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

[DR.MARIAPPAN GOVINDARAJAN]

Whether the assessee explained the credit to the Assessing Officer?

AI Summary

Unexplained cash credits under s.68 can be treated as income if not satisfactorily explained, regardless of ledger classification. Whether amounts received from a sundry debtor may be treated as an unexplained cash credit depends on whether the taxpayer can satisfactorily explain the nature and source of the receipts; if the payment recorded as income or reduction of a debtor cannot be adequately explained to the satisfaction of the assessing officer, it may be treated as an unexplained cash credit irrespective of whether it appears in the balance sheet or profit and loss account, and the taxpayer bears the burden of providing contemporaneous evidence of genuineness.