Income Tax Appellate Tribunal - Raipur
Asha Soni, Bilaspur vs Deputy Commissioner Of Income Tax, ... on 10 January, 2024
आयकर अपीलीय अिधकरण, रायपुर यायपीठ, रायपुर
IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR
ी र वश सूद, याियक सद य एवं ी अ ण खोड़ पया, लेखा सद य के सम ।
BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM
(ITA No. 99/RPR/2022)
(Assessment Year: 2017-18)
Asha Soni V Deputy Commissioner of Income Tax
145, Agrawal Colony, s Circle-1(1), Bilaspur
Priyadarshini Nagar, Bilaspur (C.G.)
PAN: AJEPS8536L
(अपीलाथ /Appellant) . ( यथ / Respondent)
.
िनधा रती क ओर से /Assessee by : Shri R.B. Doshi, CA
राज व क ओर से /Revenue by : Shri Satya Prakash Sharma, Sr. DR
सुनवाई क तार ख/ Date of Hearing : 19.10.2023
घोषणा क तार ख/Date of : 10.01.2024
Pronouncement
आदे श / O R D E R
Per Arun Khodpia, AM:
The captioned Appeal is filed by the assessee against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2017-18 dated 25.03.2022, which in turn resulted from the order of Ld. Income Tax Officer, Circle-1(1), Bilaspur, under section 143(3) of the Income Tax Act, 1961 dated 26.12.2019.
2. The grounds of appeal raised by the assessee are as under:
1. Ld. CIT(A) erred in confirming addition of Rs. 35,00,000/- made by AO u/s 68 on account of unsecured loans taken by the appellant. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, baseless & contrary to evidence on record and is not justified.
2 ITA 99/RPR/2022 Asha Soni
2. Without prejudice to ground no. 1, addition made by the AO and confirmed by CIT(A) is illegal inasmuch as provisions of sec. 68 is not applicable in the facts of the case.
3. Ld. CIT(A) erred in not adjudicating grounds raised by appellant, relating to the validity of assessment order being illegal and the same having been passed in violation of principles of natural justice.
4. Ld. CIT(A) erred in confirming the addition made by AO without appreciating the facts that the issue relating to addition is not covered by scope of "limited scrutiny".
5. The appellant reserves the right to add, amend or modify any of the grounds of appeal.
3. The brief facts of the case are that the assessee is an "individual", has filed her return of income electronically for the A.Y. 2017-18 on 14.03.2018, declaring total income of Rs. 15,90,200/-, which includes agriculture income of Rs. 94,750/-. The case of the assessee was selected for scrutiny through 'CASS' (Under Limited Scrutiny). Notice u/s 143(2) of the Income Tax Act, 1961 dated 21.09.2018 was issued and duly served. Notice u/s 142(1) of the Act, along with questionnaire dated 13.08.2019 was issued and duly served upon the assessee. In response to the aforesaid notices, the assessee has furnished submissions through e-proceedings. The main source of income of the assessee were salary, house property and income from other sources. After discussions and deliberations an amount of Rs.35,00,000/- credited by M/s Mission Dealmark Private Limited and M/s Starlink Iron & Steel Private Limited in the form of unsecured loan 3 ITA 99/RPR/2022 Asha Soni to the assessee are treated as unexplained cash credits u/s 68 r.w.s.
115BBE of the Income Tax Act, and accordingly, the income of the assessee was assessed at Rs.50,90,200/-. Aggrieved by the order of Ld. AO u/s 143(3), effecting the aforesaid addition, the assessee preferred an appeal before the Ld. CIT(A), wherein the contentions of the assessee could not find favour and therefore, the appeal of the assessee has been dismissed.
4. Being aggrieved, to assail against the observations of the 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 4 ITA 99/RPR/2022 Asha Soni 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 been made without valid jurisdiction and thus, have no legs to stand in the eyes of law. In support of such argument, Ld. AR relied upon following judgments:
i) M/S Su-Raj Diamond Dealers Pvt. Ltd. vs Pr. CIT in ITA No. 3098/Mum/2019 dt. 27.11.2019 , PN 105 to 110 of PB, relevant findings in para no. 8, PN 110 of PB.
