INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Trading results of the assessee not disturbed -

AO issued notices under section 133(6) but that were returned unserved/uncomplied. Therefore, AO asked the assessee to produce the creditors for his examination and recording of statements. However, the assessee could neither produce those creditors before the AO nor could produce any credible evidence to his satisfaction. Thus, AO treated those creditors as bogus and made addition under section 68. Assessee contended that when the purchase and sales have been accepted and books were not rejected and when the assessee was having regular transactions with the said parties and in subsequent years the assessments have been completed under section 143(3) without making any addition, then no addition was called for in the instant year. Held: It was noticed from the assessment order that the AO had not rejected the book results and thereby had accepted the purchases and the sales made by the assessee. Thus, addition could not be made under section 68 merely on account of the sundry creditors in whose cases the letters issued under section 133(6) were either returned unserved or were not complied with and the assessee failed to produce them.

Relied:CIT v.. Ritu Anurag Agarwal (2010) 2 taxmann.com 134 (Del),Smt. Sudha Loyalka, C/o M/s. RRA TaxIndia v. ITO (2018) 97 taxmann.com 30 (Delhi) : 2018 TaxPub(DT) 6082 (Del-Trib),ITO v. Zazsons Exports Ltd. (2015) 153 ITD 1 : 2015 TaxPub(DT) 2095 (Luck-Trib)

REFERRED : Shri Mehraj Malik C/o Shri Akhilesh Kumar, Advocate v. ITO [ITA No. 1789/Del/2015, Order, dated 15-5-2019]

FAVOUR : In assessee's favour

A.Y. : 2008-09

INCOME TAX ACT, 1961

Section 37(1)

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