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| The Tax Publishers2020 TaxPub(DT) 4607 (Bang-Trib) INCOME TAX ACT, 1961
Section 68
Genuineness of professional fee received by assessee from M/s VHPL could not be disputed merely on the allegation that no services were rendered as there was no dispute with regard to identity and capacity of VHPL and tax has been deducted on the sum payable by VHPL and further, as VHPL did not have employees, therefore, assessee catered to the needs of VHPL.
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Income from undisclosed sources - Addition under section 68 - Receipt of professional fee treated as unexplained credit - Assessee proved identity, creditworthiness and genuineness
Assessee-company received Rs. 6 lakhs as professional fee from M/s. VHPL. AO noticed that assessee and VHPL were located in the same floor and at the same address and VHPL had no staff for the past 7 years and did not pay any rents to assessee. Also, directors of VHPL and assessee were one and the same. Nature of services received could not be explained by VHPL Vice-President, when he was examined. Accordingly, AO held that income of Rs. 6 lakhs offered by assessee as business income was unexplained credit under section 68. Held: There was no dispute with regard to identity and capacity of VHPL. Genuineness of transaction could not be disputed merely on the allegation that no services were rendered. The basic presumption under section 68 is that the sum treated as unexplained has to be assessee's money. TDS has been deducted on the sum payable by VHPL. As VHPL did not have employees, therefore, assessee catered to the needs of VHPL. In these circumstances, addition of Rs. 6 lakhs under section 68 was not justified.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 32(1)
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