Topic
Under Section 68 of the Income Tax Act, 1961, unexplained cash credits refer to funds deposited in a taxpayer's account without a verifiable source, which the tax authorities may treat as undisclosed income.
ITAT Kolkata ruled the Section 148 reassessment notice for AY 2015-16 was barred by Section 149(1)(b) and set aside the ₹20.04 crore share-capital addition treated as unexplained cash credit. The decision protects taxpayers from reassessment notices served outside the statutory limitation period.
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 Kolkata rules that repayment of loans in subsequent years discharges the assessee's burden under Section 68 of the Income Tax Act, setting aside an unexplained cash credit addition of ₹1.4 crore. The ruling clarifies that delayed repayments do not automatically trigger Section 68 additions, providing relief to taxpayers facing shell company allegations.
The ITAT Delhi has ruled that cash deposits made during demonetization, if fully supported by genuine, audited cash sales recorded in the books of account and already taxed as turnover, cannot be reclassified as unexplained income under Section 68. This protects businesses with transparent cash-based operations from double taxation and reinforces that proper bookkeeping is a valid defense against presumptive tax additions.
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 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 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.
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.
ITAT Delhi holds that the Commissioner of Income Tax (Appeals) cannot admit new evidence under Section 250(4) without first complying with Rule 46A(3), which mandates the Assessing Officer’s examination and response. The ruling reinforces procedural fairness in appellate proceedings, ensuring revenue authorities are not bypassed in evidence evaluation.
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 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 Ahmedabad rules that capital introduced by partners cannot be treated as unexplained income under Section 68 of the Income Tax Act if the partner's identity and creditworthiness are established. The decision reinforces that tax authorities must accept documented partner contributions unless material discrepancies exist, offering relief to partnership firms under tax scrutiny.
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.