2018 (4) TMI 1624 - AT - Income Tax

Unexplained cash credit u/s 68 - cash credit for the previous year shown in the assessee s bank pass book issued to him by the bank but not shown in the cash book maintained by him - Held that - As decided in COMMISSIONER OF INCOME-TAX POONA VERSUS BHAICHAND H. GANDHI 1982 (2) TMI 28 - BOMBAY HIGH COURT 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 - decided in favour of assessee.

Summary

Issues Involved:
Challenge to correctness of CIT(A)'s order under section 143(3) of the Income Tax Act, 1961 for assessment year 2008-09. Condonation of delay in filing appeal. Treatment of cash deposit as unexplained cash credit under section 68 of the IT Act. Interpretation of judicial precedent regarding treatment of bank account as books of account for assessment purposes.

Analysis:

1. Challenge to CIT(A)'s Order:
The appellant challenged the correctness of the CIT(A)'s order regarding the assessment under section 143(3) of the Income Tax Act, 1961 for the assessment year 2008-09. The delay in filing the appeal was 36 days, but the appellant moved a condonation petition, which was accepted by the tribunal. The delay was condoned, and the matter was taken up on merits.

2. Condonation of Delay:
The appellant's appeal was time-barred by 36 days, but the tribunal accepted the condonation petition after perusal and hearing the rival contentions. The delay was condoned, allowing the tribunal to proceed with the matter on its merits.

3. Treatment of Cash Deposit as Unexplained Cash Credit:
The appellant, a salaried employee, had a cash deposit in his bank account during a specific period. The Assessing Officer treated a portion of this deposit as an "unexplained cash credit" under section 68 of the IT Act. The appellant explained the source of the deposits as the sale of ancestral property, but the Assessing Officer did not accept the explanation. The CIT(A) also upheld the decision. However, the tribunal, citing a judicial precedent, held that the treatment of the bank account as books of account for assessment purposes was not sustainable in law. Consequently, the tribunal directed the Assessing Officer to delete the impugned addition of the cash deposit.

4. Interpretation of Judicial Precedent:
During the appeal hearing, the appellant's counsel referred to a judgment of the Hon'ble Bombay High Court regarding the treatment of cash credits found in books of account for assessment purposes. The High Court's judgment emphasized that the relationship between a bank and its customer is that of debtor and creditor, not trustee and beneficiary. The tribunal, following this precedent, concluded that the impugned addition based on treating the bank account as books of account was not legally sustainable. Therefore, the tribunal upheld the appellant's plea and directed the deletion of the added amount from the assessment.

In conclusion, the tribunal allowed the appeal, following the judicial precedent cited by the appellant's counsel, and directed the Assessing Officer to delete the impugned addition from the assessment.