INCOME TAX ACT, 1961

Section 68

Income from undisclosed source - Addition under section 68 - Purchases made on credit -

Assessee was a builder engaged in business of construction after claiming brought forward losses in respect of assessment years 1998-99 and 2000-01. AO completed the assessment under section 144 and asked assessee to explain about the current liabilities from the 03 companies for which AO had issued notices to 03 parties mentioned in the facts of the case under section 133(6) and could not find response from those parties. In this manner AO added the same amount as unexplained cash credit under the provisions of section 68. Held:After receiving the payment of building sold by assessee, payment was made to the parties and it was noted that the documentary proof was the books of assessee which were audited and it showed that all these payments were made and the assessee also filed necessary evidence before the authorities. All these submissions of assessee were forwarded to AO, however, he adopted his earlier stand. Hence, addition in dispute was not permissible under section 68 which should have been invoked under section 69C. The unpaid purchase price could not be added to the income of the assessee as per decision case of CIT v. Ritu Anurag Aggarwal [(2010) 2 taxmann.com 134 (Delhi)]. When purchases were not doubted by AO, addition in dispute under section 68 was not tenable.

REFERRED : Pr. CIT v. Shri Kulwinder Singh (2017) 298 CTR 389 (Punjab & Haryana) : 2017 TaxPub(DT) 5079 (P&H-HC); CIT v. Ritu Anurag Agarwal (2010) 2 taxmann.com 134 (Delhi) and Yaggina Veeraraghavulu v. CIT (1980) 126 ITR 48 (Delhi) : 1980 TaxPub(DT) 1088 (Del-HC).

FAVOUR : In assessee's favour.

A.Y. :

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