INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of security deposits from dealers - Only some of the parties confirmed to have given security deposit to assessee

Assessee called for the confirmations from various parlies who had given security deposits to assessee amounting to Rs. 1.07 crores. Letters issued by AO remained unserved or had not been responded by respective creditors. Accordingly, AO made addition of the amount concerned under section 68. Assessee approached CIT(A), who deleted addition of Rs. 35 lakhs only. Held: In the remand proceedings, AO conducted complete enquiries about Security Deposit from Dealers of Rs. 1,07,00,.000 and after such enquiry came to a conclusion deposits amounting Rs. 35 lakhs were confirmed. In respect of some other persons there was a discrepancy in figures reported by respective parties and further some of the parties confirmed certain balances despite the fact that no notice under section 133(6) was issued to such persons. These confirmations did not inspire confidence, particularly in view of the fact that assessee had not discharged initial onus of producing these creditors before AO. There was no documentary evidence to prove that amounts stated to have been received as security deposits were either through banking channel or from credible source, and, therefore, order of CIT(A) was correct on facts and CIT(A) rightly sustained addition of balance Rs. 72 lakhs.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 68

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