The debit entry cannot be added under Section 68 as it speaks about “Cash Credit” and not for debits entries
In a recent judgment, ITAT has deleted addition u/s 68 on the alleged cash credit holding that when a debit entry in the books can not be added under Section 68 of the Income Tax Act, 1961.
ABCAUS Case Law Citation:
ABCAUS 3951 (2024) (04) ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A), NFAC in confirming addition of Rs. 50,00,000/- on account of unsecured loan given treated alleged unexplained cash credits under section 68 of the Income Tax Act, 1961 (the Act).
The case of assessee was reopened u/s 148 of the Act on the basis of information received from Investigation Wing that one party had received unsecured loan from certain entities. The name of assessee was also shown in such unsecured loan availed by the said party and his group.
The Assessing Officer added such unsecured loan in the income of assessee, which was allegedly given by the assessee to the said third party. The additions were made under Section 68 of the Act.
The CIT(A) upheld the addition made by Assessing Officer by taking a view that the assessee failed to discharge the onus required under Section 68 of the Act.
Before the Tribunal, the assessee contended that as per case of assessing officer, the assessee had paid unsecured loan and not availed. The debit entry cannot be added under Section 68 of the Act. The assessee had paid loan to the third party as recorded in the assessment order.
It was submitted that the language of Section 68 of the Act speaks about “Cash Credit” and not for debits entries. Even otherwise, such addition cannot be made against the assessee on any other sections, as such debit entries were duly reflected in the books of the assessee.
Thus, it was prayed that the entire addition which was based on erroneous assumption was liable to be deleted.
The Tribunal opined that there was merit in the submission of the assessee that there was no credit in the books of assessee which could be added under Section 68 of the Act. Rather the entry of unsecured loan was in the form of debit entry. It was not the case of Assessing Officer that the assessee had made advance/unsecured loan which is not recorded in the books of assessee.
Accordingly, the appeal was allowed.
Empanelment of General Observers for ICSI Examinations June 2026 ICSI has invited interested members to enroll as General Observers for…
Income Tax Department Pune is engaging Young Professionals CA for assistance in ITAT representation With a view to augment departmental…
IDBI invites application for empanelment of Chartered Accountant firms as Concurrent Auditor for FY 2026-27 IDBI Bank has invited online…
Audit reports must be disclosed if considered relevant by banks in classifying the account of a customer as fraud –…
ICAI sets up a branch of CIRC at Korba city (Chhattisgarh) w.e.f. 6th February, 2026 Council of the Institute of…
Chartered Accountants Final Examination to be held twice a year from May 2026 Examination onwards ICAI vide Notification dated 15.04.2024…