Income Tax : Learn about unexplained cash credits under Section 68, tax implications, key legal cases, and compliance requirements to avoid pen...
Income Tax : Understand the applicability of Section 68 (cash credit) and Section 69 (unexplained investments) under the Income Tax Act with re...
Income Tax : The Sections by which the assessees are suffering too much due to high pitched assessments passed by NFAC are from 68 to 69D and 1...
Income Tax : Recent Chennai ITAT decisions address unexplained income, underreporting, and penalties under Sections 69A, 68, 270A, and 271. Key...
Income Tax : Learn about penalty provisions under the IT Act, including penalties for defaults in tax payment, income reporting, and more. Key ...
Income Tax : ITAT Bangalore reverses addition of ₹12 lakh under Section 68, accepting sales as the source of cash deposits made during demone...
Income Tax : ITAT Raipur held that penalty under section 271(1)(c) of the Income Tax Act justifiable since no plausible explanation provided fo...
Income Tax : ITAT Delhi held that when the sale consideration as per conveyance deed and circle rates are different, matter must be referred to...
Income Tax : ITAT Jaipur held that addition of the amount already recorded as cash sales cannot be treated as unexplained cash deposits under s...
Income Tax : ITAT Ahmedabad held that addition, treating share application money as unexplained income, based on surmises and conjectures witho...
Income Tax : Assessing Officers should follow the sequence as noted below for applying provisions of section 68 of the Act: Step 1: Whether the...
A.O. was not convinced by the explanation furnished by the assessee with regard to share capital received from six applicants and a sum of Rs.24 lacs was added u/s 68 of the Act. Appeal filed with CIT was rejected on the ground of assessee inability to explain the identity
In the present instance, the AO apparently had the books and all the relevant information pertaining to the share applicants. CIT v. Lovely Exports (P) Ltd. 2008 (216) CTR (SC) 195 directs that whilst the initial onus to prove the identity of a third party,
Assessee relied upon the assessment order of AY 2008-09 before CIT (A) in which the accounting to assessee was accepted by revenue. CIT (A) took cognizance of that order pertaining to AY 2008-09 and quantified net profit of assessee retail business @ 5%. ITAT also confirmed the order of CIT (A).
While Section 68 certainly enables the AO to bring to tax amounts which are suspect, in a transaction of the present kind, where the identity and the relationship of the donor are known, the AO in our opinion ought not to have concluded that the transaction – by which the assessee received the amount of Rs. 1,84,860/- was ingenuine.
There are various case laws which conclude the facts that once the assesse discharged its primary onus by placing material and document on record before AO then it is assumed that the unexplained amount reflected in books of assessee stands explained.
In AY 1994-15, the assessee (Sarita Aggarwal) had shown credit of Rs.2,60,000/- in the capital account under the narration Gift. The Assessing Officer disbelieved the claim and made an addition of the aforesaid amount to the income as declared, holding that the assessee was unable to establish genuineness of the gift.
Clearing difference has been determined on the basis of statement of purchase and sales of shares of security made on assessee’s behalf by the broker. CIT(A) decided this issue after examining the ledger accounts maintained by the assessee and contract notes issued by the broker.
The assessee submitted that he produced following evidences before the AO to prove the identity and creditworthiness of Shri Vinod Kumar :- (i) Copy of Share Application received from Mr. Vinod Kumar (ii) Copy of Shares Certificate of shares Allotted to him (iii) Copy of confirmation received from him
Mere cash deposit in the bank account of the creditor cannot be said that the creditor has no creditworthiness. Then by disagreeing by the other decisions the Hon’ble Tribunal held that in the present case, not even a notice was issued by the Assessing Officer to the creditors to examine and verify the case of the assessee regarding creditworthiness and identity of the creditors.
Peak credit theory will be applicable only when there are deposits in cash and withdrawals in cash. In the instant case when the deposits are made in cash and most of the withdrawals are by way of clearing and not cash withdrawn, therefore, the theory of peak credit is not fully applicable to the facts of this case.
