Section 68 – Bank account of an assessee cannot be held to be ‘books’ of the assessee maintained for any previous year, and therefore, no addition u/s. 68 can be made in respect of a deposit in the bank account.

Section 68 – Bank account of an assessee
cannot be held to be ‘books’ of the assessee maintained for any previous year,
and therefore, no addition u/s. 68 can be made in respect of a deposit in the
bank account.

FACTS

The assessee had filed his return of income
for A.Y. 2008-09. In the course of the assessment proceedings the Assessing
Officer observed that the assessee had during the previous year made a cash
deposits of Rs.11,47,660 in his saving bank account. In the absence of any
explanation on the part of the assessee as regards the ‘nature’ and ‘source’ of
the aforesaid cash deposit in the aforesaid bank account, the Assessing Officer
made an addition of the peak amount of cash deposit of Rs.11,47,660 u/s. 68 of
the Act.

Aggrieved by the assessment order, the
assessee preferred an appeal to the CIT(A). The CIT(A) upheld the addition made
by the Assessing Officer and dismissed the appeal.

HELD

The Tribunal held that an addition u/s. 68
could only be made where any sum was found credited in the books of an assessee
maintained for any previous year, and the assessee either offered no
explanation about the nature and source as regards the same, or the explanation
offered by him in the opinion of the assessing officer was not found to be
satisfactory. A credit in the ‘bank account’ of an assessee could not be
construed as a credit in the ‘books of the assessee’, for the very reason that
the bank account could not be held to be the ‘books’ of the assessee. Though it
remained as a matter of fact that the ‘bank account’ of an assessee was 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 could be held to be
the ‘books’ of the assessee. Therefore, 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, could
not be brought to tax by invoking the provisions of section 68.