2010 (11) TMI 460

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...., Chandigarh (in short "the Tribunal") in ITA No. 1249/CHANDI/1998, relating to the assessment year 1995-96. 2. The following substantial question of law has been claimed for determination by this Court:   "Whether under the facts and circumstances of the case and on the true and correct interpretation of the provisions of Section 68, whether the Tribunal is justified in upholding the addition on the ground of lack of explanation for the source of income whereas when the genuineness of the transaction and the identity of the creditors along with the explanation of the credit stands established thereby complying with the requirements of the provisions of the Act?"   3. The facts, in brief, necessary for adjudication, as na....

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.... rightly sustained the addition made under Section 68 of the Income Tax Act, 1961 by disagreeing with the explanation furnished by the assessee and, holding that the cash credit was not genuine. Findings recorded by the Tribunal may be reproduced with advantage which read as under:-   "In respect of ground no.2 AO noted that the assessee received a sum of Rs.50,000 from Smt. Manjit Kaur as cash credit through account payee cheque No.858325 dated 24.2.95. Statement of Manjit Kaur was recorded, wherein she confirmed the loan being advanced AO noted that a sum of Rs.50000 was deposited in cash on the same date when the cheque was advanced to the assessee firm. About source, Manjit Kaur stated 'I don't remember at the moment'. AO ultima....

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....sited from my savings and agricultural income or from money sent by my husband from Italy'. From the said statement, it is clear that Manjit Kaur explained the source of deposit in cash in a general manner. If any, funds are being received from a foreign country the same should have come through banking channel. That is not the position in the instant case.   This is a case where provisions of Section 68 are clearly attracted. Section 68 provided that any cash credit found in the books relating to which the assessee offers no explanation is unsatisfactory. Such credit could be charged to tax as income of the assessee. The principle embodied in Section 68 is only a statutory recognition of what was always understood to be the law bas....