2019 (1) TMI 1610 - AT - Income Tax

Condonation of delay of 80 days - mother of assessee being an old lady forgot to deliver the order to him - HELD THAT - As stated by the assessee that the order passed by the CIT(A), was served on his aged mother on 03.10.2016. It is stated by the assessee that his mother being an old lady forgot to deliver the order to him, which resultantly had led to the delay in filing of the present appeal before us. Assessee claimed that he learnt about the fact that his appeal had been disposed off by the CIT(A)-2, only when a notice for recovery of demand for the year under consideration was received by him from the A.O. The assessee had stated that as the delay in filing of the appeal had arisen not on account of any lapses or laches on his part, but on account of an inadvertent omission on the part of his aged mother, therefore, the delay of 80 days involved in filing of the appeal to be condoned. Addition u/s 68 - whether bank account or bank passbook of an assessee cannot be held as the latters 'books of account'? - HELD THAT - We are persuaded to subscribe to the contention advanced by the ld. A.R that as the bank account or bank passbook of an assessee cannot be held as the latters 'books of account', hence no addition in respect of a cash deposit made in the said account could be validly made under Sec.68 Our aforesaid observations is duly fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand H. Gandhi 1982 (2) TMI 28 - BOMBAY HIGH COURT . We thus respectfully following the judgment of CIT Vs. Bhaichand H. Gandhi (supra) 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 (4) TMI 534 - ITAT MUMBAI thus are of the considered view that the addition made by the A.O u/s 68 cannot be sustained, and as such is liable to be vacated. - Decided in favour of assessee

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Validity of addition under Section 68 of the Income Tax Act, 1961 concerning cash deposits in the bank account.

Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal filed by the assessee involved a delay of 80 days. The assessee explained that the delay occurred because the order was served on his aged mother, who forgot to deliver it to him. This explanation was supported by an affidavit. The Tribunal deliberated on the reasons for the delay and found them to be credible. Consequently, the delay was condoned, allowing the appeal to proceed.

2. Validity of Addition under Section 68:
The core issue was the addition of ?11,47,660/- made by the Assessing Officer (A.O) under Section 68 of the Income Tax Act, 1961, which was upheld by the CIT(A). The assessee contended that the addition was invalid as the cash deposits were made in a bank account, which could not be considered as "books of account" under Section 68. The Tribunal found substantial merit in this argument, referencing the judgment of the Hon'ble High Court of Bombay in CIT Vs. Bhaichand H. Gandhi (1983) 143 ITR 67 (Bom.), which held that a bank passbook is not a "book" maintained by the assessee.

The Tribunal also cited similar views from other cases, including Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum) and Smt. Manshi Mahendra Pitkar Vs. ITO (2016) 73 taxmann.com 68 (Mumbai Trib.), supporting the position that bank accounts or passbooks cannot be construed as the assessee's books of account for the purposes of Section 68.

Given this legal precedent, the Tribunal concluded that the addition made by the A.O under Section 68 based on the cash deposits in the bank account could not be sustained. Therefore, the addition of ?11,47,660/- was vacated, and the appeal was allowed.

Conclusion:
The Tribunal allowed the appeal, condoning the delay and setting aside the addition made under Section 68, thereby providing relief to the assessee. The judgment emphasized the legal interpretation that bank accounts or passbooks do not qualify as "books of account" for the purposes of Section 68 of the Income Tax Act, 1961.