Addition u/s 68 towards unexplained cash credit unjustified as source of credit entries explained

DCIT Vs Vikas Arora (ITAT Delhi)

ITAT Delhi held that addition towards unexplained cash credit under section 68 of the Income Tax Act unjustified as necessary details explaining the source of credit entries duly provided.

Facts- The assessee, a non-resident individual, filed his return for the assessment year under dispute declaring income of Rs.10,15,790/-. The return so filed was processed u/s. 143(1).

Subsequently, AO received information that an amount of Rs.3,68,15,167/- has been credited to the bank account of the assessee. Since, the amount credited to the bank account was not offered in the return, AO reopened the assessment u/s. 147 of the Act. Alleging that the assessee did not furnish any documentary evidence to substantiate his claim, AO treated the amount of Rs.3,68,15,167/- as unexplained cash credit u/s. 68 of Act and added back to the income of the assessee, while completing the assessment u/s. 143(3) read with section 147 of the Act.

Conclusion- Held that the assessee has considered the income derived from sale of property credited to the bank account. That being the factual position emerging on record, in our view, reopening of assessment appears to be without proper application of mind and based on conjectures and surmises. There is no live link between the materials available on record and the formation of belief. Therefore, in our view, learned first appellate authority was justified in holding the reopening of assessment under section 147 of the Act to be invalid.

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