26 January 2011
hello all, plz its very urgent. plz guide me
my questions is provisions of cash credit u/s 68 says that any amount credited in the books of accounts for ANY previous year ........... cash credit.
now when any can AO disallow opening balance. in other words credit made in year 03-04 balance c/d and now section 68 applied for that opening balance amount for year of 2006-07. is it possible?? what does the terms specify.. "credited in books" and "any previous year"
26 January 2011
Tax assessment isnot the subject of accounting. It is not the subject matter whether cash credit is appearing in opening balance of cash. IF the AO any cash credit during the PY , that may be taken as income. For previous years, that will relates to that particular year.
26 January 2011
Sec. 68 is not applicable in your case. It applies only for the transactions entered into during the year. Even in one of the case it was held that credit entries appearing in the bank passbook of assessee which he is unable to explain even then 68 does not apply as bank pass is not the books of account of assessee.
26 January 2011
Conditions for taxing tax credits, among others, are as follows:- i) there has to be a credit of amounts in the books maintained by the assessee. ii) such credit has to be a sum of money during the previous year. The given issue does not fit into the above conditions,being opening balance, and hence A.O's action will not sustain in the eye's of law.
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