Chandermauli Vs ITO (ITAT Ahmedabad)
Section 68 Cannot Tax an Entry That Never Entered the Books: ITAT Deletes ₹13.29 Lakh Addition Built Solely on Insight-Portal Information
The Ahmedabad Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal and deleted an addition of ₹13,29,120 made under section 68 of the Income-tax Act, 1961 for Assessment Year 2018-19. The Tribunal held that the primary condition for invoking section 68 is that the relevant sum must actually be found credited in the books of the assessee. In the absence of evidence establishing such a credit entry, the addition could not legally be sustained.
The case of the assessee was reopened on the basis of information available on the Insight portal alleging that the assessee was one of the beneficiaries of accommodation-entry transactions aggregating to ₹13,29,120 through M/s. Asti Vinayak Textile, M/s. Ganpati Textile, Narayan and Company and M/s. Hanuman Fabrics. The assessee categorically and repeatedly denied having undertaken the alleged transactions and submitted its bank statements, cash ledger and books of account before the Assessing Officer. According to the assessee, the alleged accommodation entries were not reflected in those records.
Despite the submissions, the Assessing Officer proceeded to add ₹13,29,120 on the basis of the information available with him. The addition was made as unexplained cash credits under section 68 read with section 115BBE, and penalty proceedings under section 270A were also initiated.
