INCOME TAX ACT, 1961

Section 68

Income from undisclosed source - Addition under section 68 - Unexplained cash credit -

AO observed that assessee was maintaining a Bank A/c and on perusal of the bank account statement, AO observed that assessee had made cash deposits. He also noticed that on several occasions, cash was deposited from outstation. Assessee submitted that cash deposit represented the loan taken from one Mr. S and cash deposited related to kirana business. AO, however, was not convinced with the contentions of assessee in toto. He, therefore, asked assessee to explain why peak credit appearing in savings A/c of assessee should not be treated as 'unexplained cash credit' under section 68. Since assessee did not offer any substantial evidence, AO brought the same to tax under section 68. Held: Assessee had not established that deposits were out of business transactions, but peak cash credit added by AO and confirmed by CIT(A) also cannot be upheld because assessee had declared the gross turnover which was also part of cash deposits. Therefore, peak credit worked out by AO could be a receipt from business transactions also. Therefore, AO was directed to treat all unexplained cash credits also as business turnover of assessee and estimated the income thereon at the same rate at which the disclosed income was brought to tax.

REFERRED : CIT v. Devi Prasad Vishwanath Prasad (1969) (72 ITR 194) (SC) : 1969 TaxPub(DT) 0124 (SC) Kale Khan Mohammad Hanif v. CIT (1963) (50 ITR 1) (SC) : 1963 TaxPub(DT) 0420 (SC) CIT v. Maduri Rajaiahgari Kistaiah (1979) (120 ITR 294) (AP) : 1979 TaxPub(DT) 0337 (AP-HC)

FAVOUR : In assessee's favour

A.Y. : 2014-15

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