. Though it remains as a matter of fact that the 'bank account' of an assessee is the account of the assessee with the bank, or in other words the account of the assessee in the books of the bank, but the same in no way can be held to be the 'books' of the assessee. We have given a thoughtful consideration to the scope and gamut of the aforesaid statutory provision, viz. Sec. 68, and are of the considered view that an addition made in respect of a cash deposit in the 'bank account' of an assessee, in the absence of the same found credited in the 'books of the assessee' maintained for the previous year, cannot be brought to tax by invoking the provisions of Section 68. That our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand'N. Gandhi (1983) 141 ITR 67 (Bombay) wherein the Hon'ble High Court has held as under: - "As the Tribunal has pointed out, it is fairly well settled that when moneys are deposited in a bank, the relationship that is constituted between the banker and the customer is one of debtor and creditor 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 constituent's account in the books maintained by the bank. It is not as if the pass book 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 under the instructions of the constituent. In view of this, the Tribunal was, with 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 instructions. In our view, the Tribunal was justified in the conclusions at which it arrived." We find that the aforesaid view of the Hon'ble jurisdictional High Court had thereafter been followed by a 'SMC' of the ITAT Mumbai bench in the case of Smt. Manshi Mahendra Pitkar Vs. ITO 1(2), Thane (2016) 73 taxmann.com 68 (Mumbai Trib.) wherein it was held as under: - 'I have carefully considered the rival submissions. In the present case the addition has been I made by the income tax authorities by treating the cash deposits in the bank account as an unexplained cash credit within the meaning of section 68 of the Act. The legal point raised by the assessee is to the effect that the bank Pass book is not an account book maintained by the assessee so as to fall within the ambit of section 68 of the Act. Under section 68 of the ITA No.82-ASR-2018 6 Act, it is only when an amount is found credited in the account books of the assessee for any previous year that the deeming provisions of section 68 of the Act......... circumstances mentioned therein. Notably, section 68 of the Act in a situation "Where any sum is found credited in the books of an assessee. The Hon'ble Bombay High Court in the case of Shri Bhaichand Gandhi (supra) has approved the proposition that a bank Pass Book maintained by the bank cannot be regarded as a book of the assessee for the purposes of section 68 of the Act. Factually speaking, in the present case, assessee is not maintaining any books of account and section 68 of the Act has been invoked by the Assessing Officer only on the basis of the bank Pass Book. The invoking of section 68 of the Act has to fail because as per the judgment of the Hon'ble Bombay High Court in the case of Shri Bhaichand N. Gandhi (supra), the bank Pass Book or bank statement cannot be construed to be a book maintained by the assessee for any previous year as understood for the purposes of section 68 of the Act. Therefore, on this account itself the impugned addition deserves to be deleted. I hold so." We further find that a similar view had also been arrived at in a 'third member' decision of the Tribunal in the case of Smt. Madhu Raitani Vs. ACIT (2011) 10 taxmann.com 206 (Gauhati) (TM), as well as by a coordinate bench of the Tribunal in the case of ITO, Barabanki Vs. Kamal Kumar Mishra (2013) 33 taxamann.com 610 (Lucknow Trib.). Thus in the backdrop of the aforesaid facts of the case read in light of the settled position of law, we are of the considered view that the addition made by the A.O in respect of the cash deposit of Rs.l0,53,000/-(supra) in the bank account of the assessee by invoking Section 68 has to fail for the very reason that as per the judgment of the Hon'ble Bombay High Court in the case of Shri Bhaichand N. Gandhi (supra), a bank pass book or bank statement cannot be considered to be a 'book' maintained by the assessee for any previous year, as understood for the purpose of Section 68 of the Act. Therefore, on this count itself the impugned addition Rs.10,53,000/- deserves to be deleted." We are of the considered view that as the bank account of an assessee cannot be held to be the 'books' of an assessee maintained for any previous year, thus, no addition under Sec. 68 of the Act can be made in respect of a simpliciter deposit in the bank account. We, thus, respectfully following the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand H. Gandhi (1983) 143 ITR 67 (Bom.), and being in agreement with the view taken by the coordinate bench of the Tribunal i.e. ITAT, Mumbai in case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum), thus, are of the considered view that the addition of Rs.12,13,700/- made by the A.O under Sec.68 cannot be sustained, and is liable to be vacated. We, thus, set aside the order of the CIT(A) and delete the addition of Rs.12,13,700/- made by the A.O under Sec.68 of the Act. 10. The Grounds of appeal no.1 and 7 are allowed in terms of our aforesaid observations. 11. That as we have quashed the assessment for the reasons stated hereinabove, therefore, we herein refrain from adverting to and therein adjudicating the other ITA No.82-ASR-2018 7 contentions on the basis of which the ld. AR had assailed the validity of the jurisdiction assumed by the AO for framing the assessment, as well as the sustainability of the addition qua the merits of the case, which are left open. 12. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations. Order pronounced in the open court on 24 th December, 2021. Sd/- Sd/- (Dr. M.L. Meena) (Ravish Sood) Accountant Member Judicial Member Date: 24.12.2021 prabhat Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T By Order