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TMI Blog2024 (12) TMI 1334X X X X Extracts X X X X X X X X Extracts X X X X ..... in the ordinary course of the business of the assessee. Addition u/s 68 of the Act in the case of the assessee is not sustainable - Decided in favour of assessee. - Shri Challa Nagendra Prasad, Judicial Member For the Assessee : Shri Suresh K Gupta, CA For the Revenue : Shri Om Prakash, Sr. DR ORDER This appeal is filed by the assessee against the order of the Ld. Addl./JCIT(Appeals)-1, Pune dated 22.01.2024 for the AY 2017- 18. The assessee in his appeal raised the following grounds: - 1. That the order passed by the Ld.CIT(Appeals) u/s 250 of the Income Tax Act, 1961 is bad in law and not justified because Ld.CIT(A) has dismissed the appeal simply on account of non-prosecution of the appeal by the appellant without appreciating the fact that section 251 of the I.T. Act does not provide any power to Ld.CIT(A) to dismiss the appeal for non-prosecution and the Ld.CIT(A) has to adjudicate the grounds of appeal before passing the order. 2. The Ld.CIT(A) has erred both in law and in facts of the case in not allowing sufficient opportunity to the appellant to represent its case before himself to adjudicate on all ground of appeal. 3. The order of Ld.CIT(A) and Ld. AO is unsustainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitute books of account. 4. Ld. Counsel for the assessee further referring to provisions of section 2(12A) of the Act which defines books or books of account submits that the definition of books under the Act is inclusive. A perusal of the definition shows that the same does not include bank passbook or bank statement. A conjoint reading of above provisions would thus leave to the conclusion that the addition u/s 68 of the Act can be made only where any amount is found credited in the books as defined u/s 2(12A) of the Act maintained by the assessee. For the above proposition the Ld. Counsel places reliance on the decision of the Hon ble Jurisdictional High Court in the case of CIT Vs. M/s Mayawati (338 ITR 563) and the decision of the coordinate bench in the case of Smt. Babbal Bhatia Vs. ITO in ITA No.5430/Del/2011 dated 08.06.2018. The Ld. Counsel thus submits that a cash credit appearing in assessee s passbook relevant to a particular previous year, in a case where the assessee does not maintain books of account does not attract the provisions of section 68 of the Act. 5. On the other hand, the Ld. DR submits that in the case of Janak Goyal Vs. DCIT the coordinate bench of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed to service. 4. Since the grievance raised vide additional ground goes to the root of the matter, we decided to hear the representatives of both the sides on this point of law. 5. Briefly stated, the facts of the case are that as per the ITD system, the Assessing Officer came to know that the assessee has deposited cash in bank accounts maintained with Indian Bank, State Bank of India and State Bank of Hyderabad and has also received rent. On finding that no return was filed, proceedings u/s 147 of the Act were initiated after recorded reasons and accordingly, statutory notice u/s 148 of the Act was issued and served upon the assessee. In response to the notice, the assessee filed returns of income for the respective assessment years. 6. The assessee was asked to explain the sources of the cash deposited in the bank accounts. The assessee filed cash flow statement alongwith with the submission that part of the cash deposited was received from sales and balance amount represents withdrawals made from other banks. 7. The Assessing Officer was of the opinion that the returned income of the assessee does not in any manner justify the claim of receipts of cash from sales and dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggarwal 22 Taxmann.com 94 which was affirmed by the Hon'ble High Court of Allahabad in 358 ITR 483. The ld. DR also relied upon the decision of the Hon'ble Bombay High Court in the case of Arun Kumar J. Muchhala [2017] 85 Taxmann.com 306. 13. The ld. DR concluded by stating that the additions have been made by the Assessing Officer because the assessee could not explain the sources of cash deposits in the bank accounts and it is immaterial to say that the additions cannot be made u/s 68 because in any case the additions have to be made. 14. Representative of both the sides were heard at length, case records carefully perused and judicial decisions carefully considered. The undisputed fact is that the cash was deposited in the bank accounts of the assessee. It is true that the returned income does not match the presumptive rate of tax on the gross turnover of the assessee. It is equally true that in the returns of income itself the assessee made it very clear that she is not maintaining books of account. If the revenue authorities were of the view that the returns have not been filed as per provisions of section 44AF of the Act, nothing prevented the officers to treat the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttled 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 maintained by the assessee or under his instructions. In our view, the Tribunal was justified in the conclusions at which it arrived. 18. The Hon'ble jurisdictional High Court of Delhi in the case of CIT Vs. Ms. Mayawati reported in 338 ITR 563 [DEL] has held as under: As the ITAT has come to the conclusion that Section 68 has no applicability to the facts of the present case as the assessee is not maintaining any books of accounts. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 maintained by the assessee or under his instructions. In our view, the Tribunal was justified in the conclusions at which it arrived. 21. In the case of Anandram Ratiani, the Hon'ble Guwahati High Court has also held that a perusal of section 68 of the Act shows that in relation to expression books the emphasis is on the word 'Assessee' meaning thereby that such books have to be books of the assessee himself and not of any other assessee. 22. It is corr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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