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February 2014

Cash credits: Section 68: A. Y. 1989-90: Meaning of “any sum”: No explanation regarding particular amount: Addition of sum in excess of such particular amount is not permissible u/s. 68:

By K. B. Bhujle, Advocate
Reading Time 1 mins
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D. C. Rastogi vs. CIT; 359 ITR 513 (Del):

For the A. Y. 1989-90 the assessee could not satisfactorily explain cash entry to the tune of Rs. 15,17,060/-. The Assessing Officer was of the opinion that even the profits returned were not truly disclosed as were other sources of income. He, therefore, proceeded to reject the accounts and complete the assessment on an estimate basis. Accordingly, the Assessing Officer made an addition of Rs. 25 lakh over and above the specific amount of Rs. 15,17,060/-. The Commissioner (Appeals) reduced the estimation to Rs. 17 lakh. This was upheld by the Tribunal.

The Delhi High Court allowed the assessee’s appeal and held as under:

“i) In the case of section 68 of the Income-tax Act, 1961, there cannot be any estimate even if for the rest of the accounts, such an exercise is validly undertaken. This is for the simple reason that the expression “any sum” refers to any specific amount and nothing more.

ii) U/s. 68 any amount other than one found credited in the account books of the assessee could not be estimated and charged to tax.”

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