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TMI Blog2020 (1) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... account of the assessee with ICICI Bank, Dharwad branch at ₹ 9.16 lakh. In my opinion, when moneys are deposited in the bank account, the relationship that is constituted between the banker and the customer is one of the debtor and creditor and not of trustee and beneficiary. Applying this principle, the bank statements supplied by the bank to its constituent is only a copy of the constituent s account in the books maintained by the bank. It is not as if the bank statements are maintained by the bank as the agent of the constituent, nor can it be said that the pass book is maintained by the bank under the instructions of the constituent. Therefore, the bank statements supplied by the bank to the assessee in the present case could not be regarded as a book of the assessee, nor a book maintained by the assessee or under his instructions. As such, addition u/s 68 of the Act of the amount entered only in the bank statements was not justified -See BHAICHAND H. GANDHI [ 1982 (2) TMI 28 - BOMBAY HIGH COURT] Thus the amount found credited in the bank account of the assessee cannot be made an addition u/s 68 of the Act - Decided in favour of assessee. - ITA No.354/Bang/2019, ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While completing the assessment, in addition to the offered income, he made further addition of ₹ 9,16,300 towards unexplained cash credit in the account of ICICI Bank. The assessee went in appeal before the CIT(A), against the order of the Assessing Officer, who confirmed the addition made u/s 68 of the Act to the tune of ₹ 9,16,300. The CIT(A) though agreed with the A.O. with regard to the addition made u/s 68 of the Act, he gave direction to the A.O. to allow the opening balance in the bank account as deduction while calculating the cash deposits made form unexplained sources during the year. Against this, the assessee is in appeal before the Tribunal. 4. With regard to the reopening of assessment, which is not emanated from the order of the CIT(A), is dismissed. 5. With regard to grounds No.3 and 4, the learned AR submitted that the A.O. has made the additions as unexplained cash deposits in the bank account without considering the explanation offered by the assessee. According to the learned AR, the said amount deposited with the bank was emanated from the contract work carried out by the assessee and it is directly connected with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f proof. Therefore, the assessment made by the Assessing Officer, which are predominantly influenced by suspicion, cannot be upheld. In my opinion, mere surmises and conjectures that the assessee had deposited cash in bank account whenever there is cash shortage to make payment, cannot the basis for a predetermined approach without bringing any specific transactions or evidence brought on record by the Assessing Officer to support his version. If the Assessing Officer wants to assess the income of the assessee under normal procedure, heavy burden on him to bring on record necessary material to show that the assessee is not engaged in contract work of building construction. In the present case, there is only on the basis of suspicion, made an addition after accepting the income offered by the assessee on presumptive basis u/s 44AD of the Act, which cannot be upheld. Being so, the assessment of the assessee to be made u/s 44AD of the Act and the addition u/s 68 of the Act cannot be sustained. Section 44AD provides that where the assessee is engaged in eligible business as proprietor under that section, a sum equal to 8% of the gross receipts shall be deemed to be the profits and gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The stand of the assessee before the Commissioner of Income-tax (Appeals) and the Tribunal that the said amount of ₹ 14,95,300 was on account of business receipts had been accepted. The Ld. AR with reference to any material on record, could not show that the cash deposits amounting to ₹ 14,95,300 were unexplained or undisclosed income of the assessee. 9. In view of the above position, we are unable to hold that any substantial question of law arises in this appeal. 10. The appeal is dismissed. 7.2 The Chandigarh Bench of the Tribunal in the case of Nand Lal Popli vs. DC1T in ITA Nos. 1161 1162/Chd/2013, order dt. 14/06/2016, held as follows:- 9. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The issue to be decided by us is whether accepting the case of the assessee as taxable under the presumptive taxation as provided under section 44AD of the Act, the Assessing Officer can make addition under section 69C of the Act making the cash flow statement provided by the assessee the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such presumptive taxation can claim to have earned income @ 8% or above of the gross receipts. In that case, the provisions of sub-section (5) of the said section will be applicable to it, which reads as under: 44AD (5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in subsection (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB. 13. From the combined reading of sub-section (1) and sub-section (5), it is apparent that the obligation to maintain the books of account and get them audited is only on the assessee who opts to claim the income being less than 8% of the gross receipts. 7.3 Now coming to the argument of the learned D.R. that the addition has been made under section 68 of the Act, on which there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esumptive taxation has been formed in order to avoid the long drawn process of assessment in cases of small traders or in cases of those businesses where the incomes are almost of static quantum of all the businesses. 7.5 Applying the propositions of law laid down in the above case law cited supra to the facts of the case on hand, I delete the addition in question. 