The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) ruled that the addition of unexplained cash under section 68 of the Income Tax Act,1961 based on doubt is not sustainable.
The assessee challenged ‘the order of CIT(A) dated 7.2.2020 on various grounds. The assessee’s books of accounts show sundry creditors of Rs.11,01,453/ where the assessee failed to submit the confirmation from parties. The AO invoked the provisions of section 41(1) of the Act and treated it as the income of the assessee.
The assessee contended that the debts were appearing in the assessee’s books of accounts and also reflected in the assessee’s balance sheet for the year ended on 31.3.2008 and the balance sheet was duly signed by the assessee which means that all the debts were acknowledged by the assessee. Further stated that the said amount has been given towards the purchase of land, which was not materialized and same was returned back to the assessee and was shown as a receipt from the said party by way of cash.
The revenue authorities have no material to suggest that the assessee has not received this amount from M/s. Bindu Promoters, Bangalore in this AY 2008-09.
The Tribunal comprising Shri Chandra Poojari, accountant member and Smt. Beena Pillai, judicial member viewed that if the AO had any doubt, then he needs to very well verify with Bindu Promoters, Bangalore, which he failed to do so and held that the addition of unexplained income is not sustainable. The appeal filed by the assessee was partly allowed for statistical purposes.
The appellant was represented by Shri V. Srinivasan and the respondent was represented by Shri Venudhar Godesi.
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