TMI Blog2024 (1) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... was offered by the tribunal. Thus wherein the addition u/s 68 was proposed on the basis of entries in the Bank Passbook, which cannot be treated as books of accounts of the assessee, therefore, the contention of the Ld. AR that addition u/s 68 cannot be made when no books of accounts are maintained by the assessee is worth concurring which is well supported by the analogy and well settled principle of law drawn by Hon ble Bombay HC in the case of Bhaichand N. Gandhi (supra). Thus addition made u/s 68 in case of the assessee, who is not maintaining books of accounts is bad in law and thus, is liable to be vacated. Decided in favour of assessee. - Shri Ravish Sood, JM And Shri Arun Khodpia, AM For the Assessee : Shri R.B. Doshi, CA For the Revenue : Shri Satya Prakash Sharma, Sr. DR ORDER PER ARUN KHODPIA, AM: The captioned Appeal is filed by the assessee against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2017-18 dated 25.03.2022, which in turn resulted from the order of Ld. Income Tax Officer, Circle-1(1), Bilaspur, under section 143(3) of the Income Tax Act, 1961 dated 26.12.2019. 2. The gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the observations of the Ld. CIT(A) now the assessee is an appeal before us. 5. At the outset Ld. AR of the assessee drew our attention to the copy of the notice u/s 143(2) dated 21.09.2018 for Limited Scrutiny under 'CASS'. It was the contentions of Ld. AR that the scrutiny was proposed to examine two issues:- (1) Cash deposit and transactions in property, (2) Capital gains/loss of sale of property. Ld. AR submitted that the case of the assessee has been selected for Limited Scrutiny, but, no addition has been made qua the questions raised in notice of Limited Scrutiny, on the contrary Ld. AO had focused and examined the unsecured loans received by the assessee and had made the additions u/s 68. Ld. AR in terms of aforesaid facts has submitted that the issues mentioned in the Limited Scrutiny notice were not the basis for the addition, but the addition was made on account of unsecured loan received by the assessee, which was not covered within the scope of Limited Scrutiny. Ld. AR in support of the contention that the issue, which was the basis for addition, was never an issue covered by Limited Scrutiny notice neither the case was converted into complete scrutiny, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is erroneous, therefore, set aside his order and restore the order passed by the A.O. As we have quashed the order passed by the Pr. CIT under Sec. 263 on the ground of invalid assumption of jurisdiction by him, therefore, we refrain from adverting to and therein adjudicating the contentions advanced by the ld. A.R on the merits of the case, which thus are left open. ii) M/S Aakash Ganga Promoters Developers vs Pr. CIT in ITA No. 164/Ckt./2019 dt. 18.12.2019, PN 111 to 129 of PB, relevant findings in para no. 20, PN 128 of PB. From the spirit and mandate of section 263 of the Act, which provides revisional powers to Pr. CIT/CIT in the cases where the assessment order or any other proceedings under this Act, passed by the AO is erroneous and prejudicial to the interests of the revenue. This section is itself a mini code wherein proceedings for revision has also been provided and as per this provision, the first and foremost requirement for invoking the revisional proceedings is that the ld. Pr. CIT/CIT shall call and examine the assessment records of any proceedings under this Act, which include scrutiny assessment records and if after applying his mind to such record o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he root of the matter therefore we are inclined to proceed with this issue first by holding that, from the above submission and after examining of the records, we find that the Ld. CIT in his impugned order u/s 263 of the Act has exceeded his jurisdiction while holding the order of AO as erroneous in so far prejudicial to the interest of Revenue. In view of the above we hold that the ld. CIT has in his order u/s. 263 of the Act exceeded the jurisdiction by holding the order of AO as erroneous in so far as prejudicial to the interest of Revenue on those items which are not emanating from the AIR. Thus, we are inclined to adjudicate only those matters which are emanating from the AIR as discussed above. 