2024 (8) TMI 872 - AT - Income Tax

Addition u/s 68 - unexplained cash credit - in assessee s case, no such books of accounts have been maintained - HELD THAT - The provision regarding unexplained cash credit has been invoked after verifying and taking cognisance of the cash deposits and the savings account of the assessee with Bank of Baroda. Thus, the transaction was very well recorded in the bank statement and, per se, the bank statement which is savings account of the assessee has to be treated as books of the assessee as the assessee is an individual and is not filing books of account in the common parlance that of the Company s books of account. Thus, the contention of the assessee that Section 68 of the Act cannot be invoked does not sustain. As regards to the component of cash deposits assessee before the CIT(A) has categorically mentioned that the sale receipt of property sold was received in cheques and he has explained these receipts correctly for which the CIT(A) has accepted the assessee s contention. The component of cash deposit cannot be corelated with the sale receipts of the property as the cash component is related to the assessee s savings account for which the assessee has given explanation are out of cash deposits made by the assessee out of his known source of income and the same was duly submitted as the assessee is having source of income from house property, income from other sources and income from agricultural activity. Since the said aspects should have been taken into consideration and should have been verified by the AO, therefore, on merit, this aspect requires to be remanded back to the file of the AO for proper adjudication and verification as per Income Tax provisions. Appeal of the assessee is partly allowed for statistical purpose.

Summary

Issues:
- Validity of jurisdiction of the Assessing Officer without an order under Section 127 of the Act
- Addition of Rs. 34,30,000/- as unexplained cash credit under Section 68 of the Act
- Assessment of income based on cash deposits and property transactions

Analysis:
The appeal was filed against the order passed by the CIT(A) for the Assessment Year 2016-17. The assessee declared a total income of Rs. 1,80,270/-, which was selected for limited scrutiny regarding capital gains computation, cash deposits, and property sale details. The Assessing Officer made additions totaling Rs. 2,65,60,270/-, treating certain amounts as unexplained investments and cash credits under Section 68 of the Act, along with Short Term Capital Gain. The CIT(A) partially allowed the appeal.

The delay in filing the appeal was condoned. The assessee contended that the addition of Rs. 34,30,000/- as unexplained cash credit under Section 68 was erroneous since no books of accounts were maintained, citing relevant case laws. The AR argued that Section 68 requires the existence of maintained books, which were absent in this case. The AR also highlighted the legal criteria for invoking Section 68.

On the other hand, the DR supported the invocation of Section 68, emphasizing the recorded cash deposit in the bank statement without any explanation from the assessee. The Tribunal examined the arguments and found that Section 68 was appropriately invoked based on the bank statement evidence, considering it as the assessee's 'books' due to being an individual. However, the Tribunal noted the need for further verification regarding the cash deposits and their correlation with the property sale receipts, directing a remand to the Assessing Officer for proper adjudication and verification in line with Income Tax provisions.

Ultimately, the appeal was partly allowed for statistical purposes, with the Tribunal emphasizing the importance of providing the assessee with a hearing and adhering to principles of natural justice during the reassessment process.