2019 (2) TMI 2024 - AT - Income Tax

Tribunal directs deletion of unexplained cash credits under Section 68 of Income Tax Act

Shri R. Munusamy, Versus The Income Tax Officer, Ward – 5 (5), Chennai

The Tribunal allowed the appeal, directing the Assessing Officer to delete the addition of Rs.16,60,000 as unexplained cash credits under Section 68 of ... Unexplained cash credits u/s.68 - As explained by the Ld.AR that the assessee had not actually introduced cash but the assessee’s accountant had wrongly passed such entries in the books of accounts. It was further explained that assessee had brought in to his books of accounts his family jewellery, property received out of family settlement, vacant land purchased in Sri Ram Nagar and the land & building in Sri Ram Nagar which were all assets not acquired during the relevant assessment year - HELD THAT:- Since the cash credit standing in the books of accounts of the assessee relates to all the assets discussed herein above, we are of the considered view that the addition made by theLd.AO is erroneous and warranted. From the facts of the case it also appears that the Ld.CIT(A) has also not considered the issue in the correct prospective. Therefore we hereby direct the Ld.AO to delete the addition made in the hands of the assessee by invoking the provision of Section 68 of the Act because the assessee has not actually introduced cash in his books of accounts during the relevant assessment year but it relates to all the assets owned by the assessee explained hereinabove. Appeal of assessee allowed. Issues:1. Addition of unexplained cash credits under Section 68 of the Income Tax Act.Analysis:The appeal was against the order confirming the addition of Rs.16,60,000 as unexplained cash credits under Section 68 of the Act. The assessee, an individual with various income sources, did not file the return for the assessment year 2008-09. The Assessing Officer (AO) found that cash was introduced in the books, but it was clarified that the entries were wrongly made by the accountant. The AO still made the addition, which was upheld by the Commissioner of Income Tax (Appeals) (CIT(A)). The appellant argued that the entries were errors, presenting supporting documents. It was revealed that the assets recorded were not acquired during the relevant assessment year, including agricultural land, property from family settlement, and jewelry. The Tribunal noted that the entries were errors, and the assets were not acquired with the cash credited. Referring to a previous year's assessment, the Tribunal found no grounds for the addition, concluding that the AO's decision was incorrect. The Tribunal directed the AO to delete the addition as the cash credit related to assets owned by the assessee and not actual cash introduced.The Tribunal's decision was based on the erroneous entries made by the accountant, clarifying that the assets recorded were not acquired during the relevant assessment year. The Tribunal also highlighted the previous assessment year's findings, where a similar addition was confirmed, but no appeal was filed. Considering the financial status of the assessee's family and the nature of the assets, the Tribunal deemed the addition unwarranted. The Tribunal concluded that the addition under Section 68 was not justified as the cash credit was related to assets owned by the assessee and not actual cash introduced during the assessment year. The appeal of the assessee was allowed, and the addition was directed to be deleted.