| The Tax Publishers2021 TaxPub(DT) 0128 (Jab-Trib) INCOME TAX ACT, 1961
Section 68
Where AO assessed credits taken by assessee company as unexplained credit under section 68 for want of necessary satisfaction toward the creditworthiness of the creditors based on income tax returns of creditors for past years, considering that entire sum credited stood explained with reference the creditor's existing capital and/or current income and no verification of the same was done by AO, credits were held to be regarded as explained upon confirmation of the claims not clarified with reference to the material on record.
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Income from undisclosed sources - Unexplained cash credits - Allegation that income of creditors shown in tax returns of earlier years did not agree with the amount of loan given to assessee -
Assessee-private limited company was in business of real estate development. During scrutiny assessment, AO observed fresh credits from director and his father respectively. AO alleged that income tax returns of the two creditors for the last few years did not agree with the credits under reference, required to be proved by the assessee on the parameters of identity, capacity and genuineness. AO assessed the said credits as the assessee's income on account of unexplained credit under section 68 for want of necessary satisfaction toward the creditworthiness of the creditors. Held: A perusal of material on record showed that the entire sum credited stood explained with reference the creditor's existing capital and/or current income. No verification of the same was however done by AO. In fact, production of creditors by assessee was sought by AO in the assessment proceedings as an alternate to the submission of an explanation in writing. Even so, assessee, despite furnishing documentary evidences, offered to produce the creditors, and for which he referred to the assessee's communications to AO. It was for that reason, said credits were to be regarded as explained upon confirmation of the claims not clarified with reference to the material on record.
REFERRED : CIT v. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC) : 1986 TaxPub(DT) 1425 (SC), Roshan Di Hatti v. CIT (1977) 107 ITR 938 (SC) : 1977 TaxPub(DT) 0842 (SC), Kale Khan Mohammad Hanif v. CIT (1963) 50 ITR 1 (SC) : 1963 TaxPub(DT) 0420 (SC), Nemi Chand Kothari v. CIT & Anr. (2003) 264 ITR 254 (Gau) : 2003 TaxPub(DT) 1401 (Gau-HC), CIT v. Metachem Industries (2000) 245 ITR 160 (MP) : 2000 TaxPub(DT) 0822 (MP-HC), CIT v. Korlay Trading Co. Ltd. (1998) 232 ITR 820 (Cal) : 1998 TaxPub(DT) 1205 (Cal-HC), CIT v. Precision Finance (P) Ltd. (1994) 208 ITR 465 (Cal) : 1994 TaxPub(DT) 0368 (Cal-HC), Sarogi Credit Corporation v. CIT (1976) 103 ITR 344 (Patna) : 1976 TaxPub(DT) 0330 (Pat-HC), Tolaram Daga v. CIT (1966) 59 ITR 632 (Ass) : 1966 TaxPub(DT) 0106 (Assam-HC), Seth Kalekhan Mahomed Hanif v. CIT (1958) 34 ITR 669 (MP) : 1958 TaxPub(DT) 0073 (MP-HC) and Shri Nitin Sharma v. Pr. CIT (in ITA No. 25/Jab/2019, dated 28-9-2020) : 2020 TaxPub(DT) 4049 (Jab-Trib)
FAVOUR : Matter remanded
A.Y. :
IN THE ITAT, JABALPUR BENCH
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