IF THE TAXPAYER HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS, THEN ADDITION UNDER SECTION 68 IS NOT APPROPRIATE

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IF THE TAXPAYER HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS, THEN ADDITION UNDER SECTION 68 IS NOT APPROPRIATE.

13/01/2023

IF THE TAXPAYER HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS, THEN ADDITION UNDER SECTION 68 IS NOT APPROPRIATE

Brief facts of the case are that the assessee e-filed his return of income for the assessment year 2017-18 on 26-10-2017 declaring an income of Rs.47,52,660/-. The case of the assessee was taken up for ‘’complete scrutiny’’ u/s 143(3) of the Act on the basis of CASS and statutory notice u/s 143(2) of the Act dated 21-09- 2018 was issued through ITBA and duly served upon the assessee. Information u/s 142(1) of the Act was called for vide questionnaire through ITBA.

In compliance thereof, the assessee submitted details/information through e-proceedings which were examined by the AO and the AO thus noted that the assessee has declared income from business and other sources i.e. to say that the assessee is engaged in the business of sale of gold jewellery and ornaments having two sales outlets one at Kolkata and other at Bangaluru.

In this case, the AO completed the assessment of the assesse u/s 143(3) of the Act at an income of Rs.3,38,46,160/- by making addition of Rs.2,90,93,500/- in declared income by holding that said amount of cash deposited by the assessee in his bank account during the demonetization period is nothing but the undisclosed income of assessee which was under the garb of cash sales, therefore, the cash deposited amounting to Rs.2,90,93,500/- is liable to be added to u/s 68 of the Act and taxable @60% under provision of Section 115BBE.

We have heard both the parties and perused the materials available on record. From the assessment records, it is noted that the AO made an addition of Rs.2,90,93,500/- in declared income by holding that said amount of cash deposited by the assessee in his bank account during the demonetization period is nothing but the undisclosed income of assessee which was shown under the garb of cash sales and thus it is liable to be added u/s 68 of the Act and taxable @ 60% under the provision of Section 115BE of the Act.

Hence, there is no occasion to consider the same as income of the assessee by invoking the provisions of Section 68 of the Act. In view of the above deliberations and case laws relied upon by both the parties, we find that the AO was not justified in making an addition of Rs.2,90,93,500/- u/s 68 of the Act which has rightly been deleted the ld. CIT(A) and we concur with his findings.

Thus the appeal of the Revenue is dismissed.

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