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2020 (8) TMI 592 - AT - Income TaxAddition u/s 68 v/s 69 - unexplained deposit in the bank account - sum was not credited in the books of accounts, but the amount was found credited in the bank account of the assessee - HELD THAT - In the instant case, the deposit was made in the bank account, but not in the regular books of accounts maintained by the assessee. As per the provisions of section 68, the amount found credited in the books of accounts for which the assessee failed to offer explanation to the satisfaction of the AO required to be brought to tax u/s 68, whereas in the instant case, the said sum was not credited in the books of accounts, but the amount was found credited in the bank account of the assessee. The correct course of action for taxing the sums paid into the bank account is to tax u/s 69 of the Act. Neither the AO nor the Ld.CIT(A) has made addition u/s 69. On identical facts in the case of Smt.Asha Sanghavi 2019 (11) TMI 868 - ITAT VISAKHAPATNAM this Tribunal held that the cash deposits or deposits made in bank account required to be brought to tax u/s 69 and not u/s 68 AO is not permitted to make the addition u/s 68 of the Act in respect of the deposits made in the bank account. Accordingly, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. - Decided in favour of assessee.
Issues Involved:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961. 2. Justification of addition under Section 68 versus Section 69 of the Income Tax Act, 1961. 3. Admissibility of additional grounds raised by the assessee. Detailed Analysis: 1. Validity of Notice Issued Under Section 148: The assessee challenged the validity of the notice issued under Section 148, arguing it was bad in law. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the validity of the notice. The Tribunal did not find it necessary to adjudicate this issue separately as the primary contention revolved around the applicability of Section 68 versus Section 69. 2. Justification of Addition Under Section 68 Versus Section 69: The core issue was whether the Assessing Officer (AO) was justified in making an addition of ?40,00,500 under Section 68 for unexplained deposits in the bank account. The Tribunal noted that Section 68 pertains to credits found in the "books of accounts" maintained by the assessee, whereas the deposits in question were found in the bank account, not in the books of accounts. The Tribunal cited previous judgments, including the case of Mehul V. Vyas vs. Income Tax Officer and CIT vs. Bhaichand N. Gandhi, to support the view that a bank passbook or bank statement does not qualify as a "book" maintained by the assessee for the purposes of Section 68. The Tribunal concluded that the correct provision for taxing such deposits is Section 69, which deals with unexplained investments. As the AO and CIT(A) failed to make the addition under Section 69, the Tribunal found the addition under Section 68 unsustainable. The Tribunal stated: > "In the absence of any finding with regard to cash deposits recorded in the books of accounts of the assessee, the addition made by the AO u/s 68 in respect of cash deposits made in the bank account are unsustainable." 3. Admissibility of Additional Grounds Raised by the Assessee: The assessee raised an additional ground stating that the AO should have made the addition under Section 69 instead of Section 68. The Tribunal admitted this additional ground and found merit in the assessee's argument. The Tribunal noted: > "Since the facts are identical to the decision of Mehul V. Vyas (supra), respectfully following the view taken by the coordinate bench of ITAT, Mumbai, we hold that the addition made by the AO u/s 68 in respect of cash deposits made in the bank account is unsustainable." Conclusion: The Tribunal allowed the appeal of the assessee, setting aside the order of the CIT(A) and deleting the addition made by the AO under Section 68. The Tribunal did not find it necessary to adjudicate other grounds raised by the assessee, as the primary issue was resolved in favor of the assessee. The appeal was pronounced in open court on 29th July, 2020.
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