TaxTMI 
TaxTMI 
2025 (7) TMI 1099
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee. In other words these sums were not found in the books of the assessee but were found credited in the books of Ascertain Multi Trade Pvt. Ltd. and Murad Mercantile Pvt. Ltd. during the assessment years 2018-19 and 2019-20 which are under consideration. Ld. Counsel submits that there is no cash deposit in the bank account of the assessee i.e. Ashish Garg and therefore the assessee cannot be expected to explain the nature and sources of amounts which are not even found to be credited in the books of the assessee. Ld. Counsel for the assessee therefore submitted that the provisions of section 68 cannot be applied to the case of the assessee in respect of cash deposited in the bank accounts of various companies namely Ascertain Multi Trade Pvt. Ltd. and Murad Mercantile Pvt. Ltd., during the assessment years 2018-19 and 2019- 20. 4. The Ld. Counsel further submitted that even according to the Assessing Officer himself the cash has been found deposited in the bank accounts of the companies and therefore explanation about the nature and source of the amounts deposited in the bank accounts of the companies can be given by those respective companies. Ld. Counsel submitted that e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Hon'ble Supreme Court held as under: "The question is what is the true nature and scope of section 68 of the Act? When and in what circumstances would section 68 of the Act come into play? A bare reading of section 68 suggests that there has to be credit of amounts in the books maintained by an assessee; such credit has to be of a sum during the previous year; and the assessee's offer no explanation about the nature and source of such credit found in the books; or the explanation offered by the assessee's in the opinion of the Assessing Officer is not satisfactory, it is only then the sum so credited may be charged to income-tax as the income of the assessee's of that previous year. The expression "the assessee's offer no explanation" means where the assessee's offer no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee's. It is true the opinion of the Assessing Officer for not accepting the explanation offered by the assessee's as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....account. The cash credit entry of which the sum in question forms part, was found in the books the account of the partnership firm which in its own right is an assessee. In the above view of the matter, the books of account of the partnership firm herein cannot be considered as those of the individual assessee herein and, therefore, section 68 of the Income-tax Act would not be attracted to the present case. The above view receives support from Laxmi Narain Gupta v. CIT [1980] 124 ITR 94 (Pat). No decision taking a contrary view has been brought to our notice at the Bar. For the reasons aforementioned, we answer the question in the negative, i.e., in favour of the assessee and against the Revenue and dispose of the reference accordingly. No costs." 11. In the case of DCIT Vs. M/s Jogia Properties Ltd. (supra) the Mumbai Bench of the Tribunal held as under: "22. It is not an issue of protective addition as well as substantive addition but it is an issue that in whose books money is credited. Apparently, the money is credited in the books of account of the assessee; therefore, the provision of Section 68 of the Act should have been deci....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was held as under: "The protective assessment of an income can be made where, in the opinion of the Assessing Officer, an income has definitely arisen in a particular assessment year but there is any doubt about the entity in whose income is to be brought to tax. In the light of this legal position, when court revert to the facts of the present case, the court find that even income having arisen is not free from doubt since the Assessing Officer himself is not sure about the embezzlement having actually taken place. In the course of assessment of 'V, it is an admitted position that the Assessing Officer has disallowed the embezzlement loss and is in appeal against such a disallowance. When the fact of embezzlement is not accepted by the Assessing Officer, there cannot be any occasion to make substantive assessment and protective assessment in respect of such an embezzlement income. The question of protective assessment of such an income in the hands of the assessee, on protective basis, could have arisen in a situation in which, for example, the Assessing Officer was to come to a conclusion that embezzlement in'1 has taken place but he was not sure as to who has done ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e i.e. Ashish Garg. There is no cash deposit in the bank account of the assessee i.e. Ashish Garg. Therefore, the assessee cannot be expected to explain the nature and source of amounts which are not even found to be credited in the books of the assessee. Therefore, the provisions of section 68 cannot be applied to the case of the assessee Sh. Ashish Garg in respect of cash deposited in the bank accounts of carious companies. As per AO himself, the cash has been deposited in the bank accounts of the companies and, therefore, explanation about the nature and source of the amount deposited in the bank accounts of the companies can be given by those respective companies. As per the department itself, those companies are separate income tax assessee filing their return of income and the department is making assessments in their cases. In view of the above factual position, no addition can be made in the hand of the assessee. 8. The Hon'ble Apex Court in the case of CIT v. P. Mohankala 2007 (5) TMI 192 -Supreme Court held as under: - The question is what is the true nature and scope of section 68 of the Act? When and in what circumstances would section 68 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s added in the hands of each and every person where Assessee fails to prove identity, creditworthiness and genuineness of the transaction to the satisfaction of the learned Assessing Officer. It is deemed income in the hands of the assessee who fails to explain nature and source of the same before the AO. Deeming fiction applies in the hands of the person in whose book's sums are credited. There it ends, such deeming fiction cannot travel to other assessee for satisfying ingredients of section 68 of the Act. - - - - - - - - - - - - - There is no concept of beneficial ownership of income u/s 68 of the act, Importing the same in section 68 is in clear violation of simple provisions of that section. 11. The Hon'ble Ahmedabad bench of ITAT in the case of DCIT Central Circle - 1(4). Ahmedabad v. Basant R. Agarwal 2023 (5) TMI 634 held as under: - 16.3 Coming to the facts of the case to hand, the AO based on the statement recorded by the investigation wing of certain person held that the share capital and premium thereon credited in the books of private company managed/controlled/owned by the respondent assessee are not genuine and treated the ....