Consideration received for Sale of Truck through Banking Channel not "Unexplained Cash Credit" u/s 68 of Income Tax Act: ITAT [Read Order]

The Pune bench of the Income Tax Appellate Tribunal ( ITAT ) held that the consideration received for the sale of a truck through the banking channel does not qualify as "unexplained cash credit" under Section 68 of the Income Tax Act, 1961.

The assessee has appealed against the order passed by the Commissioner of Income Tax (Appeals) [ CIT(A) ] for the assessment year (AY) 2021-22.

In this case, the assessee is engaged in the transport business. The assessee had declared an income of Rs. 10.46 lakhs for the AY 2021-22. The AO, through the details of the bank account held by the assessee with IDBI and HDFC banks, noted that there is a credit entry of Rs. 5.00 lakh each on 11.08.2020 and 10.08.2020.

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The assessee claimed the amount of Rs. 10 lakh as proceeds from the sale of Truck No. MH09EM 5892. However, due to the lack of evidence for the truck's purchase, the AO treated it as a short-term capital gain and assessed income at Rs. 20,46,180. On appeal, the CIT(A) upheld the addition but invoked Section 68 of the Income Tax Act, 1961, treating the Rs. 10 lakh as unexplained cash credit.

The assessee’s counsel submitted copies of the registration certificate, RC book, and copy of the RTO receipt to prove that the assessee has purchased the truck. 

The bench observed that the consideration received for the sale of the truck was through a banking channel.

ITAT observed that "the assessee entered into a genuine transaction of purchase and sale of a truck, and the assessee received consideration from the sale of a truck of Rs.10.00 lakh through the banking channel, therefore, the said receipt is duly explained and cannot be treated as unexplained cash credit u/s.68 of the Act.”

The ITAT finally reached the conclusion that the assessee had entered into a genuine transaction of purchase and sale of the truck, and the assessee received consideration from the sale of the truck of Rs. 10.00 lakh through the banking channel, due to which the addition under Section 68 of the Income Tax Act is not sustainable.

The ITAT, comprising Manish Board ( Accountant Member ), allowed the assessee’s appeal partly.

To Read the full text of the Order CLICK HERE

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