2018 (8) TMI 1748 - AT - Income Tax

Addition u/s 68 - unexplained deposits in the bank account (in the name of the appellant and his wife) - non mainataning of books of accounts - whether bank Pass Book maintained by the bank cannot be regarded as a book of the assessee for the purposes of section 68? - Held that - AO in the remand proceedings had issued summons to the persons and their affidavit were filed, they were cross examined and their statement were recorded on oath and the same were forwarded to the CIT(A) who has failed to take cognizance of the same. The assessee before us, had filed said evidences i.e. affidavit of the persons, their statement which were recorded at page 20 to 39 of the paper book - Totality of the evidences available with the assessee, statements of the persons recorded and their cross examination in which no disparity has been found or detected, then explanation offered by the assessee merits to be accepted in toto. Accordingly, we hold that there is no merit in making addition on this count in the hands of the assessee. the addition under section 68 of the Act has been made in the hands of the assessee because of cash deposit in the bank account i.e. savings account maintained by the assessee. The Hon ble Bombay High Court in the case of CIT Vs. Bhaichand Gandhi 1982 (2) TMI 28 - BOMBAY HIGH COURT 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 - where the assessee was not maintaining any books of account and section 68 had been invoked by the Assessing Officer only on the basis of the bank pass book ; the invoking of section 68 has to fail because 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 - See SMT. MANASI MAHENDRA PITKAR AND SHRI. MAHENDRA CHINTAMAN PITKAR VERSUS THE INCOME TAX OFFICER 1 (2) , THANE 1 (2). 2016 (9) TMI 605 - ITAT MUMBAI - decided in favour of assessee.

Summary

Issues involved:
1. Addition made under section 68 of the Income Tax Act.

Detailed Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the addition made under section 68 of the Income Tax Act. The assessee had declared a total income of &8377; 1,33,385 but additional income from salary and unexplained cash deposits led to penalty proceedings under section 271(1)(c). The Assessing Officer found cash deposits of &8377; 32,50,000 in the bank account, which the assessee claimed were received from relatives and savings. The assessee agreed to the addition due to lack of evidence, subject to no penalty under section 271(1)(c), but a successor officer levied the penalty, prompting the appeal.

2. The delay in filing the appeal was explained by the assessee, who had initially agreed to the addition under certain conditions. The CIT(A) upheld the addition based on the initial agreement during assessment proceedings. The assessee argued that the addition was made due to lack of evidence, which was later provided, including affidavits and statements from relatives. The Assessing Officer did not find discrepancies in these statements, suggesting the initial agreement was due to family disputes and lack of evidence.

3. The tribunal considered the principle of natural justice and the totality of evidence provided by the assessee, including affidavits, statements, and cross-examinations of relatives. It was noted that the CIT(A) failed to consider these pieces of evidence properly. The tribunal held that the addition under section 68 was not warranted, especially since the bank passbook alone cannot be considered as the assessee's book for section 68 purposes, as per legal precedents cited.

4. Ultimately, the tribunal allowed the appeal, stating that the addition under section 68 was not justified based on the evidence provided by the assessee. The decision was based on the lack of merit in making the addition and the legal interpretation regarding the bank passbook as the assessee's book for section 68 purposes. The tribunal emphasized the importance of considering all facts and circumstances before rejecting the claims of the assessee, ensuring a fair assessment based on available evidence.

5. In conclusion, the tribunal ruled in favor of the assessee, allowing the appeal and overturning the addition made under section 68 of the Income Tax Act. The judgment highlighted the significance of evidence, legal principles, and the proper application of the law in reaching a just decision.