Income Tax Appellate Tribunal - Raipur
Hemlata Bhatia, Bhilai vs Income-Tax Officer-2(1), Bhilai, ... on 5 January, 2024
आयकर अपील य अ धकरण यायपीठ "एक-सद य" मामला रायपुर म
IN THE INCOME TAX APPELLATE TRIBUNAL
RAIPUR BENCH "SMC", RAIPUR
ी रवीश सूद, या यक सद य के सम
BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER
आयकर अपील सं. / ITA No. 319/RPR/2023
नधारण वष / Assessment Year : 2013-14
Hemlata Bhatia
MIG-1/991, HUDCO,
AMDI Nagar, Bhilai
Dist. Durg (C.G.)-490 009
PAN : ACFPC0200M
.......अपीलाथ / Appellant
बनाम / V/s.
The Income Tax Officer-2(1),
Bhilai (C.G.)
...... यथ / Respondent
Assessee by : S/shri Sakshi Gopal Agrawal
Siddharth Parakh, CAs
Revenue by : Shri Satya Prakash Sharma, Sr. DR
सुनवाई क तार ख / Date of Hearing : 19.12.2023
घोषणा क तार ख / Date of Pronouncement : 05.01.2024
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Hemlata Bhatia Vs. ITO-2(1), Bhilai
ITA No. 319/RPR/2023
आदे श / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 15.05.2023, which in turn arises from the order passed by the A.O under Sec. 147 r.w.s.144 r.w.s. 144B of the Income-tax Act, 1961 (in short 'the Act') dated 20.09.2021 for the assessment year 2013-14. The assessee has assailed the impugned order on the following grounds of appeal:
"1) On facts and in the circumstances of the case and in law, assessment order passed by Assessment Unit, NFAC u/s. 147 r.w.s. 144 on 20.09.2021 is invalid because all notices during the course of assessment proceedings were issued in mail id not belonged to the assessee, thus no notices were served to the assessee as per demand of law. In absence or service of notices and no opportunity of being heard given to the assessee, the consequential assessment order passed would be invalid and is liable to be quashed.
2) On facts and in the circumstances of the case and in law, order passed by CIT(A) is not as per law because it was passed on 15.05.2023 though time up to 19.05.2023 was given by him to the assessee to file submission in notice of hearing issued on 12.05.2023, thus, no proper opportunity of being heard was given to the assessee.
3) On facts and in the circumstances of the ease and in law, CIT(A) has erred in confirming addition of the simplicitor cash deposits of Rs.13,00,000/- made in the assessee's bank accounts u/s.68 of the Act by the AO as the bank account statement/bank passbook cannot be treated as books of account of the assessee, hence, no addition in respect of the cash deposits made therein could be validly made u/s. 68 of the Act.
4) Without prejudice to ground nos. 1 to 3, on the facts and in the circumstances of the case, CIT(A) has erred in confirming addition of Rs.13,00,000/- made by the Assessing Officer u/s. 68 by treating cash deposited in joint saving bath account with State Bank of India as unexplained cash credits of the assessee without considering the facts and circumstances of the case properly and judicially. The assessee prays that the addition of Rs.13,00,000/- be deleted.3
Hemlata Bhatia Vs. ITO-2(1), Bhilai ITA No. 319/RPR/2023
5) The assessee reserves the right to add, amend, alter or withdraw any ground/grounds of appeal at the time of hearing."
2. Succinctly stated, the A.O observing that the assessee had made cash deposits of Rs.13,00,000/- but had not filed her return of income, thus, initiated proceedings u/s.147 of the Act. Notice u/s. 148 of the Act dated 22.02.2020 was issued to the assessee. As the assessee failed to comply with the notice issued u/s. 148 of the Act, therefore, the A.O proceeded with the assessment on an ex- parte basis. As the assessee failed to come forth with any explanation as regards the nature and source of the cash deposits of Rs.13,00,000/-, therefore, the A.O held the entire amount as unexplained cash credit u/s. 68 of the Act. Accordingly, the A.O vide his order passed u/s. 147 r.w.s.144 r.w.s. 144B of the Act dated 20.09.2021 assessed the income of the assessee at Rs.13,00,000/-.
3. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success. As the assessee had filed certain new evidence before the CIT(Appeals), therefore, he called for a remand report from the A.O. For the sake of clarity the relevant observations of the CIT(Appeals) are culled out as under:
"4. Decision on grounds of Appeal: The Facts of the case, Grounds of Appeal, Written Submission, Assessment Order & Remand Report are noted.
