INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Assessee, failed to substantiate that the cash deposits in his account were on account of sales made by him from his business -

Assessee had deposited cash in his bank account. AO made addition under section 68 on account of unexplained cash deposited in assessee's bank account. Assessee contended that it was the proceeds of sale from his business that were deposited in the bank account. Further, he contended that AO had not provided time to submit the required documents and had not considered the return filed and the declaration accompanying the same. But, as the assessee had failed to explain the nature and source of cash deposited in his bank accounts or produce any evidence in the nature of purchase bills to justify that the deposits in the bank account were sale receipts, his contention was rejected. Held: Since assessee had failed to produce any material to authenticate that the cash deposits in his account were on account of the sales being made by him from his business, therefore, the Revenue could not be faulted for making the addition of the unexplained cash entries in the bank account under section 68. Moreover, the Revenue upheld that the cash had been deposited merely to generate funds in the bank account, whenever payments were required to be made by cheque. Therefore, indeed there was no nexus with the gross receipts. Further, as the assessee had not produced any material in support to explain the entries of cash such as books of accounts or purchase bills, etc, AO had rightly made addition under section 68.

REFERRED : Ravinder Kumar v. ITO [ITA No. 196/Del./2019, dt. 2-9-2019] : 2019 TaxPub(DT) 6784 (Del-Trib)

FAVOUR : Against the assessee

A.Y. : 2010-11

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