Addition for unexplained cash credit u/s 68 deleted when assessee’s accountant wrongly passed such entries in the books of accounts
ABCAUS Case Law Citation:
ABCAUS 2798 (2019) (02) ITAT
In the instant case, the assessee had filed the appeal against the order passed by the Commissioner of Income Tax (Appeals) in confirming the order of the Assessing Officer (AO) who had made addition towards unexplained cash credits u/s 68 of the Income Tax Act, 1961 (the Act).
The assessee was an individual earning rental income, commission and agricultural income. The assessee did not file his return of income for the relevant assessment year.
The case was reopened U/s 147 of the Act and notice U/s 148 & 142(1) of the Act was issued.
During the course of scrutiny assessment proceedings, it was observed by the AO that the assessee had introduced cash in his books of accounts. On query it was explained by the assessee that the assessee had not actually introduced cash but the assessee’s accountant had wrongly passed such entries in the books of accounts.
It was further explained that assessee had brought in to his books of accounts his family jewelry, property received out of family settlement.
However rejecting the submission, the AO passed the assessment order u/s 143(3) r.w.s. 147 of the Act making addition in the hands of the assessee invoking the provisions of Section 68 of the Act.
On appeal the CIT(A) also confirmed the order of the Ld.AO by agreeing with his view.
Before the Tribunal, the assessee explained the mistakes committed by the accountant while writing the books of accounts of the assessee. The assessee also produced the books of accounts and the relevant documents to explain the same.
The Tribunal observed that the perusal of the books of accounts and the relevant documents shows that the assessee’s accountant had wrongly passed the entries in the books of accounts.
The Tribunal noted that the assessee had brought into his books of accounts land and jewellery. However, the assessee’s account instead of debiting the above assets and crediting assessee’s current account has wrongly passed entries as if the assessee has brought in cash and purchased these assets during the relevant assessment year.
The Tribunal opined that in view of the facts of the case, the addition made by the AO was erroneous and warranted.
Accordingly the AO was directed to delete the addition made in the hands of the assessee by invoking the provision of Section 68 of the Act because the assessee had not actually introduced cash in his books of accounts but for the mistake of the accountant