ITAT remanded invocation of Section 115BBE denying set off of current year loss against income assessed u/s 68.
ABCAUS Case Law Citation
ABCAUS 3470 (2021) (03) ITAT
Important case law relied referred:
Sumati Dayal v. CIT reported in (1995) 214 ITR 801(SC)
CIT v. Durga Prasad More (1971) 82 ITR 540 (SC)
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the addition u/s 68 read with section 115BBE of the Income Tax Act, 1961 (the Act) made by the Assessing Officer (AO) on account of unexplained cash allegedly deposited by the assessee in the Bank account.
The assessee had e-filed his return of income declaring loss. The case of the assessee was selected for limited scrutiny under Computer Aided Computer Scrutiny (CASS) inter alia to examine genuineness of sundry creditors.
There was large amount of cash deposits in the bank accounts of the assessee. The assessee claimed that the aforesaid cash deposits were made directly by two sundry creditors in the bank accounts of the assessee and they were reflected as Sundry creditors in his books of accounts.
The AO asked the assessee to discharge its initial burden of proof regarding identity and credit worthiness of the creditors and genuineness of transactions.
The assessee instead of proving identity and creditworthiness of the parties and genuineness of the transaction, asked the AO to summon these sundry creditors for examination. The AO issued summons u/s 131 of the Act. Only one party appeared before the AO and denied having any financial transactions with the assessee. The assessee did not ask for cross examination of the party.
The assessee also could not prove the purpose of granting these alleged cash amounts and even terms and conditions of these alleged credit entries were not brought on record by assessee.
The AO treated both the creditors as bogus creditors and it was held that the amount of cash deposits in assssesee’ bank account was infact assessee’s own money which was to be brought to tax.
Accordingly, the AO made additions towards alleged cash deposits u/s 68 read with Section 115BBE of the Act.
CIT(A) dismissed the appeal of the assessee.
The Tribunal opined that in the instant case, the assessee had miserably failed to discharge primary onus cast u/s 68 of the Act with respect to cash deposits in his bank accounts allegedly from sundry creditors.
The Tribunal observed that the Hon’ble Supreme Court held that law does not prescribe any quantitative test to find out whether the onus in a particular case has been discharged or not. It all depends on the facts and circumstances of each case. The Hon’ble Court held that if the explanation does not accord with human probabilities and the story is found to be unbelievable, then it must be assumed to be his money.
Accordingly, the Tribunal upheld the orders of authorities below and held that Section 68 was rightly invoked.
However, the Tribunal observed that the assessee had also challenged denial of set off of loss of current year against income assessed to tax by AO by invoking provisions of Section 68 of the Act.
The Tribunal observed sub section (2) of Section 115BBE was amended by Finance Act 2016 w.e.f. 01/04/2017 to deny the set off of any losses. However, the CIT(A) had not adjudicated on the set off of losses under Section 115BBE as was in statute for the relevant Assessment Year time, while adjudicating appeal of the assessee.
The Tribunal restored the issue of invocation of Section 115BBE of the 1961 Act by AO for denying set off of current year loss against income assessed u/s 68 of the Act to the file of CIT(A) for fresh adjudication and to pass speaking and reasoned order as to applicability of Section 115BBE read with Section 68 on the facts and circumstances of the assessee’s case before denying set off of current year loss against income charged to tax u/s 68 of the Act, in set aside remand proceedings.
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