Section 68

Section 68 – Meaning of Satisfactory explanation with respect to unexplained income!

Income Tax - This article aims at highlighting the meaning of Satisfactory Explanation to Assessing Officers with respect to Section 68 of the Income Tax Act, 1961....

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Taxation of Share Premium

Income Tax - Taxation of share premium is a relatively new but litigated area of taxation. This article examines the two alternative approaches the AO should adopt while examining the issue where share premium received is in excess of its fair market value, i.e. the route of Section 68 or Section 56 (2)(viib)....

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Tax @ 82.50% even if you received amount via proper banking channels

Income Tax - Yes, in certain case even if assessee received money through proper banking channels still it may attract tax @ 82.50% if assessee could not explain its source, identity and creditworthiness etc of the lender/giver of the amount to the satisfaction of Assessing Officer...

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Investment in Penny Stock- Bogus or Cash Credit U/s. 68?

Income Tax - Now-a-days Income Tax department investigates alleged trading/investment in shares and securities with collusion/connivance with any listed companies or with share broker by conducting Search/ Survey or by asking details u/s 133(6) of the Income Tax Act 1961....

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Income Tax on Shares Buy Back by Unlisted Companies

Income Tax - As we know, a company is a safer form of doing business. A company is a separate person than its shareholders/ members; it has its own personality and having power to assessed separately. The shareholders or members of the company are the real owners of the assets of the company. The company is doing business for the benefit of its stake ...

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Section 68 Addition for share capital/premium invalid if opportunity of cross-examination of witness not given

ACIT Vs El Dorado Biotech Pvt. Ltd. (ITAT Ahmedabad) - AO was duty bound to provide opportunity of cross-examination of witness, if he relied on statement of such witness to decide against assessee, particularly when it was demanded by assessee. Illegality crept in, the moment request for cross-examination was denied....

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Section 68 additions merely on third Party Statement without cross examination was invalid

ACIT Vs Overtop Marketing Pvt. Ltd. (ITAT Kolkata) - ACIT Vs Overtop Marketing Pvt. Ltd. (ITAT Kolkata) when the assessee as well as the lenders had discharged the onus upon them to prove the identity, creditworthiness and genuineness of the loan transaction, the AO could have disbelieved the transaction only on the basis of reliable material to dispr...

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AO cannot treat LTCG as Bogus merely on SEBI investigation report

M. Kiran Kumar Vs ACIT (ITAT Chennai) - Kiran Kumar Vs ACIT (ITAT Chennai) The AO disallowed the exemption claimed u/s.10(38) solely based on the investigation report by SEBI pertaining to certain cases based from Kolkatta wherein share prices rigged substantially over a period of time. Merely on suspicion and surmises, this disallowance ...

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No addition for unexplained cash deposit if Sale amount exceeds cash deposit in bank

Virender Kumar Vs ITO (ITAT Delhi) - In my considered opinion, once the total turnover of the assessee is much more than the total cash deposit in the bank account (in this case sales is 227% of the cash deposit), no addition is called for on account of unexplained cash deposit in the bank account. The explanation of the assessee appea...

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No addition for alleged bogus share capital if Identity of Shareholders Known to Department

Kalinga Conduits Electricables (P) Ltd. Vs PCIT (ITAT Delhi) - It was held that even if the shareholders are bogus, addition cannot be made in the hands of the assessee and addition can be made only in the hands of such bogus shareholders if their identity is known to the Department....

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SOP to apply provisions of section 68 of Income tax Act, 1961

246/151/2017-A&PAC-1 - (10/01/2018) - Assessing Officers should follow the sequence as noted below for applying provisions of section 68 of the Act: Step 1: Whether there is credit of a sum during the year in the books of accounts maintained by the taxpayer. Step 2: If yes, the assessee should be asked to explain the nature and source o...

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Section 68’s Popular Posts

Recent Posts in "Section 68"

Section 68 Addition for share capital/premium invalid if opportunity of cross-examination of witness not given

ACIT Vs El Dorado Biotech Pvt. Ltd. (ITAT Ahmedabad)

AO was duty bound to provide opportunity of cross-examination of witness, if he relied on statement of such witness to decide against assessee, particularly when it was demanded by assessee. Illegality crept in, the moment request for cross-examination was denied....

