While hearing the case of Nanoomal Gupta versus ACIT-Central Circle, Agra bench of Income Tax Appellate Tribunal ( ITAT ) ruled that addition on account of the gift received under Section 68 of the Income Tax Act doesn’t attract the credit entries in the bank passbook.
Currently, Assessee is an individual filed his return of income therein AO found Rs.1000000 worth gift received from two persons called Kaushalya Devi and Shree Bhagwan, New Delhi. When AO asked to furnish the details of the said donors regarding their creditworthiness, details and copies of accounts and the genuineness of the gifts thereafter Assessee failed to produce the same. Accordingly, AO added the entire amount of said gift to the income of Assessee as unexplained under section 68 of the Income Tax Act.
When CIT (A) confirmed the assessment order of AO, aggrieved Assessee carried the matter to this Tribunal. Advocate Navin Gargh who appeared at the behest of Assessee contended that the Assessee being an individual had no business income and books of accounts, and the addition was made only on the basis of the assessee’s Passbook, which is not a book of account; that as such, the addition made under section 68 of the Act is not sustainable.
The counsel for Assessee cited various case laws in support of this contention; On the other hand, no decision contrary to the above case laws has been cited.
Finally, bench comprising A. D. Jain, judicial member, and DR. Mitha Lal Meena, accountant member ordered that addition made only on the basis of the assessee’s bank passbook is not sustainable in law.
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.
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