Section 68

Peak Credit and telescoping theories in assessment proceedings under Income Tax

There may be some cases under Income Tax Assessment proceedings where there are a large number of unexplained credit and debit enteries of a person standing in books of account of an assessee. In such case the AO may tend to add all the aggregate enteries as unexplained income. However, in such case if the assessee does not have any explanation for every credit or debit entry of a person, standing in his books of account then one of the most commonest defences which an ..
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Addition under S. 68 cannot be made for loan taken in earlier years

ITO Vs. Nasir Khan J. Mahadik (ITAT Mumbai)-Mumbai ITAT has in the following case deleted the additions made on account of opening balances of unsecured loans and the notional interest on such loans. The Tribunal held that only fresh loans or additions to the loans during the year in question can be considered for the purpose of addition. Previous years loans cannot be added to subsequent year's income by claiming them to be unexplained.
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Deduction under Section 80 HHC allowable in respect of the addition made on account of the creditors

DCIT Vs. Divine International (ITAT Delhi) - The CIT(A) has denied the deduction in respect of the addition on account of the so called sundry creditors on the ground that as per the provisions of Section 80 HHC, it is only the income derived by the assessee from the export of such merchandise which is eligible and the addition on account of creditors cannot be considered as income derived from the exports.
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Assessee’s AO cannot question Creditor’s Income Tax Return instead he should inquire with creditor’s AO

CIT vs. Dataware Pvt Ltd (Calcutta High Court) The assessee company received share application money of Rs.1 Crore from M/s. Harrington Traders Pvt. Ltd. (hereinafter referred to as the creditor). During the assessment proceedings the assessee company submitted the confirmation letter of the creditor, details of the transaction, namely, its PAN etc. to the Assessing Officer during the second round of assessment proceeding. As per direction of the Tribunal below ..
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Addition under section 68 not permissible when the advances are received by account payee cheques and interest and shares have been paid and allotted against these advances

DCIT Vs. Bihariji Ispat Udyog Ltd. (ITAT Kolkata) - From the record it appears that all the aforesaid transactions were by Account Payee cheques and loan confirmation and also the confirmation for payment of Share Application Money were obtained from the said Ankur Marketing Ltd. with its I.T. File No. and the same were filed with the A.O. For the Share Application Money received by the assessee, shares were allotted immediately after close of the accounting year 2000-01..
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AO based on the report of the Inspector without giving an opportunity to the assessee to explain the alleged information, is not correct

S K Bothra & Sons, HUF Vs ITO (Calcutta High Court) - When the assessee has discharged the initial burden to prove the loan transaction, the addition made by the AO based on the report of the Inspector without giving an opportunity to the assessee to explain the alleged information, is not correct.- In our view, equity and justice demand that the full text of the information given by the Inspector to the Assessing Officer which is the basis of the conclusion of the asses..
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When the assessee successfully explains the source of share application money, the additions made u/s 68 are not sustainable

ACIT Vs. H.K.Impex Pvt. Ltd.(ITAT Mumbai) - The dispute is regarding addition of Rs.4.85 crores being the share application money invested by the two directors who were holding 50% share in the company. We find from the records that the assessee vide letter dated 17.9.09 addressed to AO had given full details such as name, address, PAN of the two directors. The source of the money had been explained as the money withdrawn from the capital account in the firm M/s. S.G. ..
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EPCG Scheme- Section 15(1)(b) would be applicable only when the goods are cleared from the warehouse u/s. 68 of the Cust

Section 15(1)(b) would be applicable only when the goods are cleared from the warehouse under Section 68 of the Act, i.e., within the initially permitted period or during the permitted extended period. It is trite to say that when the goods are clear
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