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2021 (12) TMI 584 - AT - Income TaxUnexplained cash credit - addition of cash deposit in bank account - non mentioning of relevant section to make addition - HELD THAT - AO as well as that of the CIT(A) that they have not specifically mentioned as to under which section of the Act the additions have been made. As relying on SMT. SUDHA LOYALKA, C/O M/S RRA TAXINDIA VERSUS ITO, WARD 35 (2) , NEW DELHI 2018 (7) TMI 1892 - ITAT DELHI sustaining of impugned addition is not justified as non-mentioning the precise provision of law makes the impugned addition bad in law. CIT(Appeals) has not specifically mentioned as to under which section of the Act addition has been done. Also, assessee during the course of assessment proceedings has submitted that the cash deposits are not the income of the assessee. The cash deposits and other credits in the bank statement of the assessee comprises of cash received on behalf of the parties, home loan disbursement from bank and cash deposits out of own sources. In respect of invoices and receipts were submitted during the assessment proceedings. However, the AO ignoring the explanation given by the assessee on the basis of entries in the bank statement considered the cash deposits of the assessee as the income of the assessee. It is important to mention here that the bank statements cannot be termed as books of accounts for the purposes of Sec. 68 - Also as found from perusal of the record that in the A.Y. 2007-08 2009-10 such cash deposits in the same bank account has been treated as sales executed through the assessee on which the assessee has earned commission income @ 7.5% on sale - A.O. as well as ld. CIT(A) have not specifically mentioned as to under which Section of the Act the additions have been made and also keeping in view the fact that Bank statement is constantly held to be not books of account for the purpose of Section 68 - we direct to delete the addition made U/s 68 - Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Legality of the addition made under Section 68 of the Income Tax Act. 3. Treatment of bank statements as books of accounts. Issue-wise Analysis: 1. Condonation of Delay in Filing the Appeal: The assessee filed the appeal with a delay of 1402 days, claiming that he was under the impression that his previous consultant had filed the appeal. This was discovered only when a new consultant reviewed the records. The assessee lodged a complaint against the previous consultant for breach of trust. The Tribunal considered the principles laid down by the Supreme Court in the case of Collector, Land Acquisition Vs. Mst. Katiji and other relevant cases, emphasizing a liberal approach towards interpreting "sufficient cause" for condonation of delay. The Tribunal concluded that the delay was caused due to a genuine reason and condoned the delay, allowing the appeal to be heard on merits. 2. Legality of the Addition Made Under Section 68 of the Income Tax Act: The assessee challenged the addition of ?4,45,588/- made by the Assessing Officer (AO) under Section 68 of the Act, which was confirmed by the CIT(A). The AO noticed undisclosed cash deposits in the assessee's bank account and treated them as income from undisclosed sources. The Tribunal observed that neither the AO nor the CIT(A) specified the section under which the addition was made. Citing the decisions of the Coordinate Bench of the Delhi ITAT in Smt. Sudha Loyalka vs ITO and the Bangalore ITAT in Shree Ramareddy Ramesh vs ITO, the Tribunal held that non-mentioning of the precise section makes the addition bad in law. 3. Treatment of Bank Statements as Books of Accounts: The Tribunal noted that bank statements cannot be considered as books of accounts for the purposes of Section 68 of the Act. This position was supported by the decision of the Coordinate Bench of the Jaipur ITAT in Dr. Vishan Swaroop Gupta vs ITO and the Bombay High Court in CIT Vs Bhaichand N Gandhi. The Tribunal emphasized that the relationship between a banker and a customer is that of debtor and creditor, and a passbook is merely a copy of the customer's account in the bank's books, not a book maintained by the assessee. Conclusion: The Tribunal found merit in the assessee's contentions, holding that the addition made under Section 68 was not justified due to the non-mentioning of the precise section and the fact that bank statements are not considered books of accounts under Section 68. Consequently, the Tribunal directed the deletion of the addition made under Section 68 of the Act. Application to Other Assessment Years: The findings and conclusions for the assessment year 2006-07 were applied mutatis mutandis to the appeals for the assessment years 2007-08 to 2010-11, resulting in all appeals being allowed.
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