INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Cash deposits--Such deposits were on account of sale proceeds -

AO found that assessee maintained various bank accounts in his name and his proprietorship concern, however, only one account was furnished and no further explanation was furnished by him. Accordingly, the AO held that bank deposits did not stand verified and all the credit entries appeared in the said bank accounts amounting to Rs. 4,37,07,862 were added to the total income of the assessee as unexplained cash credits under section 68. Assessee submitted that the alleged cash deposits were mostly on account of sales proceeds out of his poultry business. Held:It was found that out of cash deposits of Rs. 4,37,07,862 in assessee's bank accounts, an amount of Rs. 3,40,35,960 represented sale of poultry products, which was also reported in the audited financial statements. Further, the difference of Rs. 96,71,902 between the total cash deposits and sales was found due to inter transfer entry, RTGS/NEFT failure, advance return, etc., which was accepted by CIT (A) except for an amount of Rs. 12,05,000 which as per assessee represented opening cash and debtor balances because as per the CIT (A), the said opening balances were not verifiable in absence of books of account for previous years. However, assessee submitted that he was regularly filing ITRs, and further third party confirmation from debtors and cash book was duly submitted and books of account for preceding years were also maintained. Accordingly, the matter was remanded to AO for verification of opening balances of cash and debtors.

REFERRED :

FAVOUR : Matter remanded

A.Y. :

INCOME TAX ACT, 1961

Section 145(3)

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