We shall now in the backdrop of our aforesaid observations deliberate on the validity of the order passed by the Pr. CIT under Sec. 263. As observed by us hereinabove, the Pr. CIT had held the order passed by the A.O under Sec. 143(3), dated 08.12.2016 as erroneous, in so far it was prejudicial to the interest of the revenue, for the reason, that he had failed to carry out proper investigation as regards the issue of valuation of the "closing stock‟ as reflected in the audited accounts of the assessee. We are of a strong conviction that now when the case of the assessee was selected for limited scrutiny for the reasons viz. (i). Large other expenses claimed in the P&L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares, therefore, no infirmity could be attributed to the assessment framed by the A.O on the ground that he had failed to deal with other issues which though did not fall within the realm of the limited reasons for which the case was selected for scrutiny assessment. In other words, the Pr. CIT in the garb of his revisional jurisdiction u/s 263 cannot be permitted to traverse beyond the jurisdiction that was vested with the A.O while framing the assessment. In sum and substance, revisional jurisdiction cannot be exercised for broadening the scope of jurisdiction that was vested with the A.O while framing the assessment. As a matter of fact, what cannot be done directly cannot be done indirectly. Accordingly, in terms of our aforesaid observations, we are of the considered view that as the A.O had aptly confined himself to the issues for which the case of the assessee was selected for limited scrutiny, therefore, no infirmity can be attributed to his order, for the reason, that he had failed to dwell upon certain other issues which did not form part of the reasons for which the case was selected for limited scrutiny under CASS. We thus not being able to concur with the view taken by the Pr. CIT that the order passed by the A.O under Sec. 143(3), dated 08.12.2016 is erroneous, therefore, "set 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.
5 ITA 99/RPR/2022 Asha Soni
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 that any order passed by the AO is erroneous and prejudicial to the interest of the revenue, then, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry, he deems necessary, pass such order thereon, as the circumstances of the case justify, which includes an order of enhancement or modification assessment or cancelling the assessment with a direction to pass fresh assessment order. In the present case, from the order sheet dated 14.1.2019, it is vivid that the JCIT, Range-2, Sambalpur sent a proposal for initiation of revisional proceedings u/s.263 of the Act to ACIT, Sambalpur and ld. ACIT, Sambalpur after making observation regarding requirement of examination of certain issues forwarded the proposal to Ld. PCIT along with draft notice u/s.263 which was approved by ld. PCIT in a manner in which administrative actions are proved. Hence, we are compelled to hold that the initiation of revisional proceedings, issue of notice has been done on the proposal of JCIT, Range-2, Sambalpur through ACIT, Sambalpur and mandate of procedure as provided in section 263 of the Act has not been followed and on this count, the impugned order u/s.263 of the Act also become unsustainable. While taking this view, we respectfully follow the order of ITAT Kolkata in the case of Manish Chirania order of Pune Bench of ITAT in the case of Span Overseas Ltd and order ITAT Mumbai 'F' Bench in the case of Vinay Pratap Thacker (supra).
(iii) Sanjeev Kumar Khemka vs Pr. CIT in ITA No. 1361/kol./2016 dc. 02.06.2017.
Now coming to the facts of the instant case, we find that the instant case was selected on the basis of AIR Information as evident from the order of AO under section 143(3) of the Act. There is also no whisper in the order of the AO for expanding the scope of limited scrutiny after obtaining the permission from the Administrative CIT. The ld. DR has also failed to bring anything contrary to the argument of the ld. AR. Therefore, in our considered view the scrutiny should 6 ITA 99/RPR/2022 Asha Soni have been limited only to the information emanating from the AIR. Admittedly, the assessee has claimed to have filed an appeal before Ld. CIT(A) challenging the jurisdiction exceeded by the AO while framing the assessment order u/s 143(3) of the Act. We find that the impugned issue being legal in nature and goes to the root of the matter therefore 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. Starlink Iron
Ltd. & Steel P. Ltd.
Confirmation 31 & 32 50
Bank statement 33 & 34 51 to 54
Acknowledgment 35 55
Audited financial statements 36 to 49 56 to 63
Balance sheet 42 59
3. Enquiry conducted by AO
7 ITA 99/RPR/2022
Asha Soni
i) AO conducted enquiry through PDIT (Inv.) & DDIT (Inv.) Kolkata.
