Income Tax Appellate Tribunal - Amritsar
Sh. Sanjeev Kumar Malhotra, Pathankot vs The Income Tax Officer, Pathankot on 5 May, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR
BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND
SH.N.K.CHOUDHRY, JUDICIAL MEMBER
I.T.A. No. 532(Asr)/2015
Assessment Year:2011-12
Sh. Sanjeev Kumar Vs. The Income Tax Officer,
Malhotra Prop. M/s. Tilak Ward-6(3), Pathankot.
Raj Sanjeev Kumar,
H.O. Shant Vihar
Colony, Pathankot.
PAN:AAWPM-5724D
(Appellant) (Respondent)
Appellant by: Sh. Sudarshan Kapoor (Ld. Adv.)
Respondent by: Sh. Shabir Handoo (Ld. DR)
Date of hearing : 22.02.2017
Date of pronouncement: 05.05.2017
ORDER
PER N. K. CHOUDHRY (JM):
This is an appeal filed by the assessee against the order of Ld. CIT(A)-2, Amritsar, dated 05.08.2015, for Asst. Year:2011-12.
2. The assessee has raised the following grounds of appeal.
"(i) That the Ld. Commissioner of Income Tax (Appeals)-II, Amritsar has, in view of facts & circumstances of the case, grossly erred in law and on facts in upholding the addition of Rs.42,58,243/- which was made by the A.O. to the declared income. The addition made and upheld is unjust, unlawful and exorbitantly excessive.
(ii) That the submissions made, explanations given and affidavit filed on record have not been properly considered and judicially appreciated and the addition has been wrongly made and upheld.
(iii) That in any case, the proper opportunity of hearing was not allowed and the addition made and upheld is illegal and bad in law.
(iv) That Interest U/s.234B has been wrongly charged and the penalty proceedings U/s.271(l)(c) have also been wrongly initiated."2 ITA No. 532(Asr)/2015
Asst. Year: 2011-12
3. The brief facts of the case in accordance to Assessment Order are as under:
Return of Income declaring total income of Rs. 2,30,240/- was filed by the assessee on 29-09-2011 and same was processed under section 143(1) of the Income-tax Act 1961 at a same income on 22-12-2011. The case of the assessee was selected for scrutiny through CASS ( AST Module) during the financial year 2012-13 on the reasons to examine the source of cash deposits made at Rs. 42,20,000/- in his saving bank accounts i. e. Rs. 20,00,000/- in his saving bank account No.3486000100124625 and Rs.22,20,000/- in his saving bank account No.3846000100201216 maintained with the Punjab National Bank Mohan Market, Pathankot during the financial year relevant to the assessment year under consideration. Statutory notice of hearing was issued to the assessee on 01-08-201 under section 143(2) of the Income-tax Act 1961, duly served upon the assessee through speed post vide this office dispatch No. 1590 dated 01-08-2012 as well a through Notice server of this office on 03-08-2012 , fixing the case for hearing on 09th August, 2012. In response thereto, Shri Kuldip Malhotra Advocate attended t' assessment proceedings on behalf of the assessee and sought an adjournment. The case of the assessee was accordingly adjourned to sine die till issuance of statutory notices as well as detailed questionnaire. Subsequently statutory notices of hearing were issued under sections 142(1) and 143(2) of the Income- tax Act 1961 along with detailed questionnaire on 02-07-2013, duly served upon the assessee on 09-07-2013, fixing the case for hearing on 11-07-2013. In response thereto Sh. Kuldip Malhotra, Advocate attended the assessment proceedings from time to time and information /details/documents requisitioned during the course of assessment proceedings , were filed by him and Placed on records . As per order sheet entry dated 25-02-2014, the assessee was asked to produce books of account along with relevant vouchers for 3 ITA No. 532(Asr)/2015 Asst. Year: 2011-12 examination on 03-03-2014. The assessee failed to produce books of account along with relevant vouches for examination. In the light of the above, the case of the assessee has accordingly been discussed with the assessee's counsel. However in response to summons issued u/s.131 of the I. T. Act on 14-03-2014 duly served upon assessee on the same day the assessee produced the books of accounts along with relevant vouchers and same have been examined on test check.
