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2016 (3) TMI 635 - ITAT LUCKNOW

2016 (3) TMI 635 - ITAT LUCKNOW - TMI - Addition u/s 68 - undisclosed cash deposited in bank account - Held that:- In the instant case though the assessee has furnished list of persons from whom he has collected advances given by the company on behalf of the company, but no confirmation letter of these persons were filed. The assessee has filed copy of the company’s account to corroborate his contentions but to explain the source of deposit, the assessee is required to place evidence or confirma .....

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f these deposits, the assessee has taken a plea that he has received this much of amount as gift from various guests at the time of his marriage. This aspect was examined by the lower authorities in the light of the human probability and came to the conclusion that the assessee does not belong to that family with such a status in which huge amount of ₹ 13.20 lakhs can be received as gift. Moreover, the assessee could not furnish any evidence with regard to the marriage performed at the rel .....

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he assessee was asked to furnish any evidence either in the form of photograph or invitation card with regard to the marriage of the assessee at the relevant point of time, but he could not file any evidence except oral submission. In the absence of any evidence, the story of marriage of the assessee at the relevant point of time cannot be accepted. Therefore, this addition of ₹ 13.20 lakhs can also be made under section 69 of the Act if not under section 68 of the Act relying upon the leg .....

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nder scrutiny which is against the guidelines issued by the CBDT. 2. That the Notice u/s 143 (2) of the Income Tax Act was not issued as per the provisions of law. 3. That the tax authorities were wrong in making following additions to the total income of the appellant :- (a)Rs.20,00,000/- u/s 68 of the Income Tax Act. (b)Rs.13,20,000/- u/s 68 of the Income Tax Act. 4. That the Ld. CIT (Appeal) was wrong in upholding the additions made by the Ld. A.O. 5. that the additions were made without prov .....

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in his Bank Account". 8. That the authorities were wrong in making an addition of ₹ 13.20 Lakh which was received by the appellant at the time of his marriage which is normal activity acceptable in the society. 9. That the order under appeal is against facts and law and circumstances of the case. 2. During the course of hearing, it was noted that this appeal is filed late by one day, for which an application for condonation of delay is filed and being convinced with the explanations .....

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der section 68 of the Act. 5. The facts in brief borne out from the record are that during the course of assessment proceedings, the Assessing Officer has noted that there are cash deposits of ₹ 20 lakhs, ₹ 20,000/- and ₹ 13 lakhs on 29.3.2010, 30.3.2010 and 31.3.2010 respectively in the bank account of the assessee with UCO Bank. 6. In respect of source of ₹ 20 lakhs, it was submitted that the assessee is a Director of M/s Sewa Developers (P) Ltd. (Sewa) and the said amo .....

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AN or any other supporting documents to substantiate his claim. The assessee has also failed to show as to how the amount of ₹ 20 lakhs was reflected in the books of account of the company. Since the assessee did not substantiate his explanation, the amount of ₹ 20 lakhs deposited in cash in the bank account was treated as unexplained and added to the total income of the assessee. 7. Aggrieved, the assessee preferred an appeal before the ld. CIT(A) and reiterated its contentions. Bes .....

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rties. Accordingly the assessee has collected the aforesaid amount and deposited in his account which were later on transferred to the company s account. The ld. CIT(A) re-examined the claim of the assessee, but was not convinced with it. The Assessing Officer and the ld. CIT(A) has also noted that the assessee and the company were having an account with the same branch of the bank. In that situation, what was the need of the assessee to deposit the cash received from various parties on behalf o .....

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ns. Besides, it was also contended that the assessee did not maintain the books of account and these cash deposits were noted from the bank passbook of the assessee. Therefore, in the absence of the regular books of account, provisions of section 68 of the Act cannot be invoked. In support of his contentions, the assessee has placed reliance upon the order of the Tribunal in the case of Income Tax Officer vs. Kamal Kumar Mishra reported in [20013] 33 taxmann.com 610 (Lko.). Reliance was also pla .....

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h deposited in the bank account cannot be treated as unexplained income under section 68 of the Act on account of proper maintenance of books of account, the same amount can be added under section 69 of the Act, as the assessee could not explain the source of investment or deposit in the bank. In support of his contention, the ld. D.R. has placed reliance upon the order of the Special Bench of the Tribunal in the case of Manoj Agarwal vs. DCIT (Delhi) 113 ITD 377 (SB) and also the judgments of t .....

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ing Officer from the bank passbook and nothing is borne out from the orders of the Assessing Officer as to whether the assessee ever maintained the books of account. In the light of these facts, we find force in the contention of the assessee that the books of account are not maintained by the assessee, therefore, the entry of ₹ 20 lakhs in the bank account was not found in the books of account and therefore, provisions of section 68 of the Act cannot be invoked. In this regard, we have ex .....

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the books of account of the assessee in which credit entry so found is a condition precedent for invoking the provisions of section 68 of the Act. In case the assessee has not maintained the books of account and whatever credit entries are found by the Assessing Officer, it was from the bank account of the assessee in which deposits were made at different point of time, provisions of section 68 of the Act cannot be invoked. While holding so, the Tribunal has also relied upon the judgment of the .....

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of ₹ 20 lakhs as unexplained income of the assessee. 12. We have also examined the argument raised by the ld. D.R. that in such type of cases where cash deposits are made in the bank accounts, the addition is possible under section 69 of the Act. In support of this contention, our attention as invited to the order of the Tribunal Special Bench comprising of five Members in the case of Manoj Agarwal vs. DCIT (supra), in which it has been held that section 68 of the Act may not be strictly .....

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e source of money received. It was further held that even if section 68 of the Act is not applicable, the cash deposit in the bank can be asked to be explained by the assessee under section 69 or 69B of the Act. While taking this view, the Tribunal has considered the judgment of the Hon'ble Apex Court in the case of CIT vs. Chinnathamban (supra), in which their Lordships have held that in the absence of any evidence forthcoming as the source of deposits, the Assessing Officer was justified i .....

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l difference between the two provisions and in the case of section 69 of the Act, only where investment has been made but has not been satisfactorily explained, the income should be treated to be the income of the assessee whereas in the case of section 68 of the Act, there should be a book entry and if that book entry is not satisfactorily explained, then it should be treated as income of the assessee. 14. Similar view was also expressed by the Hon'ble Patna High Court in the case of Laxmi .....

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Therefore, the addition under section 68 of the Act is not possible, but the Assessing Officer can ask the assessee to explain the source of deposit of ₹ 20 lakhs in the bank account and if the assessee fails to explain the same, addition of ₹ 20 lakhs can be made as unexplained income of the assessee. In the instant case though the assessee has furnished list of persons from whom he has collected advances given by the company on behalf of the company, but no confirmation letter of t .....

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the ld. CIT(A) and we confirm the same. 16. So far as another deposit of ₹ 13.20 lakhs is concerned, we find that when the Assessing Officer has asked the assessee to explain the source of these deposits, the assessee has taken a plea that he has received this much of amount as gift from various guests at the time of his marriage. This aspect was examined by the lower authorities in the light of the human probability and came to the conclusion that the assessee does not belong to that fam .....

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