2016 (11) TMI 941 - AT - Income Tax

Unexplained cash credit addition u/s 68 - Held that - The only point of difference is that in the balance-sheet it has been portrayed as a loan received in the earlier years whereas in the books of account of her husband the said sum was not appearing in the balance-sheet as it was treated as a gift in the earlier years itself. We find that after the Assessing Officer rejected her explanation, the appellant furnished a gift confirmation before the Commissioner of Income-tax (Appeals) but the same has been outrightly rejected. In our considered opinion, the Commissioner of Income-tax (Appeals) ought to have considered the gift confirmation filed by the assessee s husband because the same was in fact reiteration of the explanation which was already before the Assessing Officer. Thus the explanation rendered by the assessee has been unjustly rejected by the lower authorities and, therefore, the impugned addition made by invoking section 68 of the Act is unsustainable. We hold so. We, therefore, set aside the order of the Commissioner of Income-tax (Appeals) and the Assessing Officer is directed to delete the addition - Decided in favour of assessee

Summary

Issues:
- Appeal against order of Commissioner of Income-tax (Appeals) regarding addition of unexplained cash credit under section 68 of the Income-tax Act, 1961 for assessment year 2007-08.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income-tax (Appeals) concerning the addition of Rs. 7,62,367 as unexplained cash credit under section 68 of the Income-tax Act, 1961 for the assessment year 2007-08.

2. The Assessing Officer noted an outstanding loan amount in the balance sheet of the assessee, which was not supported by a corresponding entry in the husband's balance sheet. This discrepancy led to the addition under section 68.

3. The appellant explained that the amount was received as a loan from the husband's proprietary concern in earlier years but was mistakenly shown as a loan instead of a gift in the current year. The Assessing Officer rejected this explanation, considering it an afterthought.

4. During the appeal, the representative for the assessee reiterated the explanation and highlighted that the discrepancy was in the husband's books, not affecting the assessee's income computation. The rejection of the explanation was contested.

5. The Departmental representative supported the Assessing Officer's reasoning, which was not detailed in the judgment.

6. The Tribunal considered the invocation of section 68 and observed that the amount in question was not received during the year but in earlier years as a gift. The rejection of the explanation and subsequent gift confirmation was deemed unjust. The Tribunal held that the addition under section 68 was unsustainable, directing the deletion of Rs. 7,62,367.

7. Consequently, the appeal of the assessee was allowed, overturning the orders of the lower authorities.

8. The order was pronounced on March 16, 2016, in an open court session.