Kanchan Lalwani Vs ITO (ITAT Visakhapatnam)
Bank passbook is not a “book of account”; hence cash deposits cannot attract Section 68.-Addition under Section 56(2)(x)(B) made without opportunity & DVO reference violates natural justice & is unsustainable.
Assessee, an individual, filed return declaring income of ₹10.19 lakh. The case was selected for scrutiny on the ground of large cash deposits & property transactions. AO made two additions- ₹65 lakh u/s 68 as unexplained cash deposits, & ₹45.40 lakh u/s 56(2)(x)(B) as difference between stamp value & purchase consideration—raising total income to ₹1.20 crore.
Assessee explained that the cash deposits were from past savings, recoveries of personal advances & capital balance, & that Section 68 applies only to unexplained credits in books, not to deposits in bank passbook. It was also argued that Section 56(2)(x) was wrongly invoked, as the AO had originally proposed addition u/s 56(2)(vii)(b)(ii) but made the final addition under a different clause without granting opportunity.
Tribunal’s Findings
On Section 68 addition:
Tribunal held that the bank passbook is not a “book of account” within the meaning of Section 2(12A). Hence, cash deposits in a bank account cannot be treated as unexplained cash credits u/s 68. AO, if unconvinced, could have considered Section 69A, but not Section 68. Reliance was placed on CIT v. Bhaichand N. Gandhi (141 ITR 67, Bom HC) & CIT v. Parameswar Bohra (267 ITR 619, Raj HC).
