The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the Income Tax Addition under section 68 of the Income Tax Act,1961 is not valid when the assessee does not maintain any books of account.
The Assessing Officer during the course of assessment proceedings noted that as per written Page No 7 of Annexure A/PMB/O1 (pages I to 58) seized from the residence of the assessee, an amount of Rs 51,80,000/- is received by the assessee on 13/05/2011.
The AO noted that the assessee during the course of search action had declared Rs 15 crores as additional income for different assessment years vide his statement recorded u/s 132(4) on 20-11-2014& resumed on 2111-2014. The above additional income of Rs 15,00,00,000/- was once again admitted by the assessee vide his explanation submitted to the DDIT(Inv) Unit l|(1), Hyderabad and made an addition of the cash receipts of Rs. 51,80,000/- as his undisclosed income and brought to tax.
Before the CIT (A), the assessee submitted that no such amount was received then and further the receipts do not relate to the assessee. It was submitted that this seized paper is not in the handwriting of the assessee and no signature of the assessee is there on the paper. Since this is a dumb document without any real value. The CIT (A) sustained the addition after obtaining a remand report from the Assessing Officer and a rejoinder of the assessee to such remand report.
It was contended by the assessee that it is not an unaccountedreceipt but the same is on account of the sale of land and the assessee has claimed such receipt as exempt income. Further, in absence of maintenance of any books of account by the assessee no addition under the section, 68 can be made. It was argued that the assessee does not maintain any books of account and therefore, the provisions of section 68 have no application.
The ITAT bench of Shri R.K. Panda, Accountant Member and Shri K. Narasimha Chary, Judicial Member observed that the assessee does not maintain any books of account, thereforethe addition of the same u/s 68 is not allowable.
Further observed that when the assessee is undertaking certain transactions with one Shri T. Jangaiah and he was engaged in the business of real estate, he must have earned some income. Since the total amount of receipts including the cheque receipt is amounting to Rs.51,80,000/- the profit @ 10% of the addition of Rs.51,80,000/- as against Rs.51,80,000/- made by the Assessing Officer and sustained by the CIT (A) was upheld while partly allowing the appeal.
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