Unexplained Cash Credit Addition u/s 68 unsustainable as Advances from Associate Concern Accepted in Earlier Years: ITAT [Read Order]
The tribunal ruled that an advance received from an associate concern has been accepted as genuine by the Assessing Officer in regular assessments for earlier years, the same cannot be treated as non-genuine in a subsequent assessment year without incriminating material.
![Unexplained Cash Credit Addition u/s 68 unsustainable as Advances from Associate Concern Accepted in Earlier Years: ITAT [Read Order]](https://images.taxscan.in/h-upload/2025/12/29/2115685-itat-kolkata-cash-credit-unexplained-cash-credit-cash-credit-addition-itat-ruling-itat-on-cash-credit-taxscan.webp "Unexplained Cash Credit Addition u/s 68 unsustainable as Advances from Associate Concern Accepted in Earlier Years: ITAT [Read Order]")
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue's appeal and held that the provision of Section 68 of the Income Tax Act was not applicable to money received in earlier assessment years that did not represent a fresh credit in the books for the year under consideration. Educo Ventures Pvt. Ltd. (assessee) is a company that received advances from...
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue's appeal and held that the provision of Section 68 of the Income Tax Act was not applicable to money received in earlier assessment years that did not represent a fresh credit in the books for the year under consideration.
Educo Ventures Pvt. Ltd. (assessee) is a company that received advances from an associate concern, M/s Quality Vinimay Pvt. Ltd., an NBFC registered with the RBI. The funds were reportedly taken for the purpose of establishing an International School.
For the Assessment Year 2014-15, the Assessing Officer (AO) made an addition of ₹32,50,000 under Section 68 of the Act, treating the advance as an unexplained cash credit. The AO characterized the creditor as a "paper/Jamakharchi" company and concluded that it lacked the financial capacity to provide such significant advances.
Aggrieved by the addition, the assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) deleted the addition and observed that the assessee had been receiving advances from this associate concern since A.Y. 2010-11.
The CIT(A) observed that over 75% of the total advance fund ₹8,01,00,000 out of ₹10,48,50,000 had been received between A.Y. 2010-11 and A.Y. 2012-13, periods for which the AO had already accepted the transactions as genuine in scrutiny assessments under Section 143(3) of theIncome Tax Act.
The CIT(A) also held that the AO failed to refer to any specific incriminating documents found during a survey under Section 133A to support the addition. Aggrieved by the CIT(A)’s deletion, the Revenue filed an appeal before the ITAT.
The two-member bench, comprising Rajesh Kumar (Accountant Member) and Pradip Kumar Choubey (Judicial Member), observed that the advance was received in earlier years and had already been accepted as genuine in regular assessments.
The Bench held that the AO was not justified in taking a different view on the same set of financial records without new evidence. It further clarified that Section 68 cannot be applied to amounts that were not credited to the books in the current assessment year.
The tribunal concluded that there was no infirmity in the CIT(A)’s order. It dismissed the Revenue's ground and upheld the deletion of the addition. The appeal of the Revenue was dismissed.
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