In Vinod Kewalchand Bafna v. ITO, the Pune ITAT held that addition on account of unexplained cash credits under s. 68 of the Income Tax merely on the basis of Bank Pass Book is invalid since Bank passbook is not part of books of account of the assessee.
The bench was hearing an appeal filed by the assessee wherein he questioned the validity of penalty proceedings initiated against him on the basis of assessment proceedings completed by making addition u/s 68. The assessee, citing the Bombay High Court decision in Commissioner of Income Tax Vs. Bhaichand N. Gandhi, urged that the assessment is invalid since the Department has not produced any evidence other than the bank pass book,in support of the allegation of unexplained cash credits.
Allowing the appeal, the bench noted that “the additions u/s. 68 can be made only where cash credit appears in books of account of the assessee. The Bank passbook is not part of books of account of the assessee. Therefore, the additions made u/s. 68 on the basis of entries in the bank passbooks are not sustainable.Our view is further fortified by the decision rendered in the case of Mayawati Vs. DCIT reported as 113 TTJ 178 (Del.) and the decision of Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Bhaichand N. Gandhi (supra). The Hon’ble Jurisdictional High Court has upheld the order of Tribunal, where the Tribunal deleted the addition u/s. 68 holding that cash credit for the previous year shown in the assessee’s bank passbook issued to him by the bank but not shown in the cash book maintained by him for the year, does not fall within the ambit of section 68 of the Act.”
Read the full text of the order below.
