Can s.68 be applied on amount received from Sundry Debtor

[ROHIT GOEL]

Assessee making sales to a customer and a sum of ₹ 50,000/- is appearing as debtor in books against sales. Customer making payment through DD amounting ₹ 30,000/- which was credited in the account of Debtor resulting a debit balance of ₹ 20,000/-. Lateron, AO doubt the genuineness of debtor on the ground that debtor is a suspicious trader or debtor was involved in providing accomodation entries. Can such credit which is already recognised as Income be taken as Income u/s 68 and leading to charge u/s 115BBE.

In continuation whether s.68 is applicable on Credit Entries at any point during the year i.e. liability items of balance sheet or also applicable to profit and loss item like sales or other revenue in profit and loss account.

Please try to answer ignoring the amendment in s.115BBE w.e.f. 1-4-2016.

Any case law to support your opinion

AI Summary

Clarification Sought on Section 68 Applicability to Sundry Debtor Payments and Credit Entries in Financial Statements An individual raised a query about the applicability of Section 68 of the Income Tax Act on amounts received from a sundry debtor, where a debtor paid 30,000 via demand draft against a 50,000 debt, leaving a 20,000 debit balance. The Assessing Officer questioned the genuineness of the debtor, suspecting involvement in accommodation entries. The query sought clarification on whether such credits, already recognized as income, could be treated as income under Section 68, and if Section 68 applies to credit entries throughout the year, including balance sheet liabilities and profit and loss items. The response questioned if the assessee explained the credit to the Assessing Officer.