2011 (9) TMI 1107

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.... ii) The CIT(A) erred in holding that sum of Rs. 879964/- is cash credit u/s 68 of the I T Act, without giving any show cause notice to the appellant. iii) The CIT(A) has not raised any query and/or not asked the appellant to submit any explanation and without intimating the appellant initiated sec 68 of the I T Act. The Assessing Officer has never scrutinized the books and records and concluded that these are advances from debtors. iv) The opening balances of earlier years (brought forward from earlier years) cannot be added u/s 68 in the AY 2005-06 by the CIT(A) v) The CIT(A has not served any show cause notice before the impugned additions. vi)The CIT(A) erred in sustaining adhoc disallowance of Rs. ....

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....ase of Soft Sule Ltd of Rs. 1,35,000/- and also accepted the contention of the assessee that the advances cannot be assessed u/s 41(1) of the I T Act. However, the CIT(A) has held that the assessee has not explained the source of these credits with evidence as per sec. 68 of the I T Act and accordingly, confirmed the addition to the extent of Rs. 8,79,964/-. 4. Before us, the ld AR of the assessee has submitted that these amounts represent the opening balance of earlier year, which were brought forward from earlier years and cannot be added u/s 68 of the Act for the year under consideration. He has further contended that even otherwise, when summons were received by the parties but they did not respondent to the notices of the Assessing ....

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....fer the nature and source thereof or the explanation offered is not found satisfactory then, the sum so credited may be assessed as the income of the assessee of that previous year. Section 68 reads as under: Sec. 68:- Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. 6. The plain reading of section 68 makes it clear that the credit found in the books of account can be assessed as the income of the assessee only....