Unexplained cash credit addition u/s 68 for house constructed deleted on the basis of cash in hand balance in balance sheet filed along with return
ABCAUS Case Law Citation:
ABCAUS 2403 (2018) 07 ITAT
The instant appeal had been filed by the assessee against the Order of the CIT(A) an sustaining the addition made by the Assessing Officer (AO) as unexplained investments under section 68 / 69 of the Income tax Act, 1961 (the Act).
The assessee was having income from rent, commission and agriculture. During the relevant assessment year (AY) the assessee had claimed a sum utilized by it for construction of a house, out of cash balance available with the assessee, commission and other receipts recorded in the cash book.
However, the claim of the assessee was disbelieved by AO as the assessee was not able to furnish the documentary evidences for the sources of construction out of commission receipts. Therefore the AO treated the entire amount invested in construction as unexplained investment and added to the total income of the assessee.
The Commissioner of Income Tax (Appeals) confirmed the disallowance citing a reason that assessee had failed to furnish evidence for opening cash balance, commission received and other receipts recorded in the cash book.
The Tribunal observed that as per the profit and loss account and Balance Sheet filed by the assessee along with its return for the relevant assessment year, it clearly showed that the assessee had sufficient cash in hand under the heading current asset.
The ITAT opined that the opening cash balance available with the assessee was more than the amount claimed to have invested in the contruction which could at the best be considered as overstatement of cash balance.
It was held that the assessee was having sufficient source for construction of a house and there was no reason to sustain the addition made by the lower authorities.
Download Full Judgment Click Here >>
