ACIT Vs Ashok Ramulbhaya Malhotra (ITAT Ahmedabad)
No Section 68 Addition When Capital Introduction Pertains to Another Year:
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal for AY 2017-18, upholding the deletion of ₹2.27 crore addition under section 68 made on account of alleged unexplained capital introduction.
The Assessing Officer had treated deposits of ₹2,27,18,959 made with M/s Honeyvick Enterprises Pvt. Ltd. and credited to the assessee’s capital account as unexplained cash credits, on the ground that no supporting evidence was furnished during assessment. Penalty proceedings under section 271AAC(1) were also initiated.
However, the CIT(A) found as a matter of fact that the impugned deposits did not pertain to AY 2017-18 at all, and therefore, no cause of action arose for making an addition in the relevant year. On this sole ground, the addition was deleted.
Before the Tribunal, the Revenue failed to controvert the factual finding of the CIT(A) regarding the year of transaction. The ITAT held that section 68 cannot be invoked for a transaction which did not occur in the assessment year under consideration, irrespective of other issues raised by the Revenue.
Accordingly, the ITAT confirmed the deletion of the addition and dismissed the Revenue’s appeal.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
