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Facts
The assessee's appeal was filed with a delay of 96 days, which was condoned. The core issue revolves around an addition of ₹.10,08,400/- made by the Assessing Officer as unexplained cash credit.
Held
The Tribunal held that the addition made by the Assessing Officer and confirmed by the CIT(A) was unwarranted and unjustified. The grounds raised by the assessee were allowed.
Key Issues
Whether the addition of unexplained cash credit under Section 68 of the Income Tax Act, 1961, confirmed by the CIT(A), is justified.
Sections Cited
68
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Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha
O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 18.12.2024 passed by the Addl./JCIT(A), Thane for the assessment year 2007-08.
We find that this appeal is filed with a delay of 96 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said affidavit, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication.
The assessee raised 5 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the addition made by the Assessing Officer under section 68 of the Income Tax Act, 1961 [“Act” in short].
4. At the outset, we note that the Assessing Officer made addition of ₹.10,08,400/- as unexplained cash credit under other sources on the ground that the closing debtors given by the assessee and the enquiry with the debtors are contradictory and in different names. By observing that the accounts are self generated accounts on Tally software did not have any kind of independent evidence of existence of such accounts, the Assessing Officer treated the cash deposit as unexplained cash credit under section 68 of the Act by noting that the assessee has introduced cash into his books by way of deposits in this account and immediately transferred these amounts to current account. The ld. CIT(A) confirmed the addition made by the Assessing Officer.
The ld. AR Shri Akshit A Jain, CA drew our attention to the second page of the assessment order and submits that the Assessing Officer made enquiries with the debtors Mr. K. Suguraman and Mr. T. Baskaran and noted that “they have stated that they have not obtained loan from him but they have obtained loan on behalf of others”. The ld. AR vehemently argued that the issue here is not about on whose behalf the loan was obtained, but, is about whether the loan was obtained or not and whether the repayment was made by the sundry debtors. He submits that the loan was obtained and repaid by the above stated debtors, which was duly verified by the Assessing Officer during the course of assessment proceedings, in fact, the Assessing Officer has not recorded any objection over repayment of sundry debtors.
With regard to the objection of the Assessing Officer that the accounts are self generated accounts, the ld. AR submits that the said computer print outs were taken from a software named Tally, the assessee maintains his books of accounts in the said software and the assessee does not maintain manual books of accounts, but, maintains his books of accounts electronically in Tally and the documents submitted to the Assessing Officer during the course of assessment proceedings were from books of accounts only.
With regard to the objection of the Assessing Officer that the cash was received from sundry debtors in April, 2006 and deposits were made into bank from 25.10.2006 and afterwards, the ld. AR submits that the Assessing Officer has not objected on whether the cash was received or not, but, the only objection raised is that the cash was received in April, 2006 which was duly verified and was deposited from October, 2006. He vehemently argued that in view of plethora of case law, wherein, it has been stated it is not compulsory to deposit cash as and when received and the cash can be deposited when the assessee wishes to. The ld. AR drew our attention to page 29 of the paper book and submits that as per balance sheet as on 31.03.2006, the said cash receipts were available as closing balance in the books of accounts of the assessee till the date of deposit and the same has not been disputed by the Assessing Officer.
The ld. DR Shri N. Rajakumar, Addl. CIT opposed the submissions of the ld. AR and relied on the order passed by the ld. CIT(A).
Heard both the parties and perused the material available on record. The contention of the assessee before the Assessing Officer is that the assessee received repayments from the sundry debtors and deposited in the bank account. During the course of assessment proceedings, the Assessing Officer summoned the said debtors and recorded their statement. We find from the assessment order that the said two debtors stated that both of them availed loan from the assessee on behalf of some other person and repaid the same to the assessee. The Assessing Officer did not believe the said statement and proceeded to add ₹.10,08,400/- as unexplained cash credit under other sources in the hands of the assessee. Vide para 5.2.2 of the impugned order, the ld. CIT(A) held that no detailed evidences were furnished in respect of the sundry debtors, which is contrary to the findings of the Assessing Officer in the assessment order. The balance sheet as on 31.03.2006, which is placed at page 29 of the paper book clearly shows that the amounts against sundry parties at ₹.13,50,000/-, which clearly explains that in the immediate previous year, the assessee acknowledged sundry debtors to an extent of ₹.13,50,000/-, which was realized in the year under consideration to the extent as the Assessing Officer made addition. Considering the detailed submissions made by the ld. AR and the facts and circumstances of the case, we are of the opinion that the addition made by the Assessing Officer and confirmed by the ld. CIT(A) is unwarranted and unjustified. Thus, the addition made by the Assessing Officer under section 68 of the Act is deleted and the grounds raised by the assessee are allowed.
In the result, the appeal filed by the assessee is allowed. Order pronounced on 28th August, 2025 at Chennai.