Income Tax Addition Upheld for Unverified Cash Loan Creditors: Jharkhand HC

Rajmeet Singh Vs ITO (Jharkhand High Court)

Introduction: The Jharkhand High Court recently issued a ruling upholding income tax additions in the case of Rajmeet Singh Vs. ITO and Harmeet Singh Vs. ITO. The court’s decision was based on the failure of the appellants to prove the genuineness of creditors providing cash loans, resulting in substantial additions to their total income.

Detailed Analysis: The cases of Rajmeet Singh and Harmeet Singh were brought before the Jharkhand High Court following the dismissal of their appeals by the Income Tax Appellate Tribunal (ITAT). Both appellants were unable to satisfactorily explain cash deposits in their bank accounts, leading to additions under Section 68 of the Income Tax Act, 1961.

The court examined the arguments presented by both parties. The appellants contended that Section 68 did not apply as they did not maintain books of account, and the passbook provided by the bank should not be equated to books of account. They cited precedents to support their position, emphasizing that passbooks cannot be considered as books of account.

However, the court upheld the decisions of the lower authorities, stating that the appellants had submitted balance sheets, profit and loss accounts, bank statements, and other financial documents to the Assessing Officer. While passbooks alone may not constitute books of account, the financial statements provided by the appellants were considered part of their accounting records. Therefore, the additions under Section 68 were deemed justified.

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