Report of enquiry at PN 64 of PTA.
ii) Both lenders again submitted all the above documents, as referred to in
report of DDIT (Inv.). Both lenders again confirmed having given loan [PN 65 & 66, para (c)]. Reliance on CIT vs Metachem Industries (2000) 245 ITR 160 (MP).
iii) Absolutely no adverse observation of (Inv.), Kolkata. No allegation of shell companies, no adverse comments on resources available with lenders.
4. Burden cast on assessee discharged. No addition could have been made. Reliance on: -
- CIT vs Orissa Corporations (P) Ltd. (1986) 159 ITR 78 (SC), PN 83 to 88 of PB, relevant findings on PN 88 of PB, para no. 13.
- Prabhatam Investment P. Ltd. vs ACIT (2017) 49 CCH 299 (Del., Trib.), PN 93 to 104 of PB, relevant conclusion in para 18.5 of PN 102 of PB.
- Pr. CIT vs Laxman Industrial Resources Ltd. (2017) 397 ITR 106 (Del.).
- CIT vs Jai Kumar Bakliwal (2014) 366 ITR 21 7, 223 & 224 (Raj.)
- Claris Lifesciences Ltd. vs ACIT (2008) 298 ITR (AT) 403 (Ahd.)
- CIT vs Metachem Industries (2000) 245 ITR 160 (MP), PN 89 to 92 of PB.
5. Reply on some observations of AO
(i) Meager/nil income & no business receipts Returned income of lenders are as under:-
Particulars Amount (Rs.) PN of PB Mission Dealmark P. Ltd. 15,32,482/- 35 Starlink Iron & Steel P. Ltd. 11,90,568/- 55 Revenue from operation of lenders are as under :-
Particulars Amount (Rs.) PN of PB Mission Dealmark P. Ltd. 78,51,854/- 43 Starlink Iron & Steel P. Ltd. 36,80,467/- 60 Thus, the observation of AO regarding low income & profit of lenders is totally incorrect.
8 ITA 99/RPR/2022 Asha Soni It is not the case that lenders gave loan out of their income. Lenders had substantial net worth, which stood accepted in their own case. Nothing brought on record to dispute net worth of lenders. In view of this, magnitude of income was not relevant. Reliance on: -
- Anjani Associates vs ITO, ITA no. 27/RPR/2018 dt. 10.08.2018, relevant observations in para no. 16, last 7 lines.
- DCIT vs Gandhi capital (P) Ltd. (2022) 194 ITD 396 (Surat).
- Pr. CIT vs AMI Industries (India) P. Ltd. (2020) 424 ITR 219 (Bom.), out of ITA no. 5181/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 AO on the basis of analysis of financial statements of lenders are based on AO's own interpretation. AO of assessee was not competent to comment upon the financial statements of lenders and it was the AO of the lenders whose view could have been material. The AO of lenders has not made any adverse observations and is accepting the resources available in the hands of lenders.
6. Conclusion of Id. CIT(A)
i) Ld. CIT (A) observed that the report of DDIT (Inv.) brands the lenders as shell companies and that Investigation Wing unearthed incriminating material.
9 ITA 99/RPR/2022 Asha Soni
ii) Such observations of CIT (A) are baseless and arbitrary and contrary to material on record. There is nothing in the report of Investigation Wing (PN 64 of PB) which alleges that lenders were shell companies or that there was any incriminating material unearthed.
Ground no. 2 Submission of the assessee l. Ground no. I of first appeal assails that the assessment order is illegal, ab initio void.
2. Assessee does not maintain books of account, nor required to maintain it. Deriving income from salary, house property and other sources. Computation of income at PN 68 to 71 of PB.
3. In absence of books of accounts, addition u s 68 could not have been made. Reliance on:-
i) Bhaichand 11. Gandhi (1983) 141 ITR 67 (Mum.), PN 72 to 74 of PB, para no. 5, PN 74 of
ii) Mehul V. Vyas vs ITO (2014) 164 ITD 296 (Mum.)
iii) ITO vs Kamal Kumar Mishra (2013) 143 ITT) 686 (Lucknow)
iv) Kuldeep Jiwan Mahant vs ITO in ITA No. 105/RPR/2019 cit. 19.07.2022, PN 75 to 82 of PB, relevant findings on PN 81 of PB, para no. 8.
v) Amitabh Bansal vs ITO (2019) 175 ITT) 401 (Del.) Ground no. 4 Submission of assessee l. Case selected for "limited scrutiny". Notice u/s 143(2) at PN 16 to 19 of PB. Scope of "limited scrutiny" being examination of cash deposit and transaction in property (PN
16).
