SANDHI RAJA SEKHAR ,BHIMAVARAM vs. INCOME TAX OFFICER, WARD-1, BHIMAVARAM

Facts

The assessee, engaged in prawn and fish business, did not file an income tax return for AY 2013-14. During re-assessment proceedings initiated under Section 147, significant cash deposits were found in the assessee's bank account. The Assessing Officer added Rs. 53,50,000/- as unexplained cash credits under Section 68, which was upheld by the Ld. CIT(A) despite the assessee claiming not to maintain books of account.

Held

The Tribunal held that Section 68 of the Income Tax Act applies only when sums are found credited in the 'books of account maintained by the assessee'. Since the Assessing Officer himself acknowledged that the assessee did not maintain books of account, the addition made under Section 68 was legally unsustainable and deserved to be deleted.

Key Issues

Whether an addition under Section 68 for unexplained cash credits can be made when the assessee admittedly does not maintain any books of account.