Take Cash Credit Admission After Documentary Evidence Under Section 68: ITAT

In hearing for an appeal the ITAT stated that even if the onus is cast upon the assessee to prove their received cash credits, the tax authorities need to go through the documentary evidence which is represented by the assessee, before making additions in cash credit Under section 68 of Income Tax Act, 1961 Get to know complete guide of TDS provisions under income tax act 1961 at here. Also, we include several topics as TDS returns, TDS due dates, penalty & more. Read more. It came up in an appeal where M/s. Harina Developers Pvt. Ltd.challenged the order dated 9th August.2019 passed by Ld CIT(A)-3, Bengaluru. The order was related to FY 2012-13. Meanwhile, the assessee does plotting and selling business of housing sites and it represented the issues and problems they are facing in

• Addition of outstanding liabilities u/s 68 of the Act
• Addition of loans taken from directors u/s 68 of the Act
• Addition of Advances received on sale of sites u/s 68 of the Act
• Charging of interest u/s 234B of the Act

The first issue occurs when the AO finds out that the assessee has purchased land but showing a sum of Rs. 2,99,20,200/- as the amount payable to sellers. The AO asked the assessee to produce the creditors but the assessee provided one or two creditors. From them, one confirmed a pending amount of Rs.72.00 lakhs. Thus AO accepted it and added the remaining amount Rs.2,27,20,000/- as income of the assessee as per Section 68 of the income tax act A simple way to understand all major changes under rebates and deductions in income tax rules for the FY (Financial Year) 2019-20. Also, we included penalty charges if ITR filing missed. Read More. The same addition is also confirmed by the CIT(A).

The next one is concerned with the addition of Rs.1,07,46,510/- it is the loan amount received from two of their directors, which goes under unexplained cash credit as per Section 68 of the Act. In this issue, the assessee failed to present any confirmation letter from the directors and can only file ledger account extract of them thus the AO assessed the total amount as under the unexplained cash credit as per Section 68 of the Act.

The last one is concerned with the addition of Rs.2,25,16,003/- which was the advance received from the customers of plots. The AO finds out that the amount is received from 15 customers who want to buy plots in Nelamangala Project. The total amount was Rs.2,40,66,003/-.and the assessee failed to present any letter regarding this, thus AO issued notices to all the 15 customers as per Section 133(6).

Read Also: Know About Traces Form 26AS Tax Credit Statement Steps to view and download the tax credit statement traces form 26AS. Also, we mention the difference between actual TDS & reflected TDS in Form 26AS. Read more

From these 15 notices, eight letters have been returned due to the address change, incomplete address, etc and 7 letters were not responded by the receivers. In this matter, the assessees represented a bank statement showing that some of the advanced amounts have been returned to the customers, but AO did not accept it. And added the sum of Rs.2,25,16,003/- to the assessee’s income, and CIT(A) also confirmed it. N. V. Vasudevan, Vice President, and B.R. Bhaskaran Accountant Member stated that onus is cast upon the assessee to prove the received cash credit by it.

ITAT stated that “We notice that the assessee has furnished certain documents in respect of some of the advances. It has also given explanations with regard to certain other advances. None of these documents and explanations has been examined by the tax authorities. Accordingly, we are of the view that this issue also requires examination at the end of the AO. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining it afresh,”