TMI Blog2022 (5) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... it the additional evidence so produced by the assessee under Rule 46A. We deem it appropriate to remand this issue to the Assessing Officer for de novo adjudication after appropriate examination of Shri Nandaram Chavan and after consideration of all the documents as may be filed by the assessee, including the additional evidence filed before the learned CIT(A). The Assessing Officer shall have the liberty to call any person/document for examination, as may be required for complete verification of all facts and adjudication of this issue. Accordingly, issue No. 1 raised in assessee s appeal is partly allowed for statistical purpose. Disallowance of interest claimed under section 24 - assessee availed loan which will be utilised by him for the purpose of developing and renovating the property to be leased out - CIT(A) upheld the disallowance of deduction under section 24(b) of the Act claimed by the assessee in the absence of any documentary evidence to substantiate the claim of major repairs in the aforesaid 5 shops before giving the same on rent - HELD THAT:- In the present case, though the assessee has claimed that the loan was availed for the purpose of renovation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. Issue no.2 Interest paid to Vijaya Bank and Claim under section 24(b) under income from let out property. 3. The assessee is an individual and is engaged in the business of retail in books. For the year under consideration, assessee filed his return of income on 03/01/2012 declaring total income of Rs. 78,967. The assessee has shown business income, income from house property and income from other sources. 4. The first issue arising in present appeal is with regard to addition made by the Assessing Officer under section 68 of the Act in respect of cash deposits made by the assessee. 5. The brief facts of the case pertaining to this issue, as emanating from the record are: During the course of assessment proceedings, it was observed from the details on record that assessee has deposited cash of Rs. 34 lakhs in his Dattatray Maharaj Kalambe Sahkari Bank Account and cash of Rs. 15 lakhs in his Deccan Merchant Cooperative Bank Account. The assessee was asked to explain the source of the above cash deposited in his bank accounts. In response, assessee submitted that all the cash deposited in the saving accounts was withdrawn from business loan accounts held with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een utilised by Shri Nandaram Chavan for his personal/business purposes. Further, in respect of other cash deposits also, learned CIT(A) did not agree with the submission of the assessee. In respect of the assessee s submission that each cash loans up to Rs. 20,000 were obtained from 85 farmers was also not accepted by the learned CIT(A). In this regard, the learned CIT(A) noted that these farmers have not given any loan to anybody except to the assessee and all these loan creditors have savings of only to the extent of loans given to the assessee, and no interest has been paid or demanded by these loan creditor farmers. As a result, the learned CIT(A) upheld the addition made under section 68 of the Act. Being aggrieved, the assessee is in appeal before us. 7. During the course of hearing, Shri B.N. Rao, learned Authorised Representative ( learned AR ) submitted that the assessee has declared its income from business under section 44AD of the Act as per presumptive taxation and accordingly, offered to taxation 8% of revenue of Rs. 15,45,000 i.e. Rs. 1,23,600 as income under section 44 AD of the Act. The learned AR further submitted that under presumptive taxation, as per sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 34,00,000 Deccan Merchant Cooperative Bank Account Sr. No. Transaction date Amount of cash deposit 1 31/03/2011 15,00,000 Total 15,00,000 10. Upon not being satisfied with the explanation furnished by the assessee of source for cash deposits, the Assessing Officer made the addition under section 68 of the Act. During the appellate proceedings before the learned CIT(A), in reply to documents filed by the assessee, the Assessing Officer filed detailed remand report. The Assessing Officer submitted that the cash was not withdrawn by the assessee himself but the same was withdrawn by one Shri Nandaram Chavan against bearer cheque on more than one occasions. The Assessing Officer, in the remand report, further pointed out various other discrepancies in the statement of the assessee vis- -vis the information obtained from the society/bank from where the assessee alleged to have withdrawn the cash. The Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of other cash withdrawals. As a result, the learned CIT(A) upheld the addition made by the Assessing Officer under section 68 of the Act. 12. It is for the first time, during the hearing before us, contention was raised on behalf of the assessee that as the income from business was declared under the provisions of presumptive