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2022 (9) TMI 881 - AT - Income TaxAddition u/s 68 - additions received as advance against sale of stock in trade i.e flats is against facts - HELD THAT:- Section 68 cast obligation on the assessee where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source of credit thereof or the explanation offered by the assessee is found not satisfactory in the opinion of the AO, the sum so credited may be treated as income and charged to income-tax as income of the assessee of that previous year. Burden/onus is cast on the assessee and the assessee is required to explain to the satisfaction of the AO cumulatively about the identity and capacity/creditworthiness of the creditors along with the genuineness of the transaction to the satisfaction of the AO. All the constituents are required to be cumulatively satisfied. If one or more of them is absent, then the AO can make the additions u/s. 68 as an income. The burden is very heavy on the assessee to satisfy cumulatively the ingredients of Section 68 as to identity and establish the credit worthiness of the creditors and genuineness of the transaction to the satisfaction of the AO, otherwise the AO shall be free to proceed against the assessee company and make additions u/s. 68 of the Act as unexplained cash credit. The use of the word “any sum found credited in the books" in Section 68 indicates that it is widely worded and the AO can make enquiries as to the nature and source thereof. AO can go to enquire/investigate into truthfulness of the assertion of the assessee regarding the nature and the source of the credit in its books of accounts and in case the AO is not satisfied with the explanation of the assessee with respect to establishing identity and credit worthiness of the creditor and the genuineness of the transactions, the AO is empowered to make additions to the income of the assessee u/s. 68 of the Act as an unexplained credit in the hands of the assessee company because the AO is both an investigator and adjudicator. Thus, in the instant case, we hold based on facts and circumstances of the case, that the assessee fails to satisfy the mandate of Section 68 as creditworthiness of these persons as well genuineness of the transactions could not be proved by the assessee, and we sustain the addition of Rs. 54 lacs as was upheld by ld. CIT(A). The assessee fails on this issue. Additions to being amount received by cheque which was credited in assessee’s bank account, and the assessee has claimed that the said amounts were towards finishing work in the flats - HELD THAT:- It is claimed that the said finishing work was done in the subsequent year and the amount was offered for taxation by assessee in immediately succeeding year. The assessee has also filed quotation issued by it to these two persons for doing the finishing work - The complete name and addresses of these two persons are on record. We are of the view that claim of the assessee requires verification, and the matter is restored back to the file of AO for fresh adjudication. We clarify that we have not commented on the merits of the issue. AO shall provide proper and adequate opportunity of hearing to the assessee in set aside remand proceedings.
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