The Case of Anil Chhaganlal vs. ACIT was held in ITAT Mumbai. It falls under the Section 68 of the Income Tax Act.
What is Section 68 about?
The Section 68 of the Income Tax Act states that if an unaccounted amount is found credited in the book of the assessee as income of his previous year and the assessee cannot provide any satisfactory explanation about the nature and source of the credited amount then the Assessing Officer may state that amount as liable to income tax considering it as his income in the previous year.
Some important aspects of the Anil Chhaganlal vs. ACIT case are highlighted below:
Shri Harish Sharma recorded a statement in front of the Ld. ACIT and on 222nd February 2016 that statement was retracted. In two affidavits it has been mentioned that the statement that Shri Harish Sharma recorded on 8th January 2016 was under threatening from the police and also the previous papers were destroyed. The papers that the assessee signed under police threatening were claimed to have prepared by the ACIT deliberately. Thus, the statement stands of no importance if the situation had been as mentioned.
The assessee has to explain the nature and source of the credited amount without any duress. If he fails to do so, then the credited amount will be changed in form according to Section 68. The assessee had given the explanation of his loan and said that it was from M/s Encee Securities Pvt. Ltd. After hearing all the facts, the onus that was caste upon the assessee was cleared.
The money that was credited came from the shareholders who admitted that they had handed it over to the M/s Encee Securities Pvt. Ltd. Now, it is confirmed that the money came from the shareholders but for the assessee, it was only a loan. And as a matter of fact, M/s Encee Securities Pvt. Ltd. has not denied giving the loan. So, the question of proving the source of the source of money does not arise here in this case. The assessee had been alleged of receiving a huge amount of cash from his business which was spread across 212 companies among which 16 were listed companies. But this allegation was not given way. As already mentioned, the allegation was on the basis of the statement that Shri Harish Sharma gave and he was alleged of giving that statement under pressure.
No doubt remains regarding the lender, genuineness, and capacity. Thus, the addition which was made by the Assessing Officer was not right. Since the foul play was involved, thus, addition can be given to M/s Encee Securities Pvt. Ltd. but not the present assessee.
In spite of all these, the Ld. Assessing Officer continued his duty and recorded of other persons including the share subscribers to ensure if anything was found against the assessee. Thus, after considering all the facts that had been received, the conclusion came that the addition that was made under section 68 to the present assessee was not justified and so allowance had been given to his appeal.