7.6 Even otherwise, in the present case, the Assessing Officer found certain deposits as unexplained in the bank account of the assessee with ICICI Bank, Dharwad branch at ₹ 9.16 lakh. In my opinion, when moneys are deposited in the bank account, the relationship that is constituted between the banker and the customer is one of the debtor and creditor and not of trustee and beneficiary. Applying this principle, the bank statements supplied by the bank to its constituent is only a copy of the constituent s account in the books maintained by the bank. It is not as if the bank statements are maintained by the bank as the agent of the constituent, nor can it be said that the pass book is maintained by the bank under the instructions of the constituent. Therefore, the bank statements su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank account with ICICI Bank as unexplained credit u/s 68 of the I.T.Act. 9. Against this, the assessee carried the appeal before the CIT(A), who confirmed the order of the Assessing Officer, by observing that since the assessee has failed to substantiate his claim that the cash deposits were part of business turnover as a contractor. However, he has given credit towards opening balance available in the assessee s bank account to be deducted from the cash deposits considered as unexplained by the A.O. 10. Against this, the assessee is in appeal before the Tribunal. The assessee has raised following grounds:- 1. The learned CIT(Appeals) erred in upholding the Order of the Assessing Officer in the manner in which he did. 2. The ld.CIT(Appeals) failed to appreciate the fact that the order passed by the Assessing Officer under section 143(3) r.w.s. 147 was bad in law and was liable to be struck down. 3. The ld.CIT(Appeals) erred in upholding the addition of ₹ 36,26,000/- as unexplained cash deposits made by the Appellant in his Bank Account without appreciating the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee to be assessed u/s 44AD of the Act on the reason that the assessee has not furnished any details of contract work done during the year. According to him, the assessee has not carried out any construction of building and Form No.26AS also have no details of contract receipts. According to him, the assessee has deposited cash into the bank account whenever there is a shortfall in cash for making payments towards share trading. This is a general observation made by the A.O. He had not brought on record any material to show that the assessee was not engaged in contract work and construction activities. In my opinion, when the assessee offered the income u/s 44AD of the Act, there is no necessity of maintaining any books of account by the assessee. It has given option to the assessee to offer the income under the presumptive basis and the same was opted by the assessee for the assessment year under consideration. The Assessing Officer is not entitled to make any guesswork and he has to make the assessment with reference to evidence and material brought on record. There must be something more than suspicion to support the assessment. A sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT vs. Surinder Pal Anand [2010] 192 taxmann 264), had held as follows:- 7. Section 44AD of the Act was inserted by the Finance Act, 1994 with effect from 1-4-1994. Sub-section (1) of section 44AD clearly provides that where an assessee is engaged in the business of civil construction or supply of labour for civil construction, income shall be estimated at 8 per cent of the gross receipts paid or payable to the assessee in the previous year on account of such business or a sum higher than the aforesaid sum as may be declared by the assessee in his return of income notwithstanding anything to the contrary contained in sections 28 to 43C of the Act. This income is to be deemed to be the profits and gains of said business chargeable of tax under the head profits and gains of business. However, the said provisions are applicable where the gross receipts paid or payable does not exceed ₹ 40 lakhs. 8. Once under the special provision, exemption from maintaining of books of account has been provided and presumptive tax at the rate of 8 per cent of the gross receipt itself is the basis for determining the taxable income, the assessee was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come under the head profits gains of business shall be deemed to be @ 8% or any higher amount. The first important term here is 'deemed to be which proves that in such cases there is no income to the extent of such percentage, however, to extent, income is deemed. It is undisputed that 'deemed' means presuming the existence of something which actually is not. Therefore, it is quite clear that though for the purpose of levy of income tax 8% or more may be considered as income, but actually this is not the actual income of the assessee. This is also the purport of all provisions relating to presumptive taxation. 11. Putting the above analysis, in converse, it can be easily inferred that the same is also true for the expenditure of the assessee. If 8% of gross receipts are 'deemed' income of the assessee, the remaining1 92% are also 'deemed' expenditure of the assessee. Meaning thereby that actual expenditure may not be 92% of gross receipts, only for the purposes of taxation, it is considered to be so. To take it further, it can be said that the expenditure may be less than 92% or it may also be more than 92% of gross receipts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory, unless- ( a ) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and ( b ) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause ( 23FB )of section 10. 14.4 The crucial words in the said section for the purposes of present appeal are 'any previous year an A.O. has found any sum credited in the books of account of the assessee. But can I say on the facts and circumstances of the present case that the A.O. has found any sum credited in assessee s books of account. Therefore, in the present case, the provisions of section 68 of the Act cannot be applied. Asking the assessee to prove to the satisfaction of the Assessing Officer, the expenditure to the extent of 92% of gross receipts, would also defeat the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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