INCOME TAX ACT, 1961

Section 68

Income from undisclosed source - Addition under section 68 - AO felt that money of assessee was routed through assessee's-HUF and amount was concealed income -

Assessee disclosed a total income derived from interest, remuneration and commissions. The said return was selected for scrutiny by CASS for the reason 'Large Increase of Unsecured Loans'. Therefore, notice under section 143(2) was issued and served on assessee. However, none appeared for assessee and therefore, assessment was completed under section 144, bringing the unsecured loans to tax under section 68. It was submitted that AO was satisfied with the financial position of HUF with regard to money advanted and there is an entry of Sundry Debtors in the Balance Sheet of HUF. AO felt that money of assessee was routed through assessee's-HUF and amount was concealed income. Held: HUF had filed its return of income for assessment year 2012-13 and CPC had processed the return also on 14-05-2013. AO had issued notice requiring assessee to explain the sources for the deposits in cash to assessee in HUF status. Assessee had also filed reply and the acknowledgment of ITO was also available. After that date, no action was taken by ITO and therefore, it was to be deemed that AO was satisfied with the explanation given by assessee-HUF. Once AO of assessee-HUF had accepted the source for the deposits made into its accounts, the creditworthiness of the HUF was accepted by ITO and therefore, the same cannot be doubted in the hands of individual.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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