The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) has determined that income from sales cannot be added under Section 68 of the Income Tax Act, 1961 unless it is proven to be invalid.
This decision was made in response to a case involving Subhash Chand Gupta, the respondent-assessee, who e-filed his income for the relevant assessment year. The assessing officer, however, made an addition under Section 68 of the Income Tax Act, citing an unsatisfactory explanation of credits related to sales made to specific parties.
The revenue department appealed against the ruling of the Commissioner of Income Tax (Appeals), who had deleted the addition made by the assessing officer under Section 68 of the Income Tax Act.
The assessee’s attorney, P C Yadav, argued that the sales were supported by corresponding purchases and that the Assessing Officer(AO) had accepted the accuracy of both the purchase and sales figures.
It was further contended that there was no reason to doubt the legitimacy of the assessee’s sales when the purchases and profit had been duly calculated and approved.
On the other hand, the revenue’s attorney, Maninder Kaur, asserted that the addition made under Section 68 of the Income Tax Act was lawful.
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The bench noted that the Commissioner’s ruling, stating that sales cannot be added under Section 68 of the Income Tax Act unless proven fraudulent with credible evidence, was in accordance with the law. Dismissing the appeal by the revenue department, the two-member bench comprising accountant Narendra Kumar Billaiya and Judge, Challa Nagendra Prasad affirmed the legality and validity of the Commissioner’s order.
| Case Title | Subhash Chand Gupta Vs DCIT |
| Citation | I.T.A No.1548/Del/2022 |
| Date | 25.05.2023 |
| Assessee by | Shri P C Yadav, Adv. |
| Revenue by | Ms. Maninder Kaur, Sr. DR |
| Delhi ITAT | Read Order |