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Section 68 additions merely on third Party Statement without cross examination was invalid

ACIT Vs Overtop Marketing Pvt. Ltd. (ITAT Kolkata)

ACIT Vs Overtop Marketing Pvt. Ltd. (ITAT Kolkata) when the assessee as well as the lenders had discharged the onus upon them to prove the identity, creditworthiness and genuineness of the loan transaction, the AO could have disbelieved the transaction only on the basis of reliable material to disprove the same. In this case the […...

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AO cannot treat LTCG as Bogus merely on SEBI investigation report

M. Kiran Kumar Vs ACIT (ITAT Chennai)

Kiran Kumar Vs ACIT (ITAT Chennai) The AO disallowed the exemption claimed u/s.10(38) solely based on the investigation report by SEBI pertaining to certain cases based from Kolkatta wherein share prices rigged substantially over a period of time. Merely on suspicion and surmises, this disallowance was made without any corroborative evide...

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No addition for unexplained cash deposit if Sale amount exceeds cash deposit in bank

Virender Kumar Vs ITO (ITAT Delhi)

In my considered opinion, once the total turnover of the assessee is much more than the total cash deposit in the bank account (in this case sales is 227% of the cash deposit), no addition is called for on account of unexplained cash deposit in the bank account. The explanation of the assessee appears to be reasonable. Under these circums...

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No addition for alleged bogus share capital if Identity of Shareholders Known to Department

Kalinga Conduits Electricables (P) Ltd. Vs PCIT (ITAT Delhi)

It was held that even if the shareholders are bogus, addition cannot be made in the hands of the assessee and addition can be made only in the hands of such bogus shareholders if their identity is known to the Department....

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Sundry creditors cannot be doubted if AO accepts purchase, sales & net profit declared in return 

Srabani Construction (P) Ltd Vs DCIT (ITAT Cuttack)

Srabani Construction (P) Ltd Vs DCIT (ITAT Cuttack) In respect of addition of Rs.51,84,803/- made by the AO u/s.68 of the Act with regard to sundry creditors, on observing the financial statement it is found that the assessee could not produce the creditors as well as could not satisfy the three ingredients i.e. identity, creditworthiness...

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LTCG cannot be treated as Unexplained Cash Credits merely for astronomical increase in price of shares

Sh. Mukesh Mittal Vs ITO (ITAT Delhi)

Sh. Mukesh Mittal Vs ITO (ITAT Delhi) The assessment order clearly shows that the AO has merely reproduced the modus operandi of the entry providers who booked bogus long term capital gains through penny stock companies. The show cause notice dated 2.12.2016 issued by the AO during the assessment proceedings and the findings of the [&hell...

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Addition not valid when Cash Deposit is included in Turnover offered For Tax under Section 44AD

Virender Kumar Vs ITO (ITAT Jaipur)

Virender Kumar Vs ITO (ITAT Jaipur) It is noted that the assessee is in the diary business in the name and style of M/s Mohan Diary, Tijara and in pursuant to notice u/s 148, he has filed his return of income u/s 44AD declaring gross receipts from his diary business amounting to Rs 14,56,230/-. The […]...

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ITAT deletes addition made merely based on exparte Ad-Interim order of SEBI

Tapas Kumar Mallick Vs ACIT (ITAT Delhi)

Tapas Kumar Mallick Vs ACIT (ITAT Delhi) A perusal of the assessment order clearly shows that the Assessing Officer was carried away by the report of the Investigation Wing and the exparte Ad-Interim order of the SEBI. It can be seen that the entire assessment order has been framed by the Assessing Officer without conducting […]...

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ITAT explains principals for addition of new source of income by CIT(A)

ITO Vs Angel Cement Pvt. Ltd (ITAT Delhi)

ITO Vs Angel Cement Pvt. Ltd (ITAT Delhi) Now coming to the issue of fresh addition made by the ld. CIT (A) by making enhancement on account of alleged commission income in three cases. Though as discussed above, the ld. CIT (A) has deleted the addition made u/s.68 on the ground that no unaccounted funds […]...

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