CIT Vs Smt. Shashikala Ramkumar (ITAT Hyderabad)
First of all it is not understandable how an AO can make addition on the bounced cheques. It is a general banking practice that once cheques are presented for clearance, bank credits out of its own funds, subject to clearance and when cheques are not cleared, the amounts are reversed. Thus in practice, once the cheque is presented, banks credit the amount of cheque value. Therefore, the credits in the bank account are the funds of the bank which cannot be treated as ‘unexplained’ in any manner. Since the cheques have been bounced, there are corresponding debits also and as assessee is maintaining books of account under Mercantile System of Accounting, both the deposit of cheques and bouncing of the cheques are bound to be recorded in the books of account. Under what circumstances, AO considered that these amounts as unexplained credits u/s. 68 of the Act is not explainable. Ld.CIT(A) examined the issue and very clearly stated that this cannot be considered as unexplained cash credits u/s. 68. Inspite of that, both in the original grounds of appeal and revised grounds of appeal, this issue is contested. We are not sure whether the Senior Officers like CIT are applying their mind to the facts of the issue before preferring appeals. It reflects sorry state of affairs. This forum has time and again cautioning that at least while preferring second appeal to the ITAT, the Senior Officers should exercise caution and prefer appeals only on meritorious issues. There is no merit both on law and on facts for the ground raised by the Revenue. Same is dismissed.
