INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Unexplained cash credit - Remand of matter

Assessee was engaged in business of real estate. Apart from other additions, AO made addition under section 68 of an amount as unexplained cash credit. AO was of the view that assessee had failed to discharge its onus under section 68 to satisfactorily explain the cash credit reflected in the form of 'advances received against booking of flat/space'. This amount represented advance money received towards booking of flats from 447 parties. AO had randomly picked up some of the parties for examination and had called for their confirmations. Since AO was not satisfied with the responses received, he made the addition. Held: Both the parties submitted that two issues in dispute needed a fresh and thorough examination and scrutiny and it would be in fitness of things if both the issues were remitted to AO. Parties agreed that the examination and the verification of the 447 parties would necessarily have to be carried out at the level of AO and assessee would fully cooperate in getting the advances verified before AO. Similarly, with respect to the interest disallowance both the parties submitted and agreed with this issue also needed detailed enquiry and examination and that AO would be the best person to carry out such exercise. Therefore, matter was remanded back to AO for fresh verification, examination and adjudication as per law after giving proper opportunity to the assessee.

Followed:SA Builders Ltd. v. CIT 2007 TaxPub(DT) 0834 (SC) CIT v. Sweta Estates Pvt Ltd [ITA 894/2011, dt. 14-5-2012]

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2005-06

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