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2023 (1) TMI 525 - AT - Income TaxAddition of non-existing liability as unexplained cash credit u/s.68 of the Act as well as u/s.41(1) - HELD THAT:- We noted that neither AO nor CIT(A) is sure whether this is a transaction of unexplained loan or credit or this is a cessation of liability to be added u/s.41(1) of the Act or it is a business receipt to be added u/s.28(iv) of the Act, as noted by CIT(A). During the year the assessee received a sum as confirmation filed by assessee and this entry has routed through banking transactions and none of the authorities below i.e., CIT(A) or AO could not understand the nature of transaction and treated that as cessation of liability u/s.41(1) of the Act as well as unexplained credit u/s.68 . CIT(A) moved a further step and treated this amount as profit chargeable to tax u/s.28(iv) of the Act as profits and gains of business or profession in view of decision of T.V.Sundaram Iyengar & Sons Ltd [1996 (9) TMI 1 - SUPREME COURT]. Admittedly, this is a simple transaction of loan received by assessee’s wife in the books and therefrom she has advanced this amount and assessee is able to prove the sources by filing confirmation from the third party and assessee’s wife, although Trimex Resources Pvt. Ltd., does not file return of income for these years i.e. assessment year 2014-15 to 2016-17. But the AO has not taken any step to verify from the accounts of the company. In our view, the Revenue is not clear under which provisions this addition is to be made and hence, once this is not established the addition cannot be sustained. We delete the addition and allow the appeal of assessee.
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