Case Law Details
Narendra Chandubhai Rafaliya Vs ITO (ITAT Ahmedabad)
Conclusion: Existence of books of account maintained by assessee was a condition precedent for making addition under section 68. Where assessee had not maintained books of account, there was no legal scope to invoke provisions of section 68 and as such, addition made on such premise was to be deleted.
Held: Assessee-individual engaged in the business of carrying out job of work of power coating. He declared net income of Rs. 3,33,630 under section 44AD, assessee had made cash deposits on various dates in his bank account held with “Bank of India” aggregating to Rs. 63,58,700 which was questioned. He had filed return of income under section 44AD for previous two years as well and he was not required to maintain books of account of such business. AO made total addition under section 68 amounting to Rs. 63,58,700 on the basis of loans being bogus and not trusting the creditworthiness of depositors genuineness of the transactions were not proved. . CIT(Appeals) restricted the addition to Rs. 47,35,070. It was held that in the case of Smt. Madhu Raitani v. ACIT [2011] it was held that existence of books of account maintained by assessee was a condition precedent for making addition under section 68. Where assessee had not maintained books of account, there was no legal scope to invoke provisions of section 68 and as such, addition made on such premise was to be deleted. As regarding cash deposits of Rs. 12,57,700 assessee had filed confirmations along with identity proofs of lenders which showed each of the individual lenders were less than Rs. 20,000 the tribunal held that they were sound and the source of cash stood substantiated, hence, this ground was allowed. Additional ground of appeal filed by the assessee relates to set-off of loss from derivative transactions of Rs. 24,79,180 against income declared by the assessee in the return of income the tribunal observed that due to oversight the assessee could not have claimed the loss either before the lower authorities. The tribunal held that “additional claim” could be raised at any stage before “appellate authorities” and in interest of justice the matter was restored to the file of AO with a direction to verify the claim of the assessee in respect of this ground.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-3, Ahmedabad in Appeal no. CIT(A)-3/ITO, Ward-3(3)(8)/344/17-18 vide order dated 26/11/2018 passed for the assessment year 2015-16.
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