Section 68 requires a credit in books; without books, bank deposits cannot be added as unexplained cash credits.

Section 68 applies only where a sum is credited in the assessee's books of account; where no books are maintained, bank deposits cannot be taxed as unexplained cash credits under that provision. The Tribunal followed its earlier view that share-sale receipts treated as accommodation entries could not be assessed under section 68 in the absence of books, so the addition was made under an inapplicable section and could not survive. The addition was deleted.

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Issues: Whether addition made under section 68 of the Income-tax Act, 1961, in respect of share-sale receipts treated as unexplained cash credits could be sustained where no books of account were maintained.

Analysis: The assessment proceeded on the footing that the share transactions were sham and that the receipts represented unexplained money routed through accommodation entries. In deciding the appeal, the Tribunal followed its earlier view that section 68 applies only where a sum is found credited in the books of account of the assessee. Since no books of account were maintained in the ordinary course, the bank deposits could not be brought to tax under that provision. The Tribunal therefore held that the addition was made under an inapplicable section and could not survive.

Conclusion: The addition under section 68 was deleted and the issue was decided in favour of the assessee.

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