taxation under section 44AD of the Act and thus, there was no requirement to maintain the books of account, therefore, no addition can be made under section 68 of the Act. In support of his submission, learned AR placed reliance upon the decision of Co-ordinate Bench of the Tribunal in Mehul V Vyas (supra). In the aforesaid decision, the Co-ordinate Bench of the Tribunal, while deleting the addition made under section 68 of the Act in respect of cash deposits in the bank account, observed as under: 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Bhaichand N. Gandhi (surpa) 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned 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 v. Asstt. CIT [2011] 10 taxmann.com 206/45 SOT 231 (Gau.) (TM), as well as by a coordinate bench of the Tribunal in the case of ITO v. Kamal Kumar Mishra [2013] 33 taxmann.com 610/143 ITD 686 (Luck. - 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.10,53,000/-(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 Bhaichand N. Gandhi (supra), a bank pass book or bank statement cannot be considered to be a '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. 9. Even otherwise, we find that the explanation rendered by the assessee in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed to take advantage of his own wrong. Burden lies on him to show from where he has received the amount and what is its nature. Unless this fact is explained he can not claim or have deduction of the said amount from the income tax. Sec. 68 of I. T. Act provides that where the assessee offers no explanation about the nature and source of the credits in the books of account, all the amounts so credited or where the explanation offered by the assessee is not satisfactory in relation to the same then such credits may be charged to tax as income of the assessee for that particular previous year. It is to be noted here in this case that huge amounts have been credited in the account of the Appellant and he has not explained the nature of the same. The source of the said amount has been discovered by the Assessing Officer from Bank Pass Book. It is to be noted that when the source and nature has been held to have been explained, the said amount has been deleted by the appellate forums. Now the dispute has remained in respect of amount of Rs.9,00,000/- from M/s. Pooja Corporation, Rs.7,00,000/- from M/s. Pooja Enterprises, Rs.24,00,000/- from Shri. Ashok Mehta, Rs.18,00,000/- from Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly furnished the bank statement of Shri Nandaram Chavan in support of his submission that the amount withdrawn was not utilised by the bearer. We further find that though the learned CIT(A) has recorded the submission of the Assessing Officer on the additional evidence produced by the assessee in respect of interest free loans taken from 85 farmers, however, did not admit the additional evidence so produced by the assessee under Rule 46A. In view of the above, we deem it appropriate to remand this issue to the Assessing Officer for de novo adjudication after appropriate examination of Shri Nandaram Chavan and after consideration of all the documents as may be filed by the assessee, including the additional evidence filed before the learned CIT(A). The Assessing Officer shall have the liberty to call any person/document for examination, as may be required for complete verification of all facts and adjudication of this issue. Accordingly, issue No. 1 raised in assessee s appeal is partly allowed for statistical purpose. 17. The next issue arising in assessee s appeal is with regard to disallowance of interest of Rs. 5,51,376 claimed under section 24 of the Act. 18. The brief fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance made by the Assessing Officer. 20. During the course of hearing, learned AR, by referring to the certificate dated 06/01/2015 issued by Vijaya Bank, submitted that the loan was availed by the assessee for the purpose of developing and renovating the property which was given on lease to Aditya Birla Retail Limited. The learned AR further submitted that the assessee has taken loan to improve the condition of 5 shops, merge them into single structure to accommodate a corporate entity to have their setup. Thus, the amount incurred is towards the improvement of the premises, which fetched the rent of Rs. 7,87,680. 21. On the other hand, learned DR vehemently relied upon the orders passed by the lower authorities. 22. We have considered the rival submissions and perused the material available on record. In the present case, the assessee availed loan of Rs. 52 lakhs from Vijaya Bank. As per the certificate dated 06/01/2015 by Vijaya Bank, the assessee had given a declaration that the said loan will be utilised by him for the purpose of developing and renovating the property to be leased out. In the present case, it is not in dispute that the assessee has given 5 shop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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