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TMI Blog2014 (9) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... h credit - it may be a cash credit or it may be a credit representing the value of the supplies made by the suppliers on credit - once the credit so mentioned in the section was found to be not supported by any acceptable evidence than the sum so credited would be charged to income tax as the income of the assessee. Section 68 of the Act suggests that there has to be a credit of an amount in the books maintained by an assessee and such credit would be charged to income tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source - The expression "any sum is found credited in the books of the assessee" means all entries on the credit side as well as on the debit side in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of 1.75%. The Assessing Officer on perusal of the balance sheet noticed that the assessee had shown a liability for supply of sarees at ₹ 1,32,39,095/-. On this basis, the assessee was directed to produce the weavers for examination on oath. It transpires that nine weavers were produced in the case of the sister concern M/s Saidullah and company in which it was stated that sarees to the Fatima group including the assessee was sold and that these weavers further submitted that since the transactions was more than three years old they could not give the exact outstanding amount but maintained that liabilities were outstanding against the assessee. The Assessing Officer contended that since the liabilities in the balance sheet remaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejected under Section 145 of the Act but since the book results were better than the earlier years and there was no material on record to show that the assessee had earned more profit than what was shown in the assessment year in question, the Tribunal was not inclined to disturb the book results. The Tribunal also concluded that with regard to the unexplained liabilities the case of the assessee was similar to the case of Mohd. Akhlaq and, consequently, the unexplained liabilities were required to be deleted and that no addition under Section 68 of the Act could be made. The department, being aggrieved by the order of the Tribunal, has filed the present appeal under Section 260A of the Act. We have heard Sri Dhahanjay Awasthi, the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is brother Saidullah in the previous assessment year 1999-00 nor anything has been brought on record to indicate that the findings of the Tribunal that the case of the assessee was not similar to the case of Sri Mohd. Akhlaq. We are of the opinion that the order of the Tribunal does not require any interference. Before parting, it was submitted by the learned counsel for the assessee that an entry of liability cannot be added under Section 68 of the Act. We find that the unexplained liabilities was added by the Assessing Officer under Section 68 of the Act, which has now been deleted by the Tribunal. The provision of Section 68 is extracted hereunder: Cash credits. 68. Where any sum is found credited in the books of an assessee ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed liability could be added to the income of the assessee, if no satisfactory explanation was given. In Sundar Lal Jain Vs. Commissioner of Income Tax, Lucknow 117 ITR 316 a Division Bench of this Court held that the books maintained by a firm should show cash credit entry and the firm's explanation should be found unsatisfactory only then Section 68 would entitle the Income Tax Officer to include the amount of entry in the income of the assessee's firm. In Commissioner of Income Tax Vs. P. Mohankala, 2007 (291) ITR 298 the Supreme Court explained the nature and the scope of Section 68 of the Act, namely:- The question is what is the true nature and scope of section 68 of the Act ? When and in what circumstances would sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such a case there is, prima facie, evidence against the asessee, viz., the receipt of money, and if he fails to rebut it is the said evidence being unrebutted, can be used against him by holding that it was a receipt of an income nature. While considering the explanation of the assessee the Department cannot, however, act unreasonably. From the aforesaid decision, it is clear that Section 68 of the Act suggests that there has to be a credit of an amount in the books maintained by an assessee and such credit would be charged to income tax as the income of the assessee of that previous year if the explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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