TMI Blog2022 (12) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... f simplicitor cash deposits in his bank accounts as unexplained cash credit u/s.68 - We find substance in the contentions advanced by the Ld. AR. As stated by the Ld. AR, and, rightly so, as the bank account statement/bank passbook cannot be treated as books of accounts of the assessee, hence, no addition in respect of the cash deposits could be validly made u/s.68. As the bank accounts of the assessee could not have been held to be the books of account of the assessee maintained for any business or profession, therefore, no addition u/s.68 of the Act could have been made in respect of the simplictor cash deposits made in the said bank accounts. Disallowance made u/s.14A - Both the lower authorities had grossly erred in law and the facts of the case in disallowing/sustaining the disallowance of the interest expenditure u/s.14A of the Act. As held in the case of CIT Vs. Sociedade De Fomento Industrial (P). Ltd. [ 2020 (11) TMI 277 - BOMBAY HIGH COURT ] the A.O before rejecting the disallowance offered by the assessee remains under a statutory obligation to give a clear finding with reference to the accounts of the assessee that the other expenditure which were being claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th in law facts. 8. That the disallowance of Expense u/s 14A as per Para 4 5 to the tune of Rs. 45861/- is quite illegal and bad, both in law facts. 9. That on the facts and circumstances of the case the interest charged should be deleted from the income tax computation. Also the assessee has raised an additional ground of appeal which reads as under: On the facts and in the circumstances of the case, the order passed u/s.147 r.w.s. 143(3) is liable to be quashed as the order is bad-in-law/and void-ab-initio inasmuch as the sanction granted by Learned PCIT in terms of provisions of Section 151 of the Income Tax Act, 1961 for initiation of reassessment proceedings was mechanical and granted without application of mind. 2. Succinctly stated, the assessee had filed his return of income for A.Y.2010-11 on 14.10.2010, declaring an income of Rs. 7,01,600/-. On the basis of certain information, viz. (i) that the assessee despite absence of liquid funds had made cash deposit of Rs.8 lac in his bank account; and (ii) that though the assessee had earned exempt income of Rs.55,501/- from a partnership firm but had not offered for disallowance any part of the interest e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O for initiating proceedings u/s 147 of the Act and framing the consequential assessment; (ii) validity of the addition made by the A.O u/s 68 of the Act of the simpliciter cash deposits in the assessee s bank accounts; and (iii) sustainability of the addition made by the A.O in the backdrop of the merits of the case. The Ld. AR had challenged the validity of the jurisdiction that was assumed by the A.O u/s.147 of the Act on the basis of his multi-facet contentions, viz. (i) that proceedings u/s 147 of the Act were based on misconceived facts ; (ii) that the reasons to believe forming the basis for initiating proceedings u/s 147 of the Act were absolutely vague, uncertain and non-specific; (iii) that the proceedings u/s.147 had been initiated on the basis of a mere change of opinion ; (iv) the proceedings initiated u/s 147 of the Act in absence of tangible material and live nexus with the material available on record could not be sustained; (v) reassessment proceedings had been initiated merely for the purpose of making fishing and roving enquiries; and (vi) that the reopening of the assessment being based on a sanction that was mechanically granted by the appropriate autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m as per clear, certain and specific facts that were available on his record, resorted to proceedings u/s.147 of the Act, viz. (i). the assessee despite absence of any source of liquid funds with him had made cash deposits of Rs. 8 lac in his bank account; and (ii) that the assessee despite having made exempt income yielding investments out of interest bearing funds had not offered any part of the interest expenditure for disallowance u/s.14A of the Act. Considering the aforesaid facts, I am unable to persuade myself to subscribe to the claim of the Ld. AR that the proceedings u/s.147 of the Act were initiated by the A.O merely on the basis of a pretence. On the same footing, the claim of the Ld. AR that the A.O had taken recourse to proceedings u/s 147 of the Act in the absence of any tangible material, being devoid and bereft of any merit fails and is accordingly rejected. As regards the claim of the Ld. AR that the A.O had initiated proceedings u/s.147 of the Act for making fishing and roving enquiries, I am unable to comprehend the very basis for raising of such claim. As observed by me hereinabove, the A.O had taken recourse to the proceedings u/s.147 of the Act for two fold r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO (2019) 198 TTJ 114 (Asr). On the basis of his aforesaid contention, it was averred by the Ld. AR that the addition of Rs.15.58 lac (supra) made by the A.O by treating the simplicitor cash deposits in the assessee s bank accounts as unexplained cash credit u/s.68 of the Act could not be sustained and was liable to be struck down on the said count itself. 