Bank passbook is not book of account for purpose of Income Tax

In CIT, Poona v. Bhaichand H. Gandhi 141 ITR 67 (Bom.) it was held that the pass book supplied by the bank to the assessee cannot be regarded as the book of the assessee, that is, a book maintained by the assessee or under his instructions. Therefore a cash credit for the previous year shown in the assessee’s bank pass book but not shown in the cash book maintained by the assessee for that year, does not fall within the ambit of Section 68 of Income Tax Act, 1961,thus if AO finds any unexplained transaction in the bank passbook of the assessee then same can be taxed as unexplained money under Section 69A of the act8. It is not necessary that books of account must be rejected before making any addition under Section 68. In Devinder Singh v. ACIT [2006] 101 TTJ 505 (ITAT-Asr) it has been held that there is nothing in Section 68 that books of account must be rejected before making an addition under Section 68. This is an independent and deeming provision and will apply if the assessee fails to offer an explanation of the source of particular receipt/credit appearing in the books of account or if the explanation given by the assessee is found to be not satisfactory by the A.O.

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