| Question And Answer | |
|---|---|
| Subject: | Sec 68 of the Act |
| Category: | Income-Tax |
| Querist: | Manali |
| Answered by: | KSA Legal Chambers, reserch team |
| Tags: | cross examination, Sale of jewellery, Unexplained cash credit |
| Date: | July 7, 2023 |
Assessee is jewellery and sold jewellery to Mr. A of Rs. 5 lakhs , Who is director of ABC co . In the assessment proceedings of ABC co it is found that cash has been deposited in Bank account of ABC co and payment has been given by RTGS from account of ABC co to assessee. Ao of ABC co intimated the said information and statement of Mr.A that transaction with assessee of purchase of jewellery is accomodations entry. On the basis of this information assessee case was reopened u/Sec. 147 and Addition of Rs. 5lakhs is made U/Sec. 68 of the Act.
Assessee has also requested for giving opportunity of cross examination ,which was denied on the ground that it is just procedural.
Whether action of the AO in adding Rs. 5 lakhs U/Sec.68 is justified in the hands of assessee and that to with out giving opportunity of cross examination and not appreciating submissions of the assessee that assessee has disclosed the transaction of sale , books of accounts of the assessee are audited and assessee is maintaining quantitative record and the quantity of stock is also reduced .
Pl guide
The Assessing Officer cannot make additions of Rs 5,00,000/- under section 68 of the Income Tax Act, 1961, when source of cash received in the bank account is disclosed. Further, if the sales are reflected in the books of accounts and quantitative records is maintained along with stock register, additions made by the Assessing Officer cannot sustain. The Assessing Officer is bound by law to allow an opportunity of cross examination to assessee if he desires to use any evidence against the assessee, Refer , Kishnchand Chellaram v. CIT (1980) 125 ITR 713 ( SC), Andaman Timber Industries v CCE ( 2015) 127 DTR 241/ 281 CTR 241 ( SC)