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TMI Blog2024 (1) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... offered by the tribunal. Thus wherein the addition u/s 68 was proposed on the basis of entries in the Bank Passbook, which cannot be treated as books of accounts of the assessee, therefore, the contention of the Ld. AR that addition u/s 68 cannot be made when no books of accounts are maintained by the assessee is worth concurring which is well supported by the analogy and well settled principle of law drawn by Hon ble Bombay HC in the case of Bhaichand N. Gandhi (supra). Thus addition made u/s 68 in case of the assessee, who is not maintaining books of accounts is bad in law and thus, is liable to be vacated. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT(A) now the assessee is an appeal before us. 5. At the outset Ld. AR of the assessee drew our attention to the copy of the notice u/s 143(2) dated 21.09.2018 for Limited Scrutiny under 'CASS'. It was the contentions of Ld. AR that the scrutiny was proposed to examine two issues:- (1) Cash deposit and transactions in property, (2) Capital gains/loss of sale of property. Ld. AR submitted that the case of the assessee has been selected for Limited Scrutiny, but, no addition has been made qua the questions raised in notice of Limited Scrutiny, on the contrary Ld. AO had focused and examined the unsecured loans received by the assessee and had made the additions u/s 68. Ld. AR in terms of aforesaid facts has submitted that the issues mentioned in the Limited Scrutiny notice were not the basis for the addition, but the addition was made on account of unsecured loan received by the assessee, which was not covered within the scope of Limited Scrutiny. Ld. AR in support of the contention that the issue, which was the basis for addition, was never an issue covered by Limited Scrutiny notice neither the case was converted into complete scrutiny, therefore, such addition has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside" his order and restore the order passed by the A.O. As we have quashed the order passed by the Pr. CIT under Sec. 263 on the ground of invalid assumption of jurisdiction by him, therefore, we refrain from adverting to and therein adjudicating the contentions advanced by the ld. A.R on the merits of the case, which thus are left open. ii) M/S Aakash Ganga Promoters & Developers vs Pr. CIT in ITA No. 164/Ckt./2019 dt. 18.12.2019, PN 111 to 129 of PB, relevant findings in para no. 20, PN 128 of PB. From the spirit and mandate of section 263 of the Act, which provides revisional powers to Pr. CIT/CIT in the cases where the assessment order or any other proceedings under this Act, passed by the AO is erroneous and prejudicial to the interests of the revenue. This section is itself a mini code wherein proceedings for revision has also been provided and as per this provision, the first and foremost requirement for invoking the revisional proceedings is that the ld. Pr. CIT/CIT shall call and examine the assessment records of any proceedings under this Act, which include scrutiny assessment records and if after applying his mind to such record o proceedings, he consider t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e we are inclined to proceed with this issue first by holding that, from the above submission and after examining of the records, we find that the Ld. CIT in his impugned order u/s 263 of the Act has exceeded his jurisdiction while holding the order of AO as erroneous in so far prejudicial to the interest of Revenue. In view of the above we hold that the ld. CIT has in his order u/s. 263 of the Act exceeded the jurisdiction by holding the order of AO as erroneous in so far as prejudicial to the interest of Revenue on those items which are not emanating from the AIR. Thus, we are inclined to adjudicate only those matters which are emanating from the AIR as discussed above. 6. Ld. AR also submitted written synopsis while arguing against the addition made by the Ld. AO and upheld by the Ld. CIT(A). The written synopsis furnished is extracted as under: Asha Soni, Bilaspur AY 2017/18 ITA No. 99/RPR/2022 (Assessee) Ground no. 1 Submission of assessee l. Loan received from:- Mission Dealmark P. Ltd. Rs. 10,00,000/- Starlink Iron & Steel P. Ltd. Rs. 25,00,000/- Rs. 35,00,000/- 2. Documents filed before AO: Documents Mission Dealmark P. Ltd. Starlink Iron & Steel P. