2013 (10) TMI 866 - AT - Income Tax

Unexplained Cash Credit u/s 68 - Whether the CIT (A) has erred in confirming the addition considering the amount of cash deposited to bank as unexplained cash credit u/s 68 - The show cause notice was given to the assessee to explain the source and the genuineness of the cash deposited from time to time, which has not been explained satisfactorily Following CIT Vs. KS.Dattareya 2012 (6) TMI 439 - Karnataka High Court - mentioning of wrong section does not change the sum and substance of the findings of the AO - the assessee has not been able to substantiate or prove the source and genuineness of the cash deposits made at twenty-two occasions in his bank account - there was no infirmity in the order of the learned CIT(A) on the issue. As regards amount claimed to have been saved by the assessee out of his salary income drawn during the year - For verification, notice under section 133(6) of the Act was given to the employer of the assessee, which was not replied - The assessee has not placed on record, how and where the saving in the last 18 years were kept - It is unbelievable that an assessee for the last 18 years has been savings the salary in cash and keeping the same with him in the same form at all times to come, and suddenly the entire amount is deposited during the year in the bank account in cash for purchase of residential house - No documentary evidence was placed on record by the assessee or no cogent explanation was placed on record to justify the assessee was in fact having saved out of his salary income - the AO is justified in not accepting the source of savings claimed by the assessee from the salary income. As regards the source from his father, the father of the assessee was retired on superannuation and the pension certificate of mother - No other documentary evidence was produced by him to show credit- no satisfactory explanation was provided for the source of income In the absence of any documentary evidence that the father and mother of the assessee had saved for giving gift to the assessee and in the absence of any cogent explanation with regard to the source, the AO is justified in not accepting the source of gift from father of the assessee Decided against Assesse.

Issues Involved:
1. Confirmation of addition of Rs. 20,50,700/- as unexplained cash credit under section 68.
2. Applicability of section 68 to bank pass-books as opposed to books of account.

Detailed Analysis:

Issue 1: Confirmation of Addition of Rs. 20,50,700/- as Unexplained Cash Credit Under Section 68

The assessee was found to have made cash deposits totaling Rs. 20,50,700/- in Oriental Bank of Commerce, Ahmedabad during the assessment year 2009-2010. The details of these deposits were scrutinized, and the assessee was asked to explain the source of these cash deposits. The assessee provided several explanations:

a) Savings from salary over 18 years amounting to Rs. 4,02,741/-.
b) Inheritance of Rs. 6,00,000/- from the father, who was a retired government employee.
c) Gift of Rs. 5,00,000/- from the mother, also a retired government employee.
d) Gift of Rs. 5,00,000/- from the father-in-law, a farmer.

The Assessing Officer (AO) examined these explanations and found them unsatisfactory. Specifically:

- The AO found it unbelievable that the assessee could save Rs. 4,02,741/- from a meager salary and keep it in cash for 18 years without any documentary evidence.
- The inheritance claim from the father lacked proof of the father's savings and the purchase of gold, which was allegedly sold to generate the cash.
- The gift from the mother was unsupported by sufficient documentary evidence.
- The father-in-law's agricultural income was deemed insufficient to support a gift of Rs. 5,00,000/-.

As a result, the AO added Rs. 20,50,700/- to the assessee's income as unexplained cash credit. The CIT(A) confirmed this addition.

Issue 2: Applicability of Section 68 to Bank Pass-Books

The assessee argued that section 68 applies only when books of account are maintained, not when the credit is found in the pass-book. The pass-book is not considered a book of account. The assessee relied on the decision of the Lucknow Bench of ITAT in ITO Vs. Shri Kamal Kumar Mishra, which held that section 68 cannot be invoked for deposits found in a bank account in the absence of maintained books of account.

However, the tribunal found that the facts of the present case were different. The AO had issued a show cause notice to the assessee to explain the source and genuineness of the cash deposits, which the assessee failed to satisfactorily explain. The tribunal held that mentioning the wrong section (section 68) by the AO did not change the substance of the findings. The tribunal cited various court decisions supporting this view, including:

i) Manoj Aggarwal Vs. DCIT, (Del)(SB)(2008) 113 ITD 377;
ii) CIT Vs. KS.Dattareya, (2012) 344 ITR 127 (Kar.);
iii) M. Sundram Vs. ACIT, (2006) 287 ITR 1245 (Mad).

The tribunal concluded that the assessee did not substantiate or prove the source and genuineness of the cash deposits made on twenty-two occasions. Therefore, the tribunal found no infirmity in the CIT(A)'s order and dismissed the appeal.

Conclusion:

The appeal of the assessee was dismissed, with the tribunal confirming the addition of Rs. 20,50,700/- as unexplained cash credit under section 68. The tribunal also upheld that section 68 could be applied in this case despite the deposits being found in the bank pass-book, as the assessee failed to provide satisfactory explanations for the cash deposits.

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