2010 (12) TMI 964 - HC - Income Tax

unaccounted Cash credit - AO contended that where the creditor did not maintain any personal books of accounts, the Assessing Officer is entitled to enquire and satisfy himself about the sources of money in the hands of the creditor - Held that - As creditor had admitted to have advanced the money to the assessee, the source of money deposited in the bank account out of which the money was advanced to the assessee was not explained. The mere statement that a sum of Rs.40,000/- was saved out of house-hold expenses is bereft of substance. The lady creditor does not have any source of income and therefore, accumulation of Rs.40,000/- cash, advanced to the assessee, routed through bank account is not satisfactorily explained - substantial question of law is answered against the assessee.

Summary

Issues:
1. Interpretation of Section 68 - Justification of Tribunal's findings.

Analysis:

Interpretation of Section 68 - Justification of Tribunal's findings:
The case involved the determination of whether the Tribunal was justified in its findings regarding the interpretation of Section 68 of the Act. The appellant had filed its income tax return for the assessment year 1997-98, declaring an income of Rs. 59,110. During scrutiny, the Assessing Officer found certain credits to be genuine but held one credit of Rs. 40,000 in the name of Smt. Sarla Devi as unexplained. The Commissioner of Income Tax (Appeals) partly allowed the appeal but affirmed the addition of Rs. 40,000 as unexplained income under Section 68. The Tribunal upheld this addition, stating that the onus to establish the genuineness of the credit lies with the assessee, and mere filing of confirmatory letters or affidavits is not enough. The Tribunal also cited various legal precedents to support its decision. Additionally, it mentioned that the creditor's lack of personal books of accounts justified the Assessing Officer's inquiry into the source of the money. The Tribunal found the explanation provided unsatisfactory and confirmed the addition of Rs. 40,000. The High Court upheld the Tribunal's decision, stating that the Tribunal had taken a plausible view based on the evidence on record. The Court dismissed the appeal, concluding that the finding was not perverse and did not fall within the domain of Section 260A of the Act. The substantial question of law was answered against the assessee, and the appeal was dismissed.