New News 19 June

 

 

In the recent ruling, Hon’ble Bombay High Court (HC) in case of Principal Commissioner of Income Tax – 14 (PCIT) vs. Alag Securities Private Limited (Taxpayer) held that section 68 of the Income Tax Act, 1961 (ITA) would come into play when any sum is found credited in the books of the Taxpayer and the Taxpayer offers no explanation about nature and source thereof or the explanation offered by the Taxpayer is not in the opinion of the Assessing Officer (AO) satisfactory.

In the abovementioned situation, the sum so credited may be charged to income tax as the income of the Taxpayer of the relevant previous year. However, in the given case the business of the Taxpayer is centered around customers/beneficiaries making deposits in cash amounts, and in lieu thereof taking cheques from the Taxpayer for amounts slightly lesser than the quantum of deposits, the difference representing the commission realized by the Taxpayer. The cash amounts deposited by the customers i.e., the beneficiaries had been accounted for in the assessment orders of these beneficiaries.