Mehul V. Vyas Vs ITO (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has set aside an addition of Rs. 10,53,000 made by the Income Tax Officer (ITO) under Section 68 of the Income-tax Act, 1961, against Mehul V. Vyas, who represented the deceased assessee. The Tribunal’s order, pronounced on April 7, 2017, hinged on the crucial legal point that Section 68 applies only to sums credited in the “books of an assessee” and not to mere cash deposits in a bank account.
The appeal was filed against the order of the CIT(A)-11, Mumbai, dated December 13, 2012, which had sustained the AO’s addition made in an assessment order dated December 30, 2010, for the Assessment Year 2006-07.
Background of the Case
The assessee, an aged lady (since deceased), had filed her return of income for A.Y. 2006-07, declaring an income of Rs. 1,23,610. The case was reopened under Section 147 after the AO received information from the CIT (Central Information Branch) indicating that the assessee had made a cash deposit of Rs. 10,53,000 in her Savings Bank account with Punjab and Maharashtra Cooperative Bank during the year under consideration.
During the assessment proceedings, the AO asked the assessee to explain the nature and source of the cash deposit. The assessee submitted that the funds originated from accumulated savings, including money left by her deceased husband, income from a ‘Grauh Udyog’ over many years, and received back interest-bearing loans. She explained that she had decided to advance these accumulated savings as a loan to her son, Mr. Mehul V. Vyas, and for that purpose, deposited the cash into her bank account.
