Navodit Singh Vs Prakhyat land Developers Private Limited (ITAT Mumbai)
Wrong invocation of section 68 instead of section 69C is a curable defect under section 292B, but the addition can survive only if the conditions of the correct charging provision are independently satisfied: ITAT Mumbai
Summary: The Mumbai ITAT held that an addition cannot automatically survive merely because the Assessing Officer invoked the wrong provision of law, but the matter must still be examined on merits. The dispute arose when the Assessing Officer treated a difference in unsecured loan repayment as unexplained cash credit under Section 68 based on mismatch between the assessee’s books and lender confirmation. The assessee explained that the difference represented an unpresented cheque issued towards interest liability, which was later reversed and paid in the subsequent year. The CIT(A) deleted the addition holding that Section 68 applies only to credit entries and not expenditure or repayment transactions. The Tribunal agreed that Section 68 was wrongly invoked since no fresh credit was received during the year, and also observed that the Assessing Officer failed to verify the accounting treatment of the entry. However, the ITAT restored the matter for limited verification of subsequent payment through banking channels before deleting the addition finally.
