2016 (6) TMI 693 - AT - Income Tax

ITAT decisions emphasize bookkeeping importance, rule against section 68 additions.

The ITAT allowed the assessee's appeals in ITA Nos.445, 446, 447 & 449(Asr)/2015, dismissed the appeal in ITA No.448, and dismissed the Revenue's ... Addition u/s 68 - Held that:- Section 68 talks of any sum found credited in the books of an assessee maintained for any previous year. As per this section, if the assessee offers no explanation, the section would apply. But this explanation has to be with regard to any sum found credited in the books. It remains undisputed that the. assessee has not maintained any books during the year. Thus, the provisions of section 68 of the Act are not at all attracted and they have been wrongly applied by the authorities below. - Decided in favour of assessee. Issues Involved:Appeals by Revenue against CIT(A) orders, Assessee's appeals against CIT(A) orders, Challenge to reopening of case u/s 147/148, Addition made u/s 68 of the Act, Maintaining books of accounts, Additional ground of appeal raised by assessee, Dismissal of appeal by assessee, Dismissal of appeal by Revenue.Analysis:1. Appeals by Revenue against CIT(A) orders:The Revenue filed appeals against separate orders of CIT(A) dated 20.05.2015, expressing dissatisfaction with the relief granted by CIT(A) in ITA Nos.440 & 442(Asr)/2015.2. Assessee's appeals against CIT(A) orders:Assessee filed appeals in ITA Nos.445 to 449 against CIT(A) orders dated 20.05.2015, contesting the partial sustenance of additions made by the Assessing Officer under section 68 of the Act. The assessee also challenged the validity of the case reopening u/s 147/148 of the Act.3. Addition made u/s 68 of the Act:The Assessing Officer had made additions based on deposits in the assessee's bank accounts, with CIT(A) granting partial relief. The issue revolved around the applicability of section 68 considering the absence of maintained books of accounts by the assessee.4. Maintaining books of accounts:The learned AR highlighted that the assessee did not maintain any books of accounts, emphasizing this fact in various years. The absence of maintained books of accounts was a crucial point in disputing the addition made u/s 68 by the Assessing Officer.5. Additional ground of appeal raised by assessee:The assessee raised an additional ground concerning the applicability of section 68 despite not maintaining books of accounts. Citing legal precedents, the assessee argued that the additions made u/s 68 were unwarranted due to the lack of maintained books of accounts.6. Dismissal of appeal by assessee:In one appeal for the assessment year 2009-10, the assessee did not press the challenge against the relief granted by CIT(A, leading to the dismissal of the appeal. The assessee solely contested the reopening of the case, which was also withdrawn.7. Dismissal of appeal by Revenue:Considering the established facts that the assessee did not maintain books of accounts and the additions made u/s 68 were unjustified, the appeals filed by Revenue were dismissed. The ITAT held that the additions by the Assessing Officer were against the law, leading to the dismissal of Revenue's appeals.8. Conclusion:In conclusion, the ITAT allowed the appeals filed by the assessee in ITA No.445, 446, 447 & 449(Asr)/2015, while dismissing the appeal in ITA No.448 as not pressed. On the other hand, the appeals filed by Revenue in ITA Nos.440 & 442(Asr)/2015 were dismissed. The judgment highlighted the importance of maintaining books of accounts and the inapplicability of section 68 in the absence of such records, leading to the reversal of additions made by the Assessing Officer.