2017 (8) TMI 1137 - HC - Income Tax

Addition u/s 68 - gifts from NRI friend - taking loan by depositing cash - source of credit received - contrary arguments relating to maintenance of books of accounts - Held that - Appellant has not denied that he has received the said loan amount / cash deposits from those persons whose list has been given in the order of Assessing Officer. He has revealed those names from the Bank account of the Appellant. Now, Appellant intends to say that he has not maintained books of accounts and therefore, those amounts can not be considered. When Appellant is doing business, then it was incumbent on him to maintain proper books and/ or books of account. It may be in any form. Therefore, if he had not maintained it, then he can not be allowed to take advantage of his own wrong. Burden lies on him to show from where he has received the amount and what is its nature. Unless this fact is explained he can not claim or have deduction of the said amount from the income tax. Sec. 68 of I. T. Act provides that where the assessee offers no explanation about the nature and source of the credits in the books of account, all the amounts so credited or where the explanation offered by the assessee is not satisfactory in relation to the same then such credits may be charged to tax as income of the assessee for that particular previous year. When even after giving opportunities, The Appellant had failed to produce relevant documents and explain the nature and source of the amount received by him as narrated above; the order of the Assessment officer and the appellate authorities in respect of those amounts is justified - Decided against assessee.

Summary

Issues:
Challenging an order of the Income Tax Appellate Tribunal dated 30-07-2014.

Analysis:
1. The appellant filed a return for the Assessment Year 1996-97, declaring total income. Notices were issued under various sections of the Income Tax Act, but the appellant failed to provide required details despite multiple opportunities. The Assessing Officer added unexplained cash credits to the total income, resulting in a higher income assessment.

2. The Commissioner of Income Tax (Appeals) partly allowed the appeal, deleting some entries after explanations were provided. However, certain amounts remained added to the total income.

3. The appellant further appealed to the Income Tax Appellate Tribunal, which dismissed the appeal on 30-07-2014, leading to the current challenge.

4. The appellant argued that since no books of accounts were maintained, Section 68 of the Income Tax Act should not apply. Citing relevant case law, the appellant contended that unexplained cash credits can only be charged to tax if found credited in the books of the assessee.

5. The appellant emphasized that the loan amounts were received through cheques, some for flat bookings that did not materialize, hence not liable to be added to income.

6. The Revenue argued that the authorities rightly requested relevant documents to substantiate the transactions. Referring to a case precedent, the Revenue highlighted the assessee's responsibility to explain cash deposits.

7. The court noted that the appellant did not dispute receiving the loan amounts but failed to explain their nature and source adequately. As per Section 68 of the Act, unexplained credits can be charged as income if not satisfactorily explained.

8. The court found that the appellant's argument of not maintaining books of accounts was raised belatedly and that the non-production of documents differed from not maintaining accounts. The appellant's failure to produce relevant documents led to the justifiability of the authorities' decisions.

9. Ultimately, the court dismissed the appeal, stating that no substantial question of law was raised, and upheld the orders of the lower authorities regarding the disputed amounts added to the appellant's income.