2019 (1) TMI 264 - AT - Income Tax

Addition u/s 68 - unexplained cash deposits - Held that - As decided in VIJAY KUMAR PROP. V.K. MEDICAL HALL C/O KAPIL GOEL, ADV. VERSUS ITO WARD-2 FARIDABAD. 2018 (11) TMI 1550 - ITAT DELHI under similar situation section 68 can be applied only where, there are sum found credited in books of account maintained by assessee. No doubt passbook /bank statement, are maintained by a bank for its customers. - since no books of account are maintained in the ordinary course of business of the assessee, no such addition u/s 68 of the Act is tenable. Also AO applied section 68 and made additions in hands of assessee, as unexplained cash credits, to such amount, which has been found deposited by assessee in his saving bank account. To our mind in present facts of case section 69 should have been initiated by Ld.AO. It is unfortunate that Assessing Officers blindly apply provisions, which can be fatal to the interest of Revenue. However as a Tribunal, we are not competent to make addition u/s 69A of the Act, by virtue of the decision of Smt. Sarika Jain vs. CIT 2017 (7) TMI 870 - ALLAHABAD HIGH COURT - Decided in favour of assessee.

Summary

Issues Involved:
Assessment of unexplained cash deposits under section 68 of the Income Tax Act for the assessment year 2010-11.

Detailed Analysis:

Issue 1: Unexplained Cash Deposits
The appellant filed a return of income declaring an amount inclusive of agricultural income and deductions. The assessing officer completed the assessment ex-parte by making additions on account of unexplained cash deposits in various bank accounts of the appellant. Additionally, certain deductions claimed by the appellant were disallowed, and agricultural income was treated as undisclosed income. The CIT(A) partly allowed the appeal, leading to the appellant appealing before the Tribunal.

Issue 2: Legal Grounds
During the hearing, the appellant's counsel argued that the issue regarding the addition of cash deposits under section 68 was previously adjudicated by the ITAT 'F' Bench in a similar case. The counsel contended that since the appellant did not maintain books of account and had income from 'other sources' and agriculture, the addition under section 68 was not tenable in law. The counsel supported the argument with various case laws.

Issue 3: Tribunal's Analysis
After hearing both parties and considering the case laws cited, the Tribunal found that since the appellant did not maintain books of account, the addition under section 68 was not sustainable. The Tribunal referred to the decision of the ITAT 'F' Bench in a similar case where it was held that section 68 is applicable only when credits are found in books of account maintained by the assessee. The Tribunal agreed with the proposition that section 68 does not apply in cases of cash deposits in saving bank accounts where no books of account are maintained.

Issue 4: Decision and Ruling
The Tribunal allowed the additional ground raised by the appellant, leading to the deletion of the addition made by the assessing officer under section 68. Consequently, the other grounds raised by the appellant were deemed infructuous and dismissed. The Tribunal ruled in favor of the appellant, holding that the addition under section 68 was not sustainable in the present case, and therefore, deleted the same.

In conclusion, the Tribunal allowed the appeal of the assessee, ruling that the addition under section 68 for unexplained cash deposits was not sustainable due to the appellant not maintaining books of account. The decision was based on legal precedents and interpretations of relevant provisions of the Income Tax Act.