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Issues: Whether the closing cash balance shown by the assessee at the end of the relevant year could be brought to tax as unexplained cash credit under section 68 of the Income-tax Act, 1961.
Analysis: Section 68 applies where a sum is found credited in the books of an assessee for a previous year and the assessee offers no satisfactory explanation about its nature and source. The provision is confined to credit entries found in the books and does not extend to a closing cash balance carried forward at year-end. Since the addition in question was made only on account of the cash balance shown as on 31 March 2015, the statutory condition for invoking section 68 was not satisfied.
Conclusion: The addition under section 68 was not sustainable and had to be deleted in favour of the assessee.
Final Conclusion: The assessment addition treating the year-end cash balance as unexplained cash credit was set aside, and the assessee succeeded on the substantive tax issue.
Ratio Decidendi: Section 68 cannot be invoked against a mere closing cash balance, because it applies only to sums found credited in the books of account for a previous year.
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