#Section 68 Income Tax Act

ITAT Delhi rules that a valid sale agreement and subsequent proof of creditworthiness-even if established post-assessment-are sufficient to set aside Section 68 additions. This precedent strengthens taxpayers' defense against unexplained cash credit additions where property transactions are involved.

The ITAT Delhi has ruled that where the Assessing Officer has accepted the genuineness of purchases, sales, and closing stock, no disallowance under Section 68 can be made merely because trade creditors failed to respond to notices. This shields legitimate trade credit from being treated as unexplained cash credits, offering critical relief to traders with high-volume supplier networks.

ITAT Kolkata has ruled that once cash deposits are accepted as part of business turnover, they cannot be doubly taxed under Section 68 as unexplained income. This ensures consistent profit computation and prevents arbitrary double assessment, directly benefiting small businesses and traders who rely on cash-based accounting. The decision reinforces the principle that tax treatment must align with the nature of income already disclosed and verified.

The ITAT Dehradun ruled that cash deposits during demonetization cannot be treated as unexplained income through mechanical lumpsum additions, even when the assessee fails to fully discharge its burden of proof. A reduced addition of Rs. 3 lakh was upheld as fair, setting a precedent for nuanced, fact-sensitive application of Section 68 in unorganized sector businesses.

The ITAT Delhi has ruled that cash credits arising from non-taxable NRE fixed deposit interest and documented personal savings accumulated over ten years are not unexplained income under Section 68. This sets a critical precedent for NRIs and returning residents who rely on foreign-sourced savings, affirming that credible, traceable sources-even if cash-deposited-do not trigger presumptive taxation.

The ITAT Delhi has struck down a 35% ad hoc addition under Section 68, ruling that mere suspicion of unexplained cash deposits during demonetization cannot substitute for concrete evidence of bookkeeping defects. This reinforces that tax authorities must identify specific irregularities in accounts - not rely on broad assumptions - when taxing cash inflows, protecting honest taxpayers in the informal sector from arbitrary assessments.

ITAT Agra ruled that cash deposits totaling Rs. 17.74 lakh by a rural insurance agent are satisfactorily explained through documented agricultural income, past savings, and genuine family contributions, rejecting the presumption of unexplained income under Section 68. This sets a vital precedent for small taxpayers in non-urban areas who rely on informal financial networks and non-salaried earnings.

The ITAT Mumbai has struck down the practice of imposing automatic 10% disallowance on short-term borrowings under Section 68, ruling that tax authorities must conduct a substantive verification of the lender’s identity, genuineness, and creditworthiness. This sets a critical precedent for businesses relying on third-party loans, ensuring assessments are grounded in evidence, not arbitrary percentages.

ITAT Ahmedabad has ruled that when a company repays loans through traceable banking channels like RTGS, with documented lender financial capacity and TDS compliance, such transactions cannot be treated as unexplained cash credits under Section 68. This sets a critical precedent for businesses relying on legitimate borrowings, shifting the burden away from mere source-of-funds speculation to verified transactional evidence.

The ITAT Delhi has ruled that cash deposits made during the demonetization period, when fully documented through audited financial books, VAT returns, and stock records, cannot be taxed as unexplained income under Section 68. This sets a critical precedent for small and medium retailers who rely on cash transactions, affirming that proper bookkeeping overrides mere suspicion of undisclosed income.

ITAT Ahmedabad rules that under Section 68 of the Income Tax Act, only the profit component (15% margin) of business receipts from land transactions can be taxed as unexplained credit, not the entire turnover. This sets a precedent for profit estimation in similar cases, shifting the burden of proof toward the revenue after the assessee establishes genuineness of transactions.

The ITAT Delhi has ruled that the opening balance of unsecured loans cannot be treated as unexplained credit under Section 68, even if the closing balance is challenged. Once the assessee establishes the identity, genuineness, and creditworthiness of lenders, the burden shifts entirely to the Revenue to disprove the transaction - a critical safeguard for charitable trusts and small entities relying on third-party funding.

ITAT Delhi deleted a Rs 50 lakh addition under Section 68 after the assessee proved the identity, creditworthiness, and genuineness of share application money using the investor’s filed tax returns and direct verification from the investor company. This reinforces that documentary evidence from tax-compliant third parties, not just bank statements or board resolutions, can satisfy Section 68’s tripartite test - a critical precedent for real estate and startup firms raising equity capital.

ITAT Delhi rules that share capital received from a non-resident holding company cannot be taxed under Section 68 of the Income Tax Act if the assessee establishes the investor's identity, creditworthiness, and the transaction's genuineness through bank records and FIRC. This sets a precedent for protecting foreign investments from arbitrary additions where documentation is robust.

ITAT Bangalore rules that cash deposits from demonetization-era sales, backed by audited books and VAT returns, cannot be taxed as unexplained income under Section 68, even if payments were made in Specified Bank Notes (SBNs). The ruling clarifies that RBI guidelines on SBNs do not override statutory provisions of the Income Tax Act, reinforcing the primacy of documented business receipts over procedural currency norms.