Ground 1: On perusal of pare 2 of Assessment Order, it is noted ample opportunities were provided by AO to assessee to represent her case. Hence, natural justice is provided by AO before completing the Assessment Proceedings. Further, during the appeal proceedings, assessee did not produce any documentary evidence in support of this Ground. 4
Hemlata Bhatia Vs. ITO-2(1), Bhilai ITA No. 319/RPR/2023 Moreover, On going through the Assessment Order, it is noted that Assessment Order is completed as per procedure under Income Tax Act. Hence, the Ground is noted as dismissed.
Ground 2: With regard to this ground, the assessee had submitted certain new evidence for which remand report was submitted by AO. Extract of remand report is reproduced below:
"3. On perusal of the additional evidences furnished before the Ld. CIT(A), it is found that no ITR was filed by the assessee for AY 2013-14 even though her income was above taxable limit. The assessee's income as per 26AS does not match with Form16 furnished by her which has not been reconciled also.
The bank statement found attached does not bear the Name and Account number of the account holder and it reflects cash deposit as below:-
4, On examination of bank statement for FY 2012-13, it is found that 3 credit entries on 16/11/2012 relates to STDR closure amount of Rs.2,52,509/-, 1,74,168/-, and 1,59,763/- respectively and a withdrawal of Rs.9,00,000 paid to self through cheque no- 366432 is seen. However, no narration or explanation regarding source of cash deposit has been provided by the assessee.
5. Besides that, no proof of source of cash deposit from the firm of the spouse, M/s Bhatia Traders in the form of cash book, copy of ITR (declaring that income), computation sheet etc. are enclosed/furnished. This clearly indicates that the assessee has been deliberately evading taxes by not divulging her and her spouse's two income."
5
Hemlata Bhatia Vs. ITO-2(1), Bhilai ITA No. 319/RPR/2023 On going through the remand report and bank statement by assessee, I agree with the AO's contention that assessee's explanation is not satisfactory as stated in remand report. Further, the assessee has not offered any explanation on opportunity provided to comment on remand report. Hence, assessee has nothing to say on AO's remand report and is accepted by assessee. In view of the above, the ground is noted as Dismissed. Ground 3: The Ground being general in nature, does not require adjudication. In the end, the appeal Is noted as Dismissed."
4. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal.
5. I have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.
6. Shri Sakshi Gopal Agrawal, Ld. Authorized Representative (for short 'AR') for the assessee at the threshold of hearing assailed the validity of the assessment framed by the A.O vide his order passed u/s.147 r.w.s. 144 r.w.s. 144B dated 20.09.2021 for two-fold reasons, viz. (i) that the addition made by the A.O u/s. 68 of the Act is not sustainable in the eyes of law; and (ii) that as the sources of cash deposits in the bank account had duly been explained by the assessee to have been sourced out of cash withdrawals/accumulated savings, therefore, no addition of any part of the said amount was called for in the hands of the assessee. Elaborating on his aforesaid contention, the Ld. AR took me through the assessment order. It was submitted by the Ld.AR that as it was a case of 6 Hemlata Bhatia Vs. ITO-2(1), Bhilai ITA No. 319/RPR/2023 simplicitor cash deposits in the bank account that was jointly held by the assessee and her husband Shri Naresh Bhatia, therefore, no addition was called for in her hands u/s. 68 of the Act. Carrying his contention further, it was submitted by the Ld. AR that as the bank account could not be held as the assessee's books of account, therefore, the very foundation for making the impugned addition u/s. 68 of the Act falls to ground. The Ld. AR in order to buttress his aforesaid claim had drawn support from the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand H. Gandhi (1983) 141 ITR 67 (Mum.); order of the ITAT, Amritsar in the case of Satish Kumar Vs. ITO (2019) 198 TTJ 114 (Asr.); order of the ITAT, Mumbai in the case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 ( Mum.) and that of the ITAT, Raipur in the case of Shri Harjindar Singh Bal Vs. ITO, Ward-2(1), ITA No.57/RPR/2020 dated 26.12.2022. Apart from that, it was submitted by the Ld. AR that no addition of any part of the cash deposits was called for in the hands of the assessee. The Ld. AR in support of his aforesaid contention took me through the bank account which revealed that prior to the cash deposit of Rs.10 lacs on 21.11.2012 there were cash withdrawals by the assessee of Rs.9 lacs on 17.11.2012. Elaborating on the source of the cash deposits of Rs.9 lacs, the Ld. AR had further drawn my attention to certain credits in the bank account on 16.11.2012 which were stated to be the maturity proceeds of STDRs held by the assessee. As regards the balance cash deposits of Rs.1 lacs each made in three tranches, it was submitted by the Ld. AR that the same were sourced out of the accumulated savings/funds available with the assessee. 7
Hemlata Bhatia Vs. ITO-2(1), Bhilai ITA No. 319/RPR/2023
7. As the assessee has assailed the validity of the addition made by the A.O under section 68 of the Act, therefore, I shall first deal with the same. Admittedly, it is a matter of fact borne from record that the A.O while framing the assessment had made an addition of Rs.13,00,000/- u/s. 68 of the Act. For the sake of clarity the relevant observations of the A.O are culled out as under:
