| Question And Answer | |
|---|---|
| Subject: | Application of section 68 on the opening capital assets generated after payment of tax in earlier years |
| Category: | Income-Tax |
| Querist: | ajay khulshresth |
| Answered by: | Research Team |
| Tags: | cash credits, discrepancy in capital account, Unexplained cash credit |
| Date: | May 31, 2021 |
The assessee has filed his return of income for A.Y.2018-19 showing total income from business both as proprietor and as partner in partnership firm like earlier year and shown the complete capital assets held in proprietorship firm and partnership alongwith immovable properties held in his name in ITR of the above assessment year.
However, by mistake In ITR filed for A.Y.2017-18 by mistake the capital assets of proprietorship firm is only shown in particular of ITR instead of complete capital assets of all the firm while the income from all the sources truly and properly shown and assessed and nothing was concealed.
National faceless assessment has assessed the difference in capital balance as on 31.3.2018 to capital balance as per iTR 31.3.2017 wrongly applied section 68 and taxed u/s 115BBE ignoring the replies and submission. It is to inform you that all the assets were generated after payment of taxes from the return of income in past earlier years and assessee is regular assessed to tax from last 30 years. Appeal filed with CIT. Huge amount of demand any other Remedy and case law in favour of assessee.
Each case has to be represented on facts . The burden is on the assessee to explain the difference by filing the reconciliation statements . In case the Assessing Officer has not given reasonable opportunity the assessee must take the grounds of natural Justice before the CIT (A). The assessee must make an application under rule 46A of the Income tax Rules 1962 to produce the documents with supporting documents . If the assessee is able to show all the capital are from opening balance addition cannot be as cash credits . In Ivan Singh v. ACIT (2020) (2020) 422 ITR 128/ 195 DTR 227 (Bom)(HC) www.itatonline.org held that opening balance cannot be assessed as cash credits . As regards stay of recovery it is desirable to approach the appropriate authority and also make an application for early hearing . In case the stay is rejected the assessee can approach the High Court by filing writ petition . The assessee should approach the tax consultant who can guide properly after studying all the documents