The assessee , during the financial year relevant to the assessment year under consideration, deals with sale and purchase of sugar at Grain Market, Damtal ( Himachal Pradesh) with his head office at Shant Vihar, Pathankot,has shown gross profit of Rs. 11,25,385/- as against sale proceeds of Rs.8,25,26,032/- yielding rate of profit @ 1.36 %. As discussed above, the assessee was found to has made cash deposits of Rs.42,20,000/- as per Annual Information report in his saving bank accounts maintained with Punjab National Bank ,Mohan Market Pathankot during the financial year relevant to the assessment year under consideration, the case of the assessee was selected for scrutiny. Bank statements of following saving bank accounts were requisitioned under section 133(6) of the Income-tax Act 1961 and aforesaid bank furnished the copy of saving bank account. ......................
The Assessing Officer finally concluded as under:
After taking into consideration the aforesaid facts it is evident that the assessee has failed to explain the sources of huge cash deposits made in the Punjab National Bank in his aforesaid saving bank accounts amounting to Rs.42,20,000 and interest paid/accrued thereon for Rs.38,443/- and same stands un- explained under section 68 of the Income Tax Act 1961. As admitted in his statement recorded on 19.03.2014 the assessee has categorically admitted that he has not shown his cash deposits of 4 ITA No. 532(Asr)/2015 Asst. Year: 2011-12 Rs.42,20,000/- in the books of accounts of M/s. Tilak Raj Sanjeev Kumar which is a proprietary concern of the assessee and produced no corroborative evidence of past savings as claimed by the assessee was produced by him during the course of assessment proceedings. So, I hereby make an addition of Rs.42,58,443/- on account cash deposits of Rs.42,20,000/- deposited by the assessee in his aforesaid saving bank accounts and interest paid/accrued thereon at Rs.38,443/-, maintained with the Punjab National Bank, Mohan Market, Pathankot as referred supra during the relevant financial year relevant to the assessment year under consideration by treating the same as un-explained cash deposits as well as interest of Rs.38,443/- not disclosed by the assessee in his return of Income. I am satisfied that the assessee has concealed his true particulars of his income, penalty proceedings under section 271(1)(c) of the Income -tax Act 1961 are hereby initiated separately for concealing his true particulars of his income by issuing penalty notice under the aforesaid section read with section 274 of the Income-tax Act 1961.
4. Feeling aggrieved by the assessment order passed by the Assessing Officer, the assessee preferred the first appeal before the Ld. CIT(A), who also dismissed the Appeal of the assessee by holding as under:
"After considering the above facts and the statement of the assessee recorded by the AO, the AO held that it was evident that the assessee had failed to explain the sources of cash deposits made in the above bank accounts and interest paid/accrued thereon and added the same to the total income of the assessee u/s 68 of the Act.
In the appeal proceedings the assessee submitted that- the assessee's father Sh Manohar Lai had died on 03-12-2000 leaving 5 ITA No. 532(Asr)/2015 Asst. Year: 2011-12 behind four children i.e., the assessee and his three sisters namely Manju, Neeru and Seema. Their marriages had been performed during life time of assessee's father Shri Manohar Lai. The assessee was the only son and his father and his Grand Mother were living with him. The assessee's father had already sold most of the ancestral jewellery and the balance was used for the marriage of assessee's sister. But all the cash available with him and available with assessee's Grand Mother remained at home which came to the possession of the assessee after death of his Grand Mother on 14- 12-2004.
The assessee had not used the cash for his business but ultimately, all the old cash available in the family was deposited by him in the bank accounts on different dates. The total deposits of Rs42,20,000/- made in the two bank accounts during previous year relevant for A Y 2011-12 were out of past family savings and were not assessee's income of the previous year.
Therefore the appellant had tried to explain the source of cash deposited in his said bank accounts in Punjab National Bank through the cash available with his father Sh Manohar Lai at the time of his death and the cash available with his grandmother who died on 14-12-2004 which had remained at home, and was received by him after the death of his grandmother. The appellant explained that he did not use the cash for the purpose of his business and ultimately all the old cash available with the family was deposited in the bank accounts on different dates.
