The order of the Bench was delivered by
A. D. Jain (Judicial Member)- This is the assessee's appeal for the assessment year 2009-10 against the order, dated May 20, 2014, passed by the learned Commissioner of Income-tax (Appeals), Bathinda. The assessee has raised the following grounds of appeal :
"1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in upholding the addition of Rs. 3,60,000 on account of unexplained source of deposit in the bank account whereas the assessee-appellant has duly explained the source of deposit as sale of property before the Assessing Officer as well as during the appellate proceedings. As such, the addition of Rs. 3,60,000 be deleted.
2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in upholding the addition of Rs. 2,10,000 on account of unexplained source of deposit in the bank account whereas the assessee-appellant has duly explained the source of deposit as agricultural income before the Assessing Officer as well as during the appellate proceedings. As such, the addition of Rs. 2,10,000 be deleted.
3. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in enhancing the assessment on account of unexplained source of deposit in the bank account amounting to Rs. 4,95,590 whereas the assessee-appellant has duly explained the source of deposit in the bank during the assessment proceedings as well as during the appellate proceedings. As such, addition of Rs. 4,95,590 be deleted.
4. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in enhancing the income of the assessee-appellant by rejecting the explanation which has already been accepted by the Assessing Officer in respect of deposits in the bank account. As such, addition of Rs. 4,95,590 be deleted.
5. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in enhanc ing the assessment on account of unexplained source of deposit in the bank account amounting to Rs. 4,95,590 without providing sufficient, reasonable and proper opportunity to the assessee-appellant to explain his case. As such, addition made be deleted.
6. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in rejecting the explanation filed by the assessee-appellant on account of various deposits in the bank account without appreciating that the assessee- appellant is having no other source of income except fixed sources, i.e., rental and agricultural income. As such, addition made on account of unexplained deposits in the bank account by rejecting the explanation in summary manner by passing non-speaking order is against natural justice and law. As such, the same be deleted."
2. The assessee has also raised the following additional grounds :
"1. That the Assessing Officer was not justified in invoking the provisions of section 68 of the Income-tax Act, 1961, and thereby making addition of Rs. 5,70,000.
2. That the authorities below did not appreciate that the provisions of section 68 are not at all applicable in this case as the assessee admittedly is not maintaining any books of account. As such, the provisions of section 68 are not at all applicable and the very basis on which the addition was made is liable to be deleted."
3. The additional grounds raised by the assessee are legal in nature. All material facts with regard thereto are on record and nothing further requires to be called for. Accordingly, these grounds are admitted.
4. Apropos the additional grounds raised, the learned counsel for the assessee has contended that the taxing authorities have erred in not considering that section 68 of the Income-tax Act is not attracted since the assessee has not maintained any books of account, for which reason, the said section is not applicable to the assessee'scase. In this regard, reliance has been placed on the decision of the Delhi Bench of the Tribunal in the case of ITO v. Om Parkash Sharma passed on May 13, 2011, in ITA No. 2256/Del/2009, for the assessment year 2000-01, wherein, it has been held, inter alia, as follows :
"9. Coming to the merits of the case, undisputedly, the addition of Rs. 9,13,000 was based only on some entries in the bank account of the assessee. The assessee was found not to have maintained any books of account. Now, as correctly observed by the Commissioner of Income-tax (Appeals), the pass book/bank statement supplied by the bank to the assessee does not amount to a books of account of the assessee. It being only a copy of customers' account in the books maintained by the bank, a bank does not act as an agent of its customer. It also cannot be said that the banker maintains a passbook under the instructions of the account holder. The provisions of section68 of the Act are, therefore, not attracted where the assessee does not maintain books of account. The Commissioner of Income- tax (Appeals) in this regard has rightly placed reliance on CIT v. Bhaichand H. Gandhi [1983] 141 ITR 67 (Bom), Sampat Automobiles v. ITO [2005] 96 TTJ (Jodhpur) 368, Ms. Mayawati v. Deputy CIT [2008] 113 TTJ (Delhi) 178 and Sheraton Apparels v. Asst. CIT [2002] 256 ITR 20 (Bom). It is correct that since no books of account are maintained in the ordinary course of the business of the assessee, in the absence of any corroborative evidence to support the action under section 68 of the Act no such addition is tenable."
5. On the other hand, on this issue, the learned Departmental representative has placed strong reliance on the impugned order, contending that the provisions of section 68 of the Act have rightly been applied.
6. I have heard the parties and have perused the material available on record. Section 68 of the Income-tax Act, reads as follows :
"68. Where any sum is found credited in the book of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to Income-tax as the income of the assessee of that previous year."
7. So section 68 talks of any sum found credited in the books of an assessee maintained for any previous year. As per this section, if the assessee offers no explanation, the section would apply. But this explanation has to be with regard to any sum found credited in the books. This is amply clear from the use of the expression "about the nature and source thereof" ("thereof" being the operative word). Then, in case the explanation offered by the assessee is not found by the Assessing Officer to be satisfactory, the section can be invoked. This explanation, obviously, harks back to any sum found credited in the books. The words "the sum so credited" again relate to any sum found credited in the books "so credited", here being the pregnant expression.
8. Thus, a plain reading of the section establishes that it operates only where books are maintained by an assessee and a sum is found credited therein.
9. Now, in the present case, it remains undisputed that the assessee has not maintained any books during the year. Thus, the provisions of section 68 of the Act are not at all attracted and they have been wrongly applied by the authorities below. This position has been duly recognised in Om Parkash Sharma (supra). No contrary decision has been cited before this Bench.
10. In view of the above, the grievance of the assessee by way of the additional grounds taken is justified and is accepted as such. Due to such acceptance, since the provisions of section 68 of the Act are themselves held to be not applicable and misapplied, nothing further remains to be adjudicated.
11. Accordingly, the order under appeal is reversed. The addition is cancelled.
12. In the result, the appeal is allowed.
The order pronounced in the open court on February 24, 2016.