ITAT upholds Addition as Assessee has failed to offer any explanation with regard to Nature and Source of Credit in his Bank Account [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT)  upheld the addition as the assessee has failed to offer any explanation with regard to nature and source of credit in his bank account.

The entire deposits in the bank account of the assessee, Arun Duggal did not belong to him and therefore, there is no real income accrued or received to the assessee. We are unable to accept such a contention for the reason that, firstly, there are actual deposits in the bank account of the assessee for which no explanation about the nature and the source was explained which has led to addition u/s 68. Secondly, Section 68 is a deeming provision wherein the statute provides that if the assessee is unable to explain the nature and source of the credits, then it is deemed to be income of the assessee as undisclosed sources and is taxed accordingly. Provisions of section 68 apply to all credit entries in the cases including where credit entry has been made in the bank account of the assessee, if the assessee fails to offer any explanation fully corroborated and substantiated by evidence. 

The ambit of Section 68 is wide and inclusive and this provision applies to all credit entries either in the books of accounts or the bank account of the assessee because the bank account itself forms the account of the assessee where the assessee credits the amount for which he is required to explain the nature and source of such credit. The language of Section 68 applies to all credit entries in whomever name they may stand, that is, whether in the name of the assessee or even in the name of a third party. 

No presumption under any other section does not override or exclude Section 68, that is, it does not obviate the necessity to establish by independent evidence the genuineness of the cash credits under Section 68, nor does it do away with the burden which is on the assessee to establish the requisites of cash credits. 

The coram of Judicial Member, Amit Shukla and Accountant Member, Dr. B. R. R. Kumar held that, firstly, the action of the revenue authorities on the issue of notice u/s 148, approval under section 151 was in accordance with the law and secondly, addition u/s 68 has rightly been made as assessee has failed to offer any explanation with regard to nature and source of credit in his bank account and the primary burden cast upon the assessee for proving the credits has not been discharged either before AO or CIT(A).

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