INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Unexplained income -

During the course of scrutiny assessment proceedings, AO observed that assessee had obtained loan from the bank, which was disbursed by the Bank to Mr. S, a building mistry by way of a pay order. It was further observed by AO that assessee had not recorded the loan transaction in her books of accounts. AO opined that there was discrepancy in transactions which could not be explained by assessee satisfactorily, therefore she treated the amount as unexplained income and accordingly made addition under section 68. It was further observed by AO that assessee had received cash on various dates from various parties. On query, it was explained that assessee had extended loan to various parties and the same was partially returned during the relevant assessment year. Since assessee could not explain the source of the loan extended to various parties and genuineness of sundry debtors, AO made the addition of the same under section 68. Held: CIT(A) had decided the matter based on additional evidence filed by assessee without obtaining remand report from AO which was not in accordance with rule 47A of the Rules. Therefore, in interest of justice, matter was remanded back to AO with directions to admit and examine any evidence filed by assessee in support of her claim and thereafter decide the matter in accordance with law. Also directed AO to examine the actual transactions made by assessee with an open mind ignoring the silly mistakes committed in the books of accounts of assessee, as it appeared from the facts of the case that additions made by AO under section 68 might not be warranted. As far as the addition under section 68 on account of cash received from various parties was concerned, the issue required proper verification.

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2015-16

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