However the appellant has not furnished any evidence of the generation of cash explained by him as above through facts and figures and evidence. The appellant had also not submitted any evidence of the amount claimed to have been received by him from his late father and late grandmother on 14-12-2004. The time gap 6 ITA No. 532(Asr)/2015 Asst. Year: 2011-12 between 14-12-2004 and the financial year under consideration is quite long and it is not understandable why the assessee did not deposit the huge amount of cash of Rs.42,58,243/- in his bank accounts in earlier years if the said cash was available with him. The appellant has not furnished any explanation in this regard. Moreover, the appellant in his statement recorded on 19-03-2012 by the AO during assessment proceedings had admitted that no details are available with him regard to his past savings as well as past savings of his wife.
Accordingly in view of the above discussion it is held that the source of cash deposits of Rs20,00,000/- in his saving bank account no. 3486000100124625 and Rs 22,20,000/- in his saving bank account no. 3846000100201216 maintained in Punjab National Bank, Mohan Market, Pathankot have remained unexplained as the appellant could not furnish any evidence to explain the source thereof even in the appeal proceedings and therefore the addition u/s 68 of the act is confirmed.
The ground of appeal no.3 is against the charging of interest u/s 234B and penalty proceedings u/s 271(l)(c) of the Act. The charging of interest u/s 234B of the Act is mandatory but consequential in nature and therefore the AO was justified in charging the interest u/s 234B which is upheld. As regards the initiation of penalty proceedings u/s 271(l)(c) of the Act, since no appeal lies before the CIT(A) against initiation of penalty proceedings under this section, therefore the ground of appeal is dismissed."
5. Feeling aggrieved by the said order passed by the Ld. CIT(A), the assessee preferred the instant appeal on the grounds mentioned in para-2 of the order.
7 ITA No. 532(Asr)/2015Asst. Year: 2011-12
6. In addition to the grounds already raised, the assessee also prayed for raising the additional grounds which is enumerated as under:
"That even on the basis of stated facts the addition made u/s 68 of the Income Tax Act was illegal and bad in law and the Ld. Assessing officer had grossly erred in law in making addition of Rs.42,58,243/- U/s.68 of the Income Tax Act,1961."
7. Before proceeding with the case on merit, we feel it appropriate to decide the prayer of the assessee qua raising the additional ground as the assessee has submitted that it is purely legal ground and no new facts are required for adjudicating the issue, because the facts are already on record, therefore, the same may kindly be allowed to be raised.
8. On the contrary, the Ld. DR does not raise any objection. As the Assessee is not raising the ground which goes contrary to the material on record, therefore, in our considered opinion because the additional ground goes to the root of the case, therefore, we do not have any hesitation to allow the assessee to raise the additional ground in addition to the grounds already raised.
9. First, we will adjudicate the additional ground as it is purely legal in nature.
10. In support of the additional ground, the Ld. Counsel of the assessee submitted that from the facts found by the Assessing Officer, it is clear that the saving bank accounts maintained with PNB, Pathankot are not there in the books of account maintained by the assessee. However, the A.O had found that the cash deposits in those two accounts amounting to Rs.42,20,000/- and interest paid/ accrued 8 ITA No. 532(Asr)/2015 Asst. Year: 2011-12 thereon to the tune of Rs.38,443/- remained unexplained u/s 68 of the I. T. Act. Further, the Ld. AR also relied upon the following judgments.
(i) CIT, Poona Vs. Bhaichand H. Gandhi 141 ITR 67 (Bom.)
(ii) Ms. Mayawati Vs. DCIT (ITAT Delhi 'A' Bench) 113 TTJ 178.
(iii) Smt. Manasi Mahendra Pitkar Vs. I.T.O., 1(2), 73 taxman 68 Further, the Ld. AR submitted that addition made u/s 68 of the I.T. Act is not only illogical but also bad in law, therefore, the same is liable to be deleted. The Ld. AR further placed his reliance upon a decision of Amritsar Bench in the case of Smt. Vijay Kalia, Vs. ACIT, in IT(SS)A No.15(Asr)/2005 and emphasized that if the appeal is allowed on legal ground then it is not necessary to decide the other grounds on merit.
11. On the other hand, the Ld. DR submitted that explanation offered by the assesses was thoroughly considered by both the authorities and after considering the same, reasoned orders have been passed by the Authorities below.
12. We have gone through with the facts and circumstances of the case and also orders and documents as available on record. We feel it appropriate to reproduce Sec.68 of the I.T. Act.
68: 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.