6. Ld. AR also submitted written synopsis while arguing against the addition made by the Ld. AO and upheld by the Ld. CIT(A). The written synopsis furnished is extracted as under: Asha Soni, Bilaspur AY 2017/18 ITA No. 99/RPR/2022 (Assessee) Ground no. 1 Submission of assessee l. Loan received from:- Mission Dealmark P. Ltd. Rs. 10,00,000/- Starlink Iron Steel P. Ltd. Rs. 25,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mission Dealmark P. Ltd. 78,51,854/- 43 Starlink Iron Steel P. Ltd. 36,80,467/- 60 Thus, the observation of AO regarding low income profit of lenders is totally incorrect. It is not the case that lenders gave loan out of their income. Lenders had substantial net worth, which stood accepted in their own case. Nothing brought on record to dispute net worth of lenders. In view of this, magnitude of income was not relevant. Reliance on: - - Anjani Associates vs ITO, ITA no. 27/RPR/2018 dt. 10.08.2018, relevant observations in para no. 16, last 7 lines. - DCIT vs Gandhi capital (P) Ltd. (2022) 194 ITD 396 (Surat). - Pr. CIT vs AMI Industries (India) P. Ltd. (2020) 424 ITR 219 (Bom.), out of ITA no. 5181/Mum/2014 dt. 28.08.2016, relevant observations of AO at para no. 20 of High Court's order. - BST Infratech Ltd. vs DCIT (2023) 199 ITD 6 (Kol.) - Delhi High Court in case of CIT vs. Vrindavan Farms (P) Ltd. (2015) 94 CCH 329 l)el.), relevant finding of AO at para no. 3, 2 11 d to 4th line. - Prabhatam Investment P. Ltd. vs ACIT, order dt. 17.4.2017 in ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 82 of PB, relevant findings on PN 81 of PB, para no. 8. v) Amitabh Bansal vs ITO (2019) 175 ITT) 401 (Del.) Ground no. 4 Submission of assessee l . Case selected for limited scrutiny . Notice u/s 143(2) at PN 16 to 19 of PB. Scope of limited scrutiny being examination of cash deposit and transaction in property (PN 16). 2. Addition made on account of unsecured loan received by the assessee. Not covered within the scope of limited scrutiny . 3. Transaction in property not covered by sec. 68 but by sec. 69. Limited scrutiny did not include examination of loans. 4. Case not converted into complete scrutiny case. 5. Addition illegal and unsustainable. Reliance on: i) M/s Su-raj Diamond Dealers Pvt. Ltd. vs Pr. CIT in ITA No. 3098/Mum/2019 dt. 27.11.2019 , PN 105 to 110 of PB, relevant findings in para no. 8, PN 110 of PB. ii) M/S Aakash Ganga Promoters Developers vs Pr. CIT in ITA No. 164/Ckt./2019 dt. 18.12.2019, PN 111 to 129 of PB, relevant findings in para no. 20, PN 128 of PB. iii) Sanjeev Kumar Khemka vs Pr. CIT in ITA No. 1361/kol./2016 dc. 02.06.2017. 6. Ld. AR on behalf of the assessee further submitted that as per ground no. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re discussed, and concluded with the following observation: 9. After having gone through the facts and circumstances, we observe that 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 of Section 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 of the Act. In this respect, we draw strength from the decision of the Hon ble Bombay High Court in the case of CIT Vs Bhaichand N. Gandhi (1983) 141 ITR 67 (Bombay) wherein the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount 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 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 (2011) 10 taxmann.com 206 (Gauhati) (TM), as well as by the coordinate Benches of the Tribunal in the case of Mehul V. Vyas Vs. ITO (2017) 16 4 ITD 296 (Mum) and ITO, Barabanki Vs. Kamal Kumar Mishra (2013) 33 taxamann.com 610 (Lucknow). 10. We find that as stands gathered from the records, the addition aggregating to Rs. 4.03 lacs sustained by the ld. CIT(A) is in respect of the cash deposits in the bank accounts of the assessee, and not in any 'books' of the assessee for the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er submitted that merely mentioning around section is a technical mistake on the part of AO and based on such mistake addition should not be deleted. To support such contention Ld. Sr. DR has relied upon the recent judgment in the case of Smt. Gloria Eugenia Rynjah Banerji vs. ITO, in ITA No. 3510/Del/2019 for the A.Y. 2007-08 pronounced by coordinate bench of ITAT, New Delhi B bench, vide order dated 16.08.2023, wherein it is observed by the Tribunal that the addition cannot be deleted merely on technical ground that the AO mentioned sec. 68 instead of 69 of the IT Act. Ld. Sr. DR with such explanations has requested to upheld the orders of revenue authorities. 9. We have considered the rival contentions, perused the material available on record and case laws pressed into before us. In the present case as evident from the material available before us that the assessee Smt. Asha Soni has not maintained any books of accounts, neither she was required to maintain books of accounts as prescribed under the provisions of I.T. Act. Since her source of income are only salary, house property and other sources. It is also a fact that the addition on account of unexplained cash credit has ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
