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TMI Blog2020 (12) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 23-11-2020 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member For the Assessee : Shri G.V.N.Hari, AR For the Revenue : Shri D.K.Sonowal, CIT, DR ORDER PER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : This appeal is filed by the assessee and cross appeal filed by the revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-1, Guntur in Appeal No.10129/2018-19 dated 26.03.2019 for the Assessment Year (A.Y.)2011-12 and cross objections are filed by the assessee in support of the order of the Ld.CIT(A). 2. All the grounds of appeal are related to sustaining the addition of ₹ 74,91,800/- out of the total addition of ₹ 1,89,00,000/- made by the Assessing Officer (AO) u/s 68 of the Income Tax Act, 1961 (in short Act ). In this case, the assessee filed the return of income admitting total income of ₹ 32,53,980/- for the A.Y.2011-12. Subsequently, the assessment was reopened by issue of notice u/s 148 of the Act on 22.03.2018 and completed the assessment u/s 143(3) r.w.s. 147 of the Act on total income of ₹ 2,21,53,980/- and made the addition of ₹ 1,89,00,000/- u/s 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash deposits of ₹ 1,89,00,000/- in the bank account maintained by the assessee at Andhra Bank, Brundavan Gardens Branch A/c No.135910100008726. The deposits were made by Shri Prasad, Shri K.Venugopal Reddy and A.Kotaiah who are the employees of the assessee s firm/company. The AO disbelieved the explanation of the assessee that the deposits represent the sale proceeds of agricultural land and treated the same as unexplained cash credits for the F.Y.2010-11 relevant to the A.Y.2011-12 and accordingly made the addition in the hands of the assessee u/s 68 and protectively in the hands of M/s Ravichandra Textiles Pvt. Ltd. The AO made the addition of ₹ 2,88,26,250/- in the hands of M/s Ravichandra Textiles Pvt. Ltd the purchaser of the said agricultural land on protective basis. 3. Against the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) deleted the addition of ₹ 1,14,08,200/- and confirmed the balance addition of ₹ 74,91,800/-. Accordingly, the Ld.CIT(A) allowed the appeal partly. The Ld.CIT(A) observed that the property relating to agricultural land to the extent of 8.50 cents at Ponnekallu Village, Guntur and agricultur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no evidence for receipt of money over and above registered amount, credence cannot be given to the assertion made by the appellant. 4. Against which the assessee is in appeal before this Tribunal. The department also filed cross appeal challenging the deletion of addition of ₹ 1,14,08,200 and the assessee has filed cross objection. Both the appeals and cross objections are related to the addition made by the AO u/s 68 of the Act. 5. By the petition dated 24.02.2020, the assessee filed additional ground in cross objections challenging the validity of addition u/s 68 of the Act in respect of cash deposits in bank account. The additional ground raised by the assessee reads as under : On the facts and in the circumstances of the case, whether the assessing officer erred in making addition u/s 68 of the Income Tax Act, 1961 in respect of unexplained credits in the bank account when the bank account is not a book of account? The assessee argued that the additional ground is a legal ground and all the material facts are available in the assessment record, no fresh material or the enquiry is required for adjudication and hence requested to admit the additional groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Babu to Sri Sikhakolli Mastan Rao, supervisor of M/s Ravichandra Textiles Pvt Ltd. for a consideration of ₹ 1,53,00,000/- and ₹ 1,71,00,250/- on 22.12.2010 and the sale proceeds were deposited in his bank account. The assessee explained the source, the receipt from his son from sale of agricultural land. The assessing officer has not conducted any enquiry to disprove the contention of the assessee or collected any information to controvert the submission of the assessee. The relevant details of his son Kalyana Babu who stated to have deposited the cash in the bank account are available in the sale deed or can be obtained from the assessee. Once the assessee explains the source, the burden shifts on the department unless the same is discharged. After having explained the source by the assessee the AO has failed to discharge the burden. 8.1. Be that as it may, the assessee has raised cross objection challenging the addition made u/s 68 in respect of deposits made in the bank account. Since, the cross objection covers the entire assessment, we, first take up the cross objection filed by the assessee and adjudicate the same as under : As per section 68 of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention of the Id. A.R that an addition under Section 68 can only be made where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee either offers no explanation about the nature and source as regards the same, or the explanation offered by him in the opinion of the assessing officer is not found to be satisfactory. That before adverting further, we herein reproduce the relevant extract of the aforesaid statutory provision, viz. Section 68, which reads as under: - Cash Credits. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.......... That a bare perusal of the aforesaid deeming section therein reveals that an addition under the said statutory provision can only be made where any sum is found credited in the books of an assessee maintained for any previous year. Thus, the very sine qua non for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pass book is maintained by the bank under the instructions of the constituent. In view of this, the Tribunal was, with respect, justified in holding that the pass book supplied by the bank to the assessee in the present case could not be regarded as a book of the assessee, that is, a book maintained by the assessee or under his instructions. In our view, the Tribunal was justified In the conclusions at which it arrived. We find that the aforesaid view of the Hon'ble jurisdictional High Court had thereafter been followed by a 'SMC of the ITAT Mumbai bench in the case of Smt. Manshi Mahendra Pitkar Vs. ITO 1(2), Thane (2016) 73 taxmann.com 68 (Mumbai Trib.) wherein it was held as under: - I have carefully considered the rival submissions. In the present case the addition has been made by the income tax authorities by treating the cash deposits in the bank account as an unexplained cash credit within the meaning of sect/on 68 of the Act The legal point raised by the assessee is to the effect that the bank Pass book is not an account book maintained by the assessee so as to fail within the ambit of section 68 of the Act. Under section 68 of the Act, it is only w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT Vs. Bhaichand N.Gandhi (supra). Similar view was taken by the coordinate Bench of ITAT, Delhi in the case of Smt Babbal Bhatia in TS-306-ITAT-2018. In the instant case, though the assessee has maintained the books of accounts, the cash deposits made in the bank account were not found credited in the books of accounts. The entire transactions were made outside the books of accounts. 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. During the appeal hearing, the Ld.DR did not bring any other decision to support the revenue s contention that the cash deposits made in the bank account to be brought into the purview of section 68 of the Act. The case law relied upon by the Ld.DR in the case of Sachdeva (supra) though related to sale of jewellery and the failure of the assessee to prove the genuineness of sale, it was not related to the addition u/s 68. The case law relied upon by the Ld.DR is distinguishable and does not help the Revenue s case. Since the facts are identical to the decision of Mehul V ..... X X X X Extracts X X X X X X X X Extracts X X X X
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