Addition u/s 68-mere non-submission of ITR copy no ground to reject explanation

Addition u/s 68-mere non-submission of ITR copy no ground for rejecting explanation, when it was demonstrated that loans had already been repaid.  

ABCAUS Case Law Citation:
ABCAUS 2945 (2019) (05) ITAT

The sole grievance of the assessee in this appeal was that the CIT(A) had erred in confirming the addition made by the Assessing Officer (AO) under section 68 of the Income Tax Act, 1961 (the Act).

During the course of scrutiny assessment the AO mad the impugned addition u/s 68 of the Act towards cash credit appearing against nine persons/entities.

The CIT(A) called for the remand report and after examining the details furnished by the assessee, passed a detailed order confirming the addition qua three creditors only.

The Tribunal observed that the CIT(A) had confirmed the addition on the ground that the assessee failed to discharge onus put upon it by virtue of section 68 of the Income Tax Act.

The Tribunal further observed that Section 68 of the 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 found that confirmation from all these three creditors along with bank statements were placed on record. These confirmations were in the form of the ledger accounts. In other words, the balance shown in the assessee’s account had been confirmed by the creditors.

The Tribunal also noted that apart from the above, the assessee had demonstrated that these amounts had been repaid to them in subsequent years through account payee cheque.

The Tribunal, taking into consideration the above evidences, coupled with confirmation given by the creditors, expressed satisfaction that the assessee had fulfilled all the ingredients of section 68.

The Tribunal opined that mere non-submission of the copy of the income-tax return should not be a ground for rejecting the explanation of the assessee, when it had been demonstrated that loans had already been repaid.

Accordingly, the Tribunal allowed the appeal and deleted the impugned addition.

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