Topic
Section 68 of the Income Tax Act, 1961, addresses unexplained cash credits in a taxpayer’s books and allows the Income Tax Department to add such amounts to taxable income if the source is not satisfactorily explained.
ITAT Kolkata set aside ₹13.5 lakh addition under Section 68 for unexplained share capital after the assessee furnished investor details, PANs, and source of funds. The ruling clarifies the evidentiary burden required to rebut Section 68 presumptions in share premium cases.
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.
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.
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 funds received as a refund of a prior advance payment cannot be taxed as unexplained credit under Section 68 merely because the payer is a bogus entity. This clarifies that the nature of the transaction-refund of consideration-trumps the source’s legitimacy, offering critical relief to businesses engaged in legitimate commercial advances.
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 Delhi holds that under Section 68 of the Income Tax Act, the assessee must establish the identity, creditworthiness, and genuineness of creditors to avoid additions. The Tribunal deleted a Rs. 1.75 crore addition after the assessee proved a collaboration agreement and refund, setting a precedent for reassessment proceedings involving shell companies and unexplained credits.
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.
ITAT Delhi dismisses Revenue’s appeal, ruling that for Section 68 IT Act, the assessee need not prove the 'source of source' if the lender’s creditworthiness is established through banking channels and financial records. The decision clarifies the scope of unexplained credit provisions, impacting tax assessments for loans and financial transactions.
ITAT Nagpur rules that additions under Sections 68 and 69C for long-term capital gains from listed shares cannot be sustained without concrete evidence disproving the genuineness of transactions. The tribunal emphasizes that mere suspicion cannot override documentary proof, setting a precedent for tax assessments involving LTCG claims.
ITAT Mumbai rules that cash deposits derived from disclosed sales, already offered for taxation, cannot be reclassified as unexplained income under Section 68 of the IT Act. The ruling prevents double taxation and reinforces the principle that only unverified or undisclosed sources can be taxed as unexplained credits.
ITAT Delhi quashed Rs. 49.5L and Rs. 54.5L additions under Section 68, ruling that additions cannot stand without incriminating material or opportunity for cross-examination. The decision reinforces natural justice principles in income tax assessments, impacting taxpayers facing similar allegations of accommodation entries.
ITAT Mumbai rules that mere book adjustments between group companies, without actual cash flow or proof of genuineness, do not constitute unexplained income under Section 68 of the Income Tax Act. The assessee’s failure to substantiate creditworthiness and transaction authenticity led to the deletion of additions.
ITAT Delhi rules that mere PAN linkage and signatory status in a bank account do not meet the burden of proof under Section 68 of the Income Tax Act. The tribunal mandates documentary evidence of beneficial ownership to justify unexplained cash credits, impacting tax assessments involving high-value transactions.
The ITAT Lucknow deleted a Rs. 6.02 lakh addition under Section 68, ruling that tax authorities cannot treat cash credits as unexplained income merely because the creditor’s income tax returns or financial statements were not submitted. The burden shifts to the department to conduct a proactive inquiry - not just demand impossible documentation from the assessee - reinforcing that conjecture has no place in reassessment proceedings.