Credit in Bank Account of Assessee Cannot be Construed as Credit in Books of Assessee: ITAT

Shri Ashit Kumar Dey Vs. Income Tax Officer

(Order pronounced in the open court on 09/06/2022)

The assessee is engaged in the business of purchase and sale of fish and had filed his return of income for AY 2009-10 on 07.08.2009, declaring an income of Rs. 1,50,000. The case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act. The AO observed that cash amounting to Rs. 86,74,500 was over the year deposited in the savings bank of the assessee.  As the assessee on being confronted failed to come forth with an explanation as regards the nature and source of the cash deposits, the AO treated the entire amount of as unexplained cash credit and made an addition of the same u/s 68 of the Act. Also, the AO made an addition of Rs. 50,000 to the same. Accordingly, the AO vide his order passed u/s 144 of the Act, dated 26.12.2011 determined the income of the assessee at Rs. 86,74,500.

Appeal before CIT(A): Aggrieved, the assessee carried the matter in appeal before the CIT (Appeals) but without any success.

Appeal before ITAT: The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the tribunal. 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 the making of addition under Section 68 presupposes a credit of the aforesaid amount in the ‘books of an assessee’ maintained for the previous year. The same was held in the case of CIT Vs. Shri Bhaichand N. Gandhi (1983) 141 ITR 67 (Bombay), the Bank Passbook 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. As the facts and the issue involved in the present case are peri materia the aforesaid judicial pronouncements, the cash deposit of Rs. 86,74,500 in the saving bank account of the assessee cannot be assessed as unexplained cash credit u/s 68 of the Act. Thus, the order of CIT(A) was set aside. Hence, the appeal of assessee was allowed.

To Read Judgment Download PDF Below: