2025 (7) TMI 1746 - AT - Income Tax

Section 68 Addition for Unexplained Cash Credit Not Justified with Proper Evidence and Disclosures

ITO, Ward-22 (3), New Delhi Versus Satcab Subscriber Services Pvt. Ltd.

The ITAT Delhi held that the addition under section 68 for unexplained cash credit was not justified as the assessee furnished confirmations, bank ... Addition u/s 68 - unexplained cash credit - AO observed that assessee had merely furnished confirmation from the parties and had not furnished their bank statement and returns of income to prove the genuineness of the sales - HELD THAT:- With regard to other parties (including Oxigen Services India Pvt. Ltd), the assessee furnished the confirmation, their bank statement, GST returns and invoices together with the ledger account. CIT(A) admitted those additional evidences and made a tabulation with confirmation of the fact that the 13 parties had indeed made purchases from the assessee and the same is included in the total sales figure and has already disclosed and offered as sales in the income tax return. Hence, any addition made on this account would only result in double addition by placing reliance on the decision of Kailash Jewellery House i [2010 (4) TMI 1070 - DELHI HIGH COURT] wherein, it was held that once, the amount was credited in the sales account and have been duly included in the profit disclosed by the assessee for its return, the same could not be treated as undisclosed income and no addition could be made once again in respect of the same. No infirmity is found in the findings of the CIT(A). Accordingly, the grounds raised by the revenue are dismissed. ISSUES: Whether sales disclosed by the assessee can be treated as unexplained cash credit under section 68 of the Income-tax Act, 1961.Whether addition of sales already disclosed and offered to tax amounts to double taxation.The evidentiary requirements to establish the genuineness of sales transactions for tax assessment purposes. RULINGS / HOLDINGS: The sales amounting to Rs. 93,34,85,432/- were held to be genuine and already disclosed in the income tax return; hence, they cannot be treated as unexplained cash credit under section 68 of the Act.The court held that making a separate addition of sales already included in the profit disclosed by the assessee would result in 'double addition' and is impermissible.The assessee's submission of KYC documents, bank statements, GST returns, ledger accounts, and sale confirmations were sufficient to establish the genuineness of sales transactions. RATIONALE: The court applied the provisions of section 68 of the Income-tax Act, 1961, which deals with unexplained cash credits, and relied on the principle that income already disclosed and offered to tax cannot be treated as undisclosed income for making additions.Reference was made to the precedent that 'once the amount was credited in the sales account and have been duly included in the profit disclosed by the assessee for its return, the same could not be treated as undisclosed income'.The court emphasized the importance of documentary evidence such as KYC, bank statements, GST returns, and confirmations from parties to verify the genuineness of transactions.No dissent or doctrinal shift was noted; the decision aligns with established principles preventing double taxation and requiring proper verification before additions under section 68.