Addition on the basis of bounced cheques- ITAT Slams Revenue officials

Advertisement CIT Vs Smt. Shashikala Ramkumar (ITAT Hyderabad) First of all it is not understandable how an AO can make addition on the bounced cheques. It is a general banking practice that once cheques are presented for clearance, bank credits out of its own funds, subject to clearance and when cheques are not cleared, the amounts are reversed. Thus in practice, once the cheque is presented, banks credit the amount of cheque value. Therefore, the credits in the bank account are the funds of the bank which cannot be treated as ‘unexplained’ in any manner. Since the cheques have been bo...