The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT) held that the proper explanation of income of sales cannot be added under section 68 of the Income Tax Act,1961 unless it proved invalid.
Subhash Chand Gupta, the respondent-assessee e-filed his return of income on declaring income for the assessment year under consideration and the assessing officer made an addition under section 68 of the Income Tax Act in respect of the sales made to the above parties observing that the assessee had not explained the credits upto the satisfaction.
The revenue appealed against the order passed by the Commissioner of Income Tax(Appeals) for deleting the addition made by the assessing officer under section 68 of the Income Tax Act.
P C Yadav, the counsel for the assessee contended that for affecting the sales assessee had made purchases and the assessing officer had accepted the figures of purchases as correct and the figures of sales had also been correct.
It was also submitted that when purchases and profit as computed by the assessee or accepted there are no reasons to doubt the sales made by the assessee.
Maninder Kaur, the counsel for the revenue contended that the addition made under section 68 of the Income Tax Act was as or the law.
The bench observed that an order passed by the Commissioner in holding that the sales cannot be added under section 68 of the Income Tax Act unless they are proved as bogus based on some reliable evidence was valid. The two-member bench comprising Narendra Kumar Billaiya, (Accountant) and Challa Nagendra Prasad (Judicial) held that the order passed by the Commissioner was as per the law and valid while dismissing the appeal filed by the revenue.
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