Addition u/s 68 based on bank entries where return was filed under presumptive section 44AF deleted.

Addition u/s 68 where return is filed under presumptive section 44AF deleted. Addition can not be made based on entries in bank statement  

ABCAUS Case Law Citation:
ABCAUS 3150 (2019) (09) ITAT

Important case law relied upon by the parties:
CIT Bihar vs. Bihari Bros (P) Ltd

Addition u/s 68 based on bank entries where return was filed under presumptive section 44AF deleted.

In the instant case, the assessee had filed the appeal challenging the order passed by CIT(A) in confirming the addition u/s 68 of the Income Tax Act, 1961 (the Act) by treating the cheque deposits in the bank account as unexplained cash credits.

Before the Tribunal, the assessee submitted that it was undisputed that the assessee was not maintaining any books of account and the Assessing Officer (AO) had made an impugned addition on the basis of entries found in the bank statements of the assessee.

It was contended that the addition u/s 68 based on entries in the bank statement is not permissible as the provision of section 68 clearly states that any amount credited in the books of account can only be added as per the provisions of section 68 of the Act.

It was further stated that assessee had received all unsecured loans through cheques and in this respect filed copy of bank statement highlighting the entries of receipt of cheques. The assessee also placed reliance on the order of Hon’ble High Court for the proposition that once the assessee had received unsecured loans through cheques and assessee submitted the details of creditors, the assessee is deemed to have discharged its onus.

The Tribunal observed that the assessee had filed return of income under the provisions of section 44AF of the Act, which establishes that the assessee was not maintaining books of account.

It was further noted that the Assessing Officer had made an addition out of various cheques credited in the bank account of the assessee. The assessee during the course of assessment proceedings had filed confirmations regarding receipt of unsecured loans from these persons. Thus, these additions were made on the basis of entries in the bank statement as the assessee was not maintaining any books of account.

The Tribunal opined that the addition u/s 68 can only be made if any unexplained sum is found credited in the books of account of the assessee. But in the instant case, the sum was not found credited in the books of account and therefore, the addition made u/s 68 was not sustainable.

Hence the Tribunal reversed the order of learned CIT(A) and the appeal of the assessee was allowed.

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• ‘Transfer of property’ not include ‘acquiring’ of property or ‘purchasing’ of property – ITAT
• AO was not justified in questioning cash withdrawals from bank account – ITAT
• Return/Balance sheet filed within limitation extended by SC to be considered within time
• Satisfaction Note u/s 153C – term immediate cannot be extended to unreasonable delay

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