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2025 (2) TMI 116 - AT - Income TaxAddition u/s 68 - assessee has not maintained books of accounts - HELD THAT - Assessee suffered loss instead of gain. Even otherwise the assessee has not maintained books of account and credit has not been found credited in the books of accounts. Therefore in my view the provisions of section 68 of the act are not applicable where the assessee has not maintained books of accounts and the same is not found credited in the books of accounts. Thus no amount has been found credited in the books of account therefore no addition could have been made u/s 68 of the act by the AO. Even otherwise Ld. CIT(A) while dealing with the appeal of the assessee adjudicated the provisions of section 69A instead Sec. 68 of the Act. Therefore the impugned order of CIT(A) is contrary to the provisions of law. Decided in favour of assessee.
ISSUES PRESENTED and CONSIDERED
The primary issues considered in this judgment are: 1. Whether the delay in filing the appeal by the assessee should be condoned. 2. Whether the additions made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, were justified, given the facts of the case. 3. Whether the order of the Commissioner of Income Tax (Appeals) [CIT(A)] was sustainable, particularly in relation to the application of Section 69A instead of Section 68. ISSUE-WISE DETAILED ANALYSIS 1. Condonation of Delay - Relevant Legal Framework and Precedents: The Court considered the principles laid down by the Supreme Court in the case of Land Acquisition Collector Vs. Mst. Katiji & Ors., which emphasizes that substantial justice should prevail over technicalities in instances of non-deliberate delay. - Court's Interpretation and Reasoning: The Tribunal noted that the application for condonation of delay was supported by an affidavit from the assessee, and there was no counter-affidavit from the department to challenge the facts stated therein. This lack of rebuttal led the Tribunal to accept the reasons provided by the assessee. - Conclusion: The Tribunal condoned the delay, allowing the appeal to proceed on its merits. 2. Justification of Additions under Section 68 - Relevant Legal Framework and Precedents: Section 68 pertains to unexplained cash credits, where any sum found credited in the books of an assessee can be charged to income tax as the income of the assessee if the assessee fails to offer a satisfactory explanation about the nature and source of the sum. The Tribunal referenced several case laws, including Cit Vs Bhaichand N Gandhi and Anand Ram Raitani Vs. CIT, to support its reasoning. - Court's Interpretation and Reasoning: The Tribunal found that the assessee did not maintain books of accounts and that the amount of Rs. 10,12,375/- was not credited in any books of accounts. Therefore, the provisions of Section 68 were deemed inapplicable. - Key Evidence and Findings: The evidence showed that the assessee reported a loss of Rs. 37,932/- from the sale of shares, contrary to the AO's claim of escaped income. The Tribunal noted that the AO's additions were based on incorrect assumptions about the existence of credited amounts. - Application of Law to Facts: Since no books of accounts were maintained and no credit was found, the Tribunal concluded that Section 68 could not be invoked. - Conclusion: The Tribunal directed the deletion of the additions made by the AO under Section 68. 3. Sustainability of the CIT(A)'s Order - Relevant Legal Framework and Precedents: The CIT(A) applied Section 69A, which pertains to unexplained money, bullion, etc., instead of Section 68. - Court's Interpretation and Reasoning: The Tribunal found the CIT(A)'s application of Section 69A inappropriate, as the case facts did not support the existence of unexplained money or assets. - Conclusion: The Tribunal ruled that the CIT(A)'s order was contrary to the law and unsustainable, leading to the allowance of the appeal. SIGNIFICANT HOLDINGS - The Tribunal emphasized the principle that substantial justice should take precedence over procedural technicalities, especially in the context of condoning delays. - The Tribunal established that for Section 68 to apply, there must be a credit in the books of accounts, which was not present in this case. - The Tribunal clarified that the CIT(A)'s misapplication of Section 69A, in lieu of Section 68, rendered the order unsustainable. - Final determination: The appeal filed by the assessee was allowed, and the additions made by the AO were directed to be deleted.
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