12. Per contra, the Ld. Departmental Representative (for short DR ) had relied on the orders of the lower authorities. It was submitted by the Ld. DR that as the A.O had validly assumed jurisdiction u/s.147 of the Act and had brought to tax the cash deposits made by the assessee from its unexplained sources, therefore, no infirmity did emerge from the orders of the lower authorities who had rightly made/sustained the said addition. 13. Having given a thoughtful consideration to the issue in hand i.e., sustainability of the addition of the simplicitor cash deposits made in the assessee s bank accounts u/s.68 of the Act, I find substance in the contentions advanced by the Ld. AR. As stated by the Ld. AR, and, rightly so, as the bank account statement/bank passbook cannot be treated as books of accounts of the assessee, hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be strictly construed and interpreted as per its plain literal interpretation, and no word howsoever meaningful it may so appear can be allowed to be read into a statutory provision in the garb of giving effect to the underlying intent of the legislature, thus confining ourselves within the realm of our jurisdiction, therein construe the scope and gamut of the aforesaid statutory provision by according a plain meaning to the language used in Sec. 68. We are of the considered view that a credit in the 'bank account' of an assessee cannot be construed as a credit in the 'books of the assessee', for the very reason that the bank account cannot be held to be the 'books' of the assessee. Though it remains as a matter of fact that the 'bank account' of an assessee is the account of the assessee with the bank, or in other words the account of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation Where any sum is found credited in the books of an assessee............The Hon'ble Bombay High Court in the case of Shri Bhaichand Gandhi (supra) has approved the proposition that a bank Pass Book maintained by the bank cannot be regarded as a book of the assessee for the purposes of section 68 of the Act. Factually speaking, in the present case, assessee is not maintaining any books of account and section 68 of the Act has been invoked by the Assessing Officer only on the basis of the bank Pass Book. The invoking of section 68 of the Act has to fail P a g e |6 ITA No.105/Asr./2017 A.Y. 2008-09 Shri Satish Kumar Vs. Income Tax Officer because as per the judgment of the Hon'ble Bombay High Court in the case of Shri Bhaichand N. Gandhi (supra), the bank Pass Book 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. Therefore, on this account itself the impugned 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 Vs. ACIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17) 764 ITD 296 (Mum) and that of order of the ITAT, Amritsar in the case of Satish Kumar Vs. ITO (2019) 198 TTJ 114 (Asr), is of the view that the addition of Rs.15.58 lac (supra) made by the A.O u/s.68 of the Act cannot not be sustained. Resultantly, the order of the CIT(Appeals) who had upheld the addition made by the A.O u/s.68 of the Act is set-aside and addition of Rs.15.58 lacs (supra) made by the A.O u/s.68 of the Act is vacated. 14. Adverting to the disallowance made by the A.O u/s.14A of the Act of Rs.45,861/-, I find that the same was made for the reason that as per him the interest expenditure of Rs.45,861/- claimed by the assessee as a deduction was incurred for earning of exempt income. As observed by me hereinabove, the assessee had incurred interest expenditure of Rs.45,861/-, viz. (i) interest paid on loan raised from Smt. Lata Chandrayan: Rs.22,931/-; and (ii) interest paid on loan raised from Shri Vishnu Chandrayan: Rs.22,930/-. Although the assessee had not offered any part of the interest expenditure for disallowance u/s.14A of the Act, but I find that the A.O holding a conviction that the said expenditure was incurred for earning of the exempt income had di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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