"4. As per information available with this office, the assessee has made cash deposit of Rs.13,00,000/- in her bank account maintained with State Bank of India during the F.Y. 2012-13 relevant to the A.Y. 2013-14. In the interest of natural justice, the assessee was accorded numerous opportunities to comply with the notices, The assessee was also apprised of the information available with this office and was given opportunity to defend his case and to explain the same. Finally, vide Final Show Cause dated 08.09.2021 and 14.09.2021, the assessee was asked to explain/ show cause as to why assessment should not be completed u/s 144 of the Income Tax Act, 1961 on the basis of information/material available on record. However the assessee was unable to furnish any source/explanation regarding the above. From the perusal material/information available on record, it has been observed that the assessee made cash deposit of Rs.13,00,000/- in his bank account maintained with State Bank of India during the F.Y. 2012-13. It is thus, clear that the assessee has nothing to say in the matter. In view of the above facts, Rs.13,00,000/- added to the total income of the assessee for the A.Y. 2013-14, as unexplained cash deposit.
Section 68 of the Act states that:
"Where any sum is found credited in the books of on 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 Provided that where the assessee is a company (not being a company In which tho public are substantially interested), and the sum so credited consists of share application money, share capital. share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, 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 8 Hemlata Bhatia Vs. ITO-2(1), Bhilai ITA No. 319/RPR/2023
(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.
As already discussed above, assessee has failed to explain the cash credit of Rs.13,00,000/- and I am satisfied that Rs.13,00,000f- should be accordingly taxed u/s 68 of the Act. Penalty proceedings u/s. 271(1)(c) of the Act is being initiated separately."
8. As stated by the Ld. AR, and rightly so, the issue in hand is squarely covered by the order of the ITAT, Raipur in the case of Shri Harjindar Singh Bal Vs. ITO, Ward-2(1), ITA No.57/RPR/2020 dated 26.12.2022, wherein, after drawing support from the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand H. Gandhi (1983) 141 ITR 67 (Mum.) and also the order of the ITAT, Amritsar in the case of Satish Kumar Vs. ITO (2019) 198 TTJ 114 (Asr.) and ITAT, Mumbai in the case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum.) the Tribunal had observed as under:
"13. Having given a thoughtful consideration to the issue in hand i.e., sustainability of the addition of the simplicitor cash deposits made in the assessee's bank accounts u/s.68 of the Act, I find substance in the contentions advanced by the Ld. AR. As stated by the Ld. AR, and, rightly so, as the bank account statement/bank passbook cannot be treated as books of accounts of the assessee, hence, no addition in respect of the cash deposits could be validly made u/s.68 of the Act. The aforesaid view is fortified by the order of a division bench of the ITAT, Jalandhar in the case of Satish Kumar Vs. ITO (2019) 198 TTJ 114 (Asr), wherein, after drawing support from the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand H. Gandhi (1983) 141 ITR 67 (Bom) and referring to an earlier order of the ITAT, Mumbai in the case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum), the tribunal had held as under:9
Hemlata Bhatia Vs. ITO-2(1), Bhilai ITA No. 319/RPR/2023 "8. We have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities as well as the material produced before us. We will first deal with the objection raised by the ld. A.R as regards the addition of Rs.10,53,000/- which was made by the A.O under Section 68 of the 'Act', in respect of the cash deposit in the bank account of the assessee. We find substantial force in the contention 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 making of an addition under Section 68 presupposes a credit of the aforesaid amount in the 'books of an assessee' maintained for the previous year. We not being oblivious of the settled position of law that a statutory provision has to be strictly construed and interpreted as per its plain literal interpretation, and no word howsoever meaningful it may so appear can be allowed to be read into a statutory provision in the garb of giving effect to the underlying intent of the legislature, thus confining ourselves within the realm of our jurisdiction, therein construe the scope and gamut of the aforesaid statutory provision by according a plain meaning to the language used in Sec. 68. We are of the considered view that a 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, viz. Sec. 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. That our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand' N. Gandhi (1983) 141 ITR 67 (Bombay) wherein the Hon'ble 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 10 Hemlata Bhatia Vs. ITO-2(1), Bhilai ITA No. 319/RPR/2023 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 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 I 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......... circumstances mentioned therein. Notably, section 68 of the Act 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 P a g e |6 ITA No.105/Asr./2017 A.Y. 2008-09 Shri Satish Kumar Vs. Income Tax Officer 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 a coordinate bench of the Tribunal in the case of ITO, Barabanki Vs. Kamal Kumar Mishra (2013) 33 taxamann.com 610 (Lucknow Trib.). Thus in the backdrop of the aforesaid facts of the case read in light of the settled position of law, we are of the considered view that the addition made by the A.O in respect of the cash deposit of Rs.l0,53,000/-(supra) in the bank account 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 Shri Bhaichand N. Gandhi (supra), a bank pass book or bank statement cannot be considered to be a 11 Hemlata Bhatia Vs. ITO-2(1), Bhilai ITA No. 319/RPR/2023 'book' maintained by the assessee for any previous year, as understood for the purpose of Section 68 of the Act. Therefore, on this count itself the impugned addition Rs.10,53,000/- deserves to be deleted."