2. Addition made on account of unsecured loan received by the assessee. Not covered within the scope of "limited scrutiny".
3. Transaction in property not covered by sec. 68 but by sec. 69. "Limited scrutiny" did not include examination of loans.
4. Case not converted into complete scrutiny case.
5. Addition illegal and unsustainable. Reliance on:
i) M/s Su-raj Diamond Dealers Pvt. Ltd. vs Pr. CIT in ITA No. 3098/Mum/2019 dt.
27.11.2019 , PN 105 to 110 of PB, relevant findings in para no. 8, PN 110 of PB.
10 ITA 99/RPR/2022 Asha Soni
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) Mehul V. Vyas vs ITO (2014) 164 ITD 296 (Mum.)
iii) ITO vs Kamal Kumar Mishra (2013) 143 ITT) 686 (Lucknow)
iv) Kuldeep Jiwan Mahant vs ITO in ITA No. 105/RPR/2019 cit. 19.07.2022, PN
75 to 82 of PB, relevant findings on PN 81 of PB, para no. 8.
v) Amitabh Bansal vs ITO (2019) 175 ITT) 401 (Del.)
7. Ld. AR further drew our attention to page no 79 to of the Assessee's paper book showing the view adopted by the coordinate bench of the 11 ITA 99/RPR/2022 Asha Soni ITAT, Raipur in the case of Kuldeep Jiwan Mahant (supra), wherein the ratio of law laid down by Hon'ble Bombay High Court in the case of CIT vs. Bhaichand N. Gandhi (supra) has been adopted and observed as under:
7. We have considered the submissions of the ld. AR of the assessee, carefully perused facts of the case and gone through the judgments relied upon by the assessee. In the circumstances of the present case the addition u/s 68 was made by the Ld. AO and confirmed by the Ld. CIT(A) based on the cash deposit in the bank, which are evident from entries in the bank statement / passbook of the assessee. In this regard, the decision in the case of Dr Vishan Swaroop Gupta Vs. IncomeTax Officer, passed in ITA 13/JP/2020, is relevant wherein the other judgments i.e. CIT Vs. Bhaichand N Gandhi 141 ITR 67 (Bom.), Smt. Manshi Mahendra Pitkar Vs. ITO 1(2), Thane (2016) 73 taxmann.com 68 (Mumbai Trib.), Smt. Madhu Raitani Vs. ACIT (2011) 10 Taxmann.com 206 (Gauhati)(TM), Mehul v. Vyas Vs. ITO(2014) 164 ITD 296(Mum) and ITO, Barabanki Vs. Kamal Jumar Mishra (2013) 33 taxmann.com 610(Lucknow) etc. are discussed, and concluded with the following observation:
9. After having gone through the facts and circumstances, we observe that credit in the 'bank account' of an assessee cannot be construed as a credit in the 'books' of the assessee, for the very reason that the bank account cannot be held to be the 'books' of the assessee.
