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2019 (10) TMI 842 - AT - Income TaxUnexplained cash credit u/s 68 - HELD THAT:- We are of the view that u/s. 68 of the Act, it is only the credit entry appearing in the books of account of an assessee for the relevant previous year, that can be treated as unexplained cash credit in the absence of proper explanation by the assessee. Therefore, the opening balances cannot be added u/s. 68. Closure of business of assessee in June, 2015 was a sufficient cause for non-production of evidence before the AO and therefore the CIT(Appeals) ought to have admitted additional evidence in terms of Rule 46A(1)(c) of the Rules. The same reason would hold good for the assessee’s claim with regard to discrepancies in the closing balance of sundry creditors as shown by the assessee in the books of account. The additional evidence sought to be filed by the assessee ought to have been admitted for adjudication by the CIT(Appeals). Set aside the order of CIT(Appeals) and remand the issue to the AO for fresh consideration with regard to the issue of addition u/s. 68 AO will consider the additional evidence filed by the assessee before the CIT(Appeals) and after giving opportunity of being heard to the assessee, decide the addition u/s. 68 afresh in accordance with the law. As far as the refusal of the AO to allow set off of current year business loss against income added u/s. 68 of the Act by relying on the provisions of section 115BBE(2) which was inserted by the Finance Act, 2016 w.e.f. 1.4.2017, it is not in dispute before us that the CBDT in Circular No.11 of 2019 dated 19.6.2019 clarified that the amendment sought to be relied upon by the AO is applicable only prospectively and therefore not applicable to AY 2015-16. Hence even in the event of addition being made u/s. 68 in the set aside proceedings, the assessee should be given the benefit of set off of current year’s business loss against the addition u/s. 68 of the Act.
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