2019 (4) TMI 1020 - AT - Income Tax

Unexplained cash deposit in bank account - income offered for tax twice due to mistake in the return of income - assessee claimed before AO that deposit in the bank was included in the income declared under the head income from other sources and other income However, due to mistake in the return of income was again separately declared as income - HELD THAT - AO is duty bound to compute income as per the provisions of the Act after taking into consideration all the facts available before him. It is opined also by the CBDT that while making assessment, the Assessing Officer should not take advantage of the ignorance or mistake of the assessee. In the instant case, the assessee has claimed that amount of ₹ 19,00,000/- was mistakenly declared as income twice, once separately shown as income and again by including the same in other income of ₹ 25,00,000/-. However, the details of other income of ₹ 25,00,000/- was not furnished before us and the same was also not examined by the lower authorities. As in the case of Sam Global Securities Ltd. 2013 (9) TMI 876 - DELHI HIGH COURT relying on Goetze (India) Ltd. v. CIT 2006 (3) TMI 75 - SUPREME COURT has held that wherein deduction claimed by way of a letter before the Assessing Officer, was disallowed on the ground that there was no provision under the Act to make amendment in the return without filing a revised return. Appeal to the Supreme Court, as the decision was upheld by the Tribunal and the High Court, was dismissed making clear that the decision was limited to the power of the assessing authority to entertain claim for deduction otherwise than by a revised return, and did not impinge on the power of the Tribunal. In view of the above, in our considered opinion, it shall be in the interest of the justice to restore this matter back to the file of the Assessing Officer for re-adjudication after proper verification. Addition invoking provisions of Section 68 - Assessee was not maintainable any books of account during the year under consideration. Therefore, the addition is hereby deleted.

Summary

Issues Involved:
1. Double taxation of ?19,00,000 due to cash deposit in the bank.
2. Addition of ?19,00,000 as undisclosed income under Section 68 of the Income Tax Act against declared agricultural income of ?20,00,000.

Issue-wise Detailed Analysis:

1. Double Taxation of ?19,00,000:

The assessee filed an appeal against the CIT(A)'s order confirming the addition of ?19,00,000 on account of cash deposit in the bank account. The assessee argued that the amount was mistakenly declared as income twice—once separately and once included in other income of ?25,00,000. The lower authorities did not accept this contention due to the absence of a revised return of income.

The Tribunal noted that under the Income Tax Act, the Assessing Officer (AO) is required to compute income based on the facts available and should not take advantage of an assessee's mistake. The Tribunal cited the Delhi High Court's decision in CIT Vs Sam Global Securities Ltd., which distinguished the Supreme Court's decision in Goetze (India) Ltd., asserting that the Tribunal has the power to entertain claims not made in the revised return.

Given the lack of detailed verification of the other income of ?25,00,000, the Tribunal found it just to restore the matter to the AO for re-adjudication after proper verification, ensuring a fair opportunity for the assessee to be heard. This ground of appeal was allowed for statistical purposes.

2. Addition of ?19,00,000 as Undisclosed Income under Section 68:

The assessee's second grievance was the confirmation of the addition of ?19,00,000 as undisclosed income under Section 68 against the declared agricultural income of ?20,00,000. The AO added ?20,00,000 to the assessee's income, invoking Section 68, due to the absence of evidence supporting agricultural income claims. The CIT(A) confirmed this but restricted the addition to ?19,00,000.

The assessee argued that since no books of account were maintained, the addition under Section 68 was invalid, citing the Bombay High Court's decision in CIT Vs Bhaichand H. Gandhi and the Delhi Tribunal's decision in Nitin Agarwal (HUF) Vs ITO. The Tribunal agreed, noting that Section 68 applies only to credits found in the books of account. Since the assessee did not maintain any books, the addition under Section 68 was unsustainable.

The Tribunal referred to several precedents, including the Delhi Tribunal's decision in Inder Singh vs. ITO and Vijay Kumar Prop. V.K. Medical Hall vs. ITO, which held that bank passbooks do not constitute "books of account" under Section 68. Consequently, the Tribunal deleted the addition of ?19,00,000, allowing the appeal on this ground.

Conclusion:

The Tribunal partially allowed the appeal for statistical purposes, restoring the issue of double taxation to the AO for re-adjudication and deleting the addition of ?19,00,000 under Section 68 due to the absence of books of account. The order was pronounced in the Open Court on 10/04/2019.