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2012 (11) TMI 413 - AT - Income TaxAddition u/s 68 - opening cash balance - Held that - Assessee was of 58 years of age and was engaged in the business since past many years and was regularly filed return of income year after year, could not be controverted by the Revenue. The accumulated balance of Rs.1,40,886/- could not be said to be unbelievable or excessive - in favour of assessee.
Issues:
Addition under Section 68 of the Income Tax Act - Opening cash balance verification and deletion. Analysis: The appeal was against the order of the CIT(A) for the Assessment Year 2008-2009. The primary issue revolved around the addition of Rs.1,40,886 under Section 68 of the Income Tax Act, representing the opening cash balance as on April 1, 2007. The counsel for the assessee argued that the amount in question was accumulated cash in the hands of the assessee, supported by the production of a cash book where the opening balance was recorded. The assessee, aged 58 and in business for a long time, regularly filed income tax returns. The absence of account books in previous years was not deemed sufficient to discredit the existence of the opening cash balance. The Revenue contended that the onus was on the assessee to prove the source of the cash balance, emphasizing the lack of maintained accounts in prior years. Both the AO and the CIT(A) had upheld the addition. Upon review, the Tribunal noted the assessee's claim of the opening cash balance and the production of the cash book as evidence. Despite the lack of maintained account books in previous years, the Tribunal considered the age and business history of the assessee, along with the consistent filing of income tax returns annually. These factors, as recorded by the AO, supported the credibility of the accumulated balance. Consequently, the Tribunal held that invoking Section 68 of the Act to treat the opening cash balance as income was unwarranted. The addition was deemed unjustified, leading to its deletion and the allowance of the assessee's appeal. In conclusion, the Tribunal allowed the appeal of the assessee, ruling in favor of deleting the addition made under Section 68 of the Income Tax Act concerning the opening cash balance.
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