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81/Mum/2014 dt. 28.08.2016, relevant observations of AO at para no. 20 of High Court's order. - BST Infratech Ltd. vs DCIT (2023) 199 ITD 6 (Kol.) - Delhi High Court in case of CIT vs. Vrindavan Farms (P) Ltd. (2015) 94 CCH 329 l)el.), relevant finding of AO at para no. 3, 2 11 d to 4th line. - Prabhatam Investment P. Ltd. vs ACIT, order dt. 17.4.2017 in ITA no. 2525/Del/2015 of Delhi ITAT. ii) Allegation of shell/paper company - Even such allegation only in respect of one lender i.e. Mission Dealmark, who advanced loan of Rs. 10,00,000/- - AO/DDIT (Inv.) did not conduct any enquiry from the AO of lender companies. View on the status of lender could not have been expressed by the AO of assessee but by their own AO's. - Financial affairs of lenders being accepted in their case/ return. It has not been branded as shell/paper company by its AO. - Nothing brought on record as to how the lenders were held to be shell companies. Only reference is data in website of moneycontrol.com. It is a website of private party, nothing brought on record to support such allegations. - Nothing brought on record from any Government/MCA records. iii) Allegations levelled by A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings in para no. 8, PN 110 of PB. ii) M/S Aakash Ganga Promoters & Developers vs Pr. CIT in ITA No. 164/Ckt./2019 dt. 18.12.2019, PN 111 to 129 of PB, relevant findings in para no. 20, PN 128 of PB. iii) Sanjeev Kumar Khemka vs Pr. CIT in ITA No. 1361/kol./2016 dc. 02.06.2017. 6. Ld. AR on behalf of the assessee further submitted that as per ground no. 2 & 3 of the assessee's appeal the addition made by the Ld. AO was illegal since the assessee in present case is not maintaining any books of accounts nor is required to maintain the books of accounts under the provisions of the Act. It was therefore, the submissions that, provisions of sections 68, wherein it is the pre-condition that the cash credit which is to be treated as unexplained should be found to be credited in books of the assessee maintained for the previous year. In support of this contention Ld. AR of the assessee placed his reliance on following judicial pronouncements, wherein Hon'ble courts and coordinate benches of the ITAT has held that addition u/s 68 could not have been made in absence of books of accounts. i) Bhaichand N. Gandhi (1983) 141 ITR 67 (Mum.), PN 72 to 74 of PB, para no. 5, PN 74 of ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sence of the same found credited in the 'books' of the assessee maintained for the previous year, cannot be brought to tax by invoking the provisions of Section 68 of the Act. In this respect, we draw strength from the decision of the Hon'ble Bombay High Court in the case of CIT Vs Bhaichand N. Gandhi (1983) 141 ITR 67 (Bombay) wherein the High Court has held as under:- "As the Tribunal has pointed out, it is fairly well settled that when moneys are deposited in a bank, the relationship that is constituted between the banker and the customer is one of debtor and creditor and not of trustee and beneficiary. Applying this principle, the pass book 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 pass book is 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. 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 maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V. Vyas Vs. ITO (2017) 16 4 ITD 296 (Mum) and ITO, Barabanki Vs. Kamal Kumar Mishra (2013) 33 taxamann.com 610 (Lucknow). 10. We find that as stands gathered from the records, the addition aggregating to Rs. 4.03 lacs sustained by the ld. CIT(A) is in respect of the cash deposits in the bank accounts of the assessee, and not in any 'books' of the assessee for the year under consideration. We thus are of the considered view that in the backdrop of the aforesaid settled position of law, the addition made by the A.O in respect of the cash deposits of Rs. 7,13,000/- in the bank accounts of the assessee by invoking Section 68 has to fail, for the very reason that as per the judgment of the Hon'ble Bombay High Court in the case of CIT Vs. Bhaichand N. Gandhi (1983) 141 ITR 67 (Bombay), a bank pass book or bank statement cannot be considered to be a 'book' maintained by the assessee for any previous year for the purpose of Section 68 of the Act. Therefore, on this count itself the impugned addition made and sustained deserves to be deleted and we direct to delete the same. Since we have quashed the addition on the ground that no such addition could have been validly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the material available before us that the assessee Smt. Asha Soni has not maintained any books of accounts, neither she was required to maintain books of accounts as prescribed under the provisions of I.T. Act. Since her source of income are only salary, house property and other sources. It is also a fact that the addition on account of unexplained cash credit has been made u/s 68 r.w.s. 115BBE by the Ld. Assessing Officer, which has been further affirmed by the Ld. CIT(A) without observing that the addition should not have been made u/s 68. The contention of the revenue based on judgment of the coordinate bench of the ITAT, Delhi in the case of Smt. Gloria Eugenia Rynjah Banerji vs. ITO (supra) cannot be subscribed to as following the judicial discipline we are bound to follow the ratio of law and analogy drawn by Hon'ble Bombay High Court in the case of Bhaichand N. Gandhi (supra), which has not been considered while decision was offered by the tribunal. Under the factual matrix of the present case wherein the addition u/s 68 was proposed on the basis of entries in the Bank Passbook, which cannot be treated as books of accounts of the assessee, therefore, the contention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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