From the ingredients of Sec. 68, it reflects that where any sum is found created in the books of accounts of assessee maintained for any previous year, meaning thereby, any sum has to be credited in the 9 ITA No. 532(Asr)/2015 Asst. Year: 2011-12 books of assessee maintained but not even otherwise for application of section 68 of the Income Tax Act. In the case of CIT, Poona Vs. Bhaichand H. Gandhi 141 ITR 67 (Bom.) (supra) , the Court was dealing with Sec.68 of the I.T. Act and held that a cash credit for previous year shown in the assessee bank pass book but not shown in the cash book maintained by the assessee for that year, does not fall within the ambit of Sec.68 of the I. T. Act. Therefore, the such sum so credited is not chargeable to tax as the income of the assessee of that previous year. Further in the case of Ms. Mayawati Vs. DCIT (ITAT Delhi 'A' Bench) 113 TTJ 178 (supra) the Court considered the applicability of the Sec. 68 of the I.T. Act and was pleased to held as under:
"20. We are also of the opinion that s. 68 has no applicability to the facts of present case as the assessee is not maintaining any books of account. If that be so s. 68 does not apply in her case for the simple reason that the cheque received from Sh. Pankaj Jain has been deposited in her bank account. In this regard we are also of the opinion that balance sheet/statements of affairs cannot be equated to books of accounts because "in traditional terms books means a collection of sheets of paper bound together with the intention that such binding snail be permanent and papers used are kept collectively in one volume. It can i also be assumed that it connotes the contention that it should serve as a permanent record." This is the finding of the Hon'ble judges of the Bombay High Court in Sheraton Apparels vs. Asstt. CIT (2002) 175 CTR (Bom) 651: (2002) 256 ITR 20 (Bom).
20.1 Further, in P. Ram Nath Aiyars Law Lexicon 2002 edition p. 233/234 a book has been defined as under:
"A treatise, written or printed on any material and put together in any convenient form. Any printed literary compilation; a collection of sheets bound together containing manuscript entries or intended to contain such entries; the name of several important papers prepared in the progress of a cause, although entirely written and not at all in the book form."10 ITA No. 532(Asr)/2015
Asst. Year: 2011-12 20.2 Further, the Hon'ble High Court in the case of CIT vs. Bhaichand H. Gandhi (1983) 141 ITR 67 (Bom) held that bank pass book is not a book maintained by the assessee or under his instructions by the bank. Where cash credits for previous years are shown in assessee's bank pass book then they cannot be treated as income of the assessee within the meaning of s. 68.
20.3 Similar is the decision in the case of Sampat Automobiles vs. ITO (2005) 96 TTJ (Jd) 368.
20.4 Therefore, a pass book of the bank cannot be treated as a book of account of the I assessee because this is provided by the banker, which is given to its customer and is only a | copy of the customer's account in the books maintained by the bank. The bank does not act as an agent of the customer nor can it be said that the banker maintains the pass book under the instructions of the customer (the assessee).
20.5 The relationship between the banker and customer is one of debtor and creditor only. Therefore, a cash credit appearing in assessee's pass book relevant to a particular previous year, in a case where the assessee does not maintain books of account, does not attract the provisions of s. 68."
From the cumulative reading of the Sec.68 and the judgments cited(supra) it is clear that mere deposits of money in the bank if not found credited in the books of the assessee maintained for any previous year does not come within the purview of Sec. 68 of the I.T. act. Therefore, respectfully following the judgments and independently considering the facts and circumstances of the case, we do not have any hesitation to hold that impugned order passed by the Ld. CIT(A) does not stand in the eyes of law because assessment order itself is not only bad in law but also against the settled principle of law as in the instant case addition cannot be made u/s 68 of the I.T. Act. Therefore, on the aforesaid anlyzation the addition is deleted.
Considered the cases relied upon by the Assessee and independent facts and circumstances of the case, we feel it 11 ITA No. 532(Asr)/2015 Asst. Year: 2011-12 appropriate, if we proceed with the case on the merit then it shall amounts to futile exercise.
On the aforesaid observations the appeal of the assessee is allowed.
13. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 05.05.2017.
Sd/- Sd/-
(T. S. KAPOOR) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 05.05.2017.
/PK/ Ps.
Copy of the order forwarded to:
(1) The Assessee:
(2) The
(3) The CIT(A),
(4) The CIT,
(5) The SR DR, I.T.A.T.,
True copy
By Order