Though, it remains as a matter of fact that the 'bank account' of an assessee is the account of the assessee with the bank, or in other words the account of the assessee in the books of the bank, but the same in no way can be held to be the 'books' of the assessee. We have given a thoughtful consideration to the scope and gamut of the aforesaid statutory provision of Section 68, and are of the considered view that an addition made in respect of a cash deposit in the bank account of an assessee, in the absence 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:-
12 ITA 99/RPR/2022 Asha Soni "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 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 Bombay High Court had thereafter been followed by a 'SMC' bench of the ITAT, Mumbai 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 section 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 fall within the ambit of section 68 of the Act. Under section 68 of the Act, it is only when an amount is found credited in the account books of the assessee for any previous year that the deeming provisions of section 68 of the Act would apply in the circumstances mentioned therein. Notably, section 68 of the Act would come into play only in a situation Where any sum is found credited in the books of an assessee..........., The Hon'ble Bombay High Court in the case of Shri Bhaichand Gandhi (supra) has approved the proposition that a bank Pass Book maintained by the bank cannot be regarded as a book of the assessee for the purposes of section 68 of the Act. Factually speaking, in the present case, assessee is not maintaining any books of account and section 68 of the Act has been invoked by the Assessing Officer only on the basis of the bank Pass Book. The invoking of section 68 of the Act has to fail because as per the judgment of the Hon'ble Bombay High Court in the case of Shri Bhaichand N. Gandhi (supra), the bank Pass Book or bank statement cannot be construed to be a book maintained by the assessee for any previous year as understood for the purposes of section 68 of the Act. Therefore, on this account itself the impugned addition deserves to be deleted. I hold so." We further find that a similar view had also been arrived at in a 'third member' decision of the Tribunal in the case of Smt. Madhu Raitani Vs. ACIT (2011) 10 taxmann.com 206 (Gauhati) (TM), as well as by the coordinate Benches of the Tribunal in the case of Mehul 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 13 ITA 99/RPR/2022 Asha Soni 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 made U/s 68 of the Act, therefore, we refrain ourselves to decide the other grounds wherein the assessee has assailed on merits the additions sustained by the ld. CIT(A)
8. On the basis of above judicial pronouncements and material available on record, it is an admitted fact that the addition u/s 68 of the IT Act 1961 made by the Ld. AO and sustained by Ld. CIT(A) was on the basis of deposit entries in the bank statement of the assessee is in contradiction with the settled position of the law as decided in the case of CIT Vs. Bhaichand N. Gandhi (1983) 141 ITR 67 (Bom) wherein it is observed that a bank pass book or bank statement cannot be considered to be a 'book' maintained by the assessee for section 68 of the IT Act. Thus, respectfully following the above legal preposition, we are of the considered view that the addition made by Ld. AO u/s 68 of the Act is liable to be deleted. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition made in this regard. Thus, ground No.2 of the assessee, which is legal in nature, is allowed.
8. Based on aforesaid decision, Ld. AR of the assessee submitted that applying the ration laid down by Hon'ble Mumbai HC in the case of CIT vs. Bhaichand N. Gandhi the addition made by Ld. AO u/s 68 is out of the ambit of provisions of the said section, therefore, the addition made u/s 68 is liable to be deleted.
14 ITA 99/RPR/2022 Asha Soni Contrary to the aforesaid submissions of the Ld. AR, Ld. SR DR vehemently supported the orders of revenue authorities and has requested to uphold the same. Ld. SR DR further submitted that merely mentioning around section is a technical mistake on the part of AO and based on such mistake addition should not be deleted. To support such contention Ld. Sr. DR has relied upon the recent judgment in the case of Smt. Gloria Eugenia Rynjah Banerji vs. ITO, in ITA No. 3510/Del/2019 for the A.Y. 2007-08 pronounced by coordinate bench of ITAT, New Delhi B bench, vide order dated 16.08.2023, wherein it is observed by the Tribunal that the addition cannot be deleted merely on technical ground that the AO mentioned sec. 68 instead of 69 of the IT Act. Ld. Sr. DR with such explanations has requested to upheld the orders of revenue authorities.
9. We have considered the rival contentions, perused the material available on record and case laws pressed into before us. In the present case as evident from 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 15 ITA 99/RPR/2022 Asha Soni 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 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).
10. In view of aforesaid facts and circumstances, respectfully following the judgment of Hon'ble Mumbai High Court in the case of Bhaichand N. Gandhi (supra), which is adopted by the ITAT, Raipur, in the case of Kuldeep Jiwan Mahant (supra), we are of the considered opinion that 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.
16 ITA 99/RPR/2022 Asha Soni Since we have directed to vacate the addition of Rs. 35 lacs made u/s 68 on the basis of ground no. 2 & 3 of the present appeal, therefore, the other contentions raised by the assessee under other grounds of this appeal are not required to be adjudicated separately thus, left open.
11. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 10/01/2024.
Sd/- Sd/-
(RAVISH SOOD) (ARUN KHODPIA)
याियक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
रायपुर/Raipur; दनांक Dated 10/01/2024
Vaibhav Shrivastav
आदे श क ितिल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant-
2. यथ / The Respondent-
3. आयकर आयु (अपील) / The CIT(A),
4. आयकर आयु / CIT
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur
6. गाड फाईल / Guard file.
// स या पत ित True Copy // आदे शानुसार/ BY ORDER,
(Assistant Registrar)
आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur