The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ), ruled that Sec 69 of the Income Tax Act, 1961 not applicable when amount represents sale proceeds realized by company.
The present appeal relates to the addition of Rs.10 lakhs made by the Assessing Officer and confirmed by the CIT(A) on account of unexplained cash credit. The appellant in the appeal is N.K. Proteins Pvt. Ltd.
Section 68 of the Income Tax Act is subjected to apply and is applicable when the taxpayer used to maintain the books of account and there is any sum which revealed credited in the books of the taxpayers maintained for the former year and the taxpayer provides no elaboration for these cash credits or elaboration given by taxpayer was not agreeable, then the taxpayer would find guilty beneath the same section and thus the provision of this section will start. All credit entries prompt in the books of accounts of the taxpayer comes beneath this section.
The Counsel for the assessee has submitted that the said amount actually represented realization of sale proceeds as explained on behalf of the assessee before the authorities below and contended that the same, therefore, cannot be treated as unexplained cash credit and Section 68 of the Income Tax Act has no application.
A Coram consisting of Pramod M Jagtap, Vice President and Suchitra Kamble, Judicial Member observed that “We find merit in this contention of the Counsel for the assessee and since the DR has not been able to dispute the position that the amount in question represented sale proceeds realized by the assessee-company, we accept the contention of the Counsel for the assessee that Section 68 of the Income Tax Act has no application and the addition made by the Assessing Officer and confirmed by the learned CIT(A) on this issue by invoking Section 68 of the Income Tax Act cannot be sustained.”
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