Facts of the Case

The assessee, a cooperative housing society, received advances from members towards land purchase. During assessment proceedings for Assessment Year 2001-02, the Assessing Officer (AO) treated certain deposits as unexplained cash credits and made additions under Section 68 of the Income-tax Act, 1961.

The matter underwent multiple rounds of litigation. Initially, large additions were made, later remanded by the Tribunal for verification. In subsequent proceedings, the AO made an addition relating to differential deposits, which was deleted by the Commissioner of Income Tax (Appeals) [CIT(A)]. However, the CIT(A) enhanced the income by adding fresh deposits received during the relevant financial year as unexplained cash credits.

Issues Involved

  • Identity of contributors
  • Creditworthiness
  • Genuineness of transactions

Petitioner’s Arguments (Assessee)

  • Additions were unjustified and beyond the scope of directions issued in earlier Tribunal orders
  • Deposits represented advances from members for purchase of plots/land
  • Earlier deposits related to prior years and should not be taxed in the relevant year
  • Orders were passed ex parte without adequate opportunity

Respondent’s Arguments (Revenue)

  • Despite repeated opportunities, the assessee failed to produce evidence
  • The onus under Section 68 lies entirely on the assessee
  • Fresh deposits recorded in books during the relevant year remained unexplained
  • CIT(A) correctly confirmed the addition

Court Order / Findings (ITAT)

  • Fresh deposits received during the year constituted cash credits recorded in the books
  • Under Section 68, the assessee must establish identity, creditworthiness, and genuineness
  • The assessee failed to discharge this burden despite multiple opportunities
  • Non-appearance and absence of evidence warranted adverse inference

Important Clarification by the Tribunal

  • Additions pertaining to earlier deposits had already attained finality
  • Only fresh deposits during the relevant year were examined
  • Failure to substantiate credits in books automatically attracts Section 68
  • Repeated non-compliance and absence of explanation justify confirmation of additions

Link to download the order -  https://itat.gov.in/public/files/upload/1659516785-63Alld2020.pdf

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