We are of the considered view that as the bank account of an assessee cannot be held to be the 'books' of an assessee maintained for any previous year, thus no addition under Sec. 68 of the I.T Act can be made in respect of a simpliciter deposit in the bank account. We thus respectfully following the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand H. Gandhi (1983) 143 ITR 67 (Bom.) and being in agreement with the view taken by the coordinate bench of the Tribunal i.e. ITAT, Mumbai in case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum), thus are of the considered view that the addition of Rs.11,47,660/- made by the A.O under Sec.68 cannot be sustained, and as such is liable to be vacated. We thus set aside the order of the CIT(A) and delete the addition of Rs.11,47,660/- made by the A.O under Sec.68 of the Act." On the basis of my aforesaid observations, I am of the considered view that as the bank accounts of the assessee could not have been held to be the "books of account" of the assessee maintained for any business or profession, therefore, no addition u/s.68 of the Act could have been made in respect of the simplictor cash deposits made in the said bank accounts. I, thus, respectfully following the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand H. Gandhi (1983) 141 ITR 67 (Bom), as well as being in agreement with the order of the division bench of the Tribunal in the case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum) and that of order of the ITAT, Amritsar in the case of Satish Kumar Vs. ITO (2019) 198 TTJ 114 (Asr), is of the view that the addition of Rs.15.58 lac (supra) made by the A.O u/s.68 of the Act cannot not be sustained. Resultantly, the order of the CIT(Appeals) who had upheld the addition made by the A.O u/s.68 of the Act is set-aside and addition of Rs.15.58 lacs (supra) made by the A.O u/s.68 of the Act is vacated."
9. As in the present case, the cash deposits of Rs.13,00,000/- are not in the nature of cash deposits appearing in the "books of account" of the assessee, therefore, I find substance in the claim of the Ld. AR that the addition of the said amount could not have been made u/s. 68 of the Act. As the very basis for making the impugned addition by the A.O suffers from a jurisdictional defect as had been looked into by the Hon'ble High Court of Bombay in the case of CIT Vs. Bhaichand H. Gandhi (supra), therefore, respectfully following the said judicial pronouncement 12 Hemlata Bhatia Vs. ITO-2(1), Bhilai ITA No. 319/RPR/2023 and the aforesaid orders of the Tribunal, I vacate the disallowance of Rs.13,00,000/-.
10. As the addition of Rs.13,00,000/- made by the A.O u/s. 68 of the Act has been vacated for want of valid assumption of jurisdiction, therefore, I refrain from adverting to and dealing with the contentions advanced by the assessee qua the merits of the case, which, thus, are left open.
11. In the result, appeal of the assessee is allowed in terms of the aforesaid observations.
Order pronounced in open court on 05th day of January, 2024.
Sd/-
(रवीश सूद /RAVISH SOOD) या यक सद य/JUDICIAL MEMBER रायपरु / RAIPUR ; दनांक / Dated : 05 th January, 2024 SB आदे श क त ल प अ े षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals)-1, Raipur (C.G)
4. The Pr. CIT-1, Raipur (C.G)
5. वभागीय त न ध, आयकर अपील य अ धकरण,रायपुर बच, रायपुर / DR, ITAT, Raipur Bench, Raipur.
6. गाड फ़ाइल / Guard File.
आदे शानुसार / BY ORDER, // True Copy // नजी स चव / Private Secretary आयकर अपील य अ धकरण, रायपरु / ITAT, Raipur.