Deleting an addition on account of deposit of cash in bank account the Tribunal in [2019] 14 ITR (Trib)-OL 785 (ITAT[Ahm] held that the pass book supplied by the bank to the assessee could not be regarded as books of the assessee, that is, books maintained by the assessee or under his instructions so that to hold such amount as unexplained credit under section 68 is not lawfully possible. The Ahmedabad bench followed a previous view held by the Bombay High Court judgment in 141 ITR 67.
Later the Gujarat High Court in [2019] 418 ITR 596 (Guj) distinguished Bombay High Court decision when the question arose on legality of action u/s142(2A) to the case of a partner in a firm in whose case the search revealed multiplicity of transactions in his bank accounts post demonetisation and series of indiscriminating documents.More particularly the issue identified for examination was “Cash deposit during demonetization.
Therein the assessee claimed that a basic premise for the purpose of invoking sub-section (2A) of section 142 of the Act is that the assessee should be required to statutorily maintain the accounts and also that he does not maintain any personal books and as such in the absence of such condition being satisfied, the provisions of section 142(2A) of the Act cannot be invoked to his case.
It is here that the Court upon perusal of the meaning of the term “account” upheld the validity of action for special audit. It held that the expression “accounts” cannot be read to mean “books of account” which are statutorily required to be maintained by certain classes of assessees, but has to be given a wider meaning.
In a way the assessee sought to equate the expression “accounts” with “books or books of account” as contemplated under section 2(12A) of the Act as against which the Court followed a view that “accounts” is to be given a wider meaning, it would include a record of financial transactions and not merely a formal statement of transactions.
Hence action under section 142(2A) is independent of whether or not the assessee is under any statutory obligation to maintain books of account in the relevant year. It is thus more than likely than unexplained cash deposits in bank pass book may even invite action u/s 142(2A).