Addition u/s 68 for cash deposited in bank received from absconding debtor on the ground that notice sent was received back unserved, deleted
ABCAUS Case Law Citation:
ABCAUS 2822 (2019) (03) ITAT
Important Case Laws Cited/relied upon by the parties
CIT Vs. Sun Builders, 41 taxman.com 484 (Guj)
CIT Vs. Keghjibhai P. Virani 35 taxmann.com 100 (Guj)
CIT Vs. Patel Natverlal Chinubhai & Co. 40 taxmann.com 304 (Guj)
The appeal in this case was filed by the assessee against the order of CIT(A) in confirming addition as unexplained credit us/ 68 of the Income tax Act, 1961 (the Act).
The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee.
A perusal of the record revealed to the Assessing Officer (AO) that the assessee had deposited cash in saving bank account. The AO sought source of such deposits in the banks.
The assessee contended that she had issued cheque to a share broker on different dates and against he said payments she had received cash which was used for depositing in bank.
The AO directed the assessee to prove identify of creditors, genuineness of the transaction, and their credit-worthiness.
The assessee submitted that the share broker had suffered lot of losses, and ran had away from the city. She produced cuttings from the newspapers in veracity of his submissions.
However, the AO did not rely upon the version of the assessee on the ground that notice sent to him had received back with the postal remark “left”.
Hence, Assessing Officer (AO), inter alia made the addition.
Appeal to the CIT(A) did not bring any relief to the assessee.
Before the Tribunal, the assessee drew attention to the newspaper cuttings which showed the the share broker had committed suicide and police was exploring other angle in share broker suicide. Also there were newspaper reports showing fate of the share broker and other forgery he had done to various investors. He was absconding from the investors.
The Tribunal noted that section 68 of the Income Tax Act contemplates that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof, or the explanation offered by the assessee is not, in the opinion of the AO satisfactory, then the sum so credited in the accounts may be treated as income of the assessee of that previous year.
The Tribunal opined that the claim of cash alleged to have been received from share broker had to be appreciated in the light of particular background of the issue. The AO had not disputed that the assessee had issued cheque in favour of the share broker, and money was cleared from SB account to that concern.
The Tribunal observed that it was also not in dispute that, that concern was running into trouble and ultimately proprietor died in mysterious circumstances. The question was, if an assessee could make payment as investor to said concern, and allege that under some compelling circumstances or non materialization of the deal, it was received in cash, then that admission of the assessee ought to be looked into looking to the peculiar facts.
The Tribunal further observed that the assessee could not produce the person for confirmation, because he was no more. The assessee was creditor to him. The assessee had been alleging that part of the money received back in cash.
The Tribunal opined that in these circumstances, unless there was other evidence with the AO to believe that the assessee has some other source of earning should not be disbelieved. If this was not the source for the assessee to deposit cash, and there should be some other mode which could be expected that the assessee must have earned income from that mode. No such things could be brought on record by the Revenue.
Accordingly, the ITAT deleted the additions.