Whether sec 68 of the Act is only applicable in case of maintaining book of accounts by the assessee?

Arunkumar J. Muchhala vs. CIT (Bombay High Court) - 24 Aug 2017

Question of law discussed: Whether sec 68 of the Act is only applicable in case of maintaining book of accounts by the assessee?

Some interesting facts/ notes for easy references :

1- It has been vehemently argued on behalf of appellant that Books  of  accounts  have  not  been   maintained   by  the   Petitioner  and therefore Sec. 68 of I. T. Act will not be applicable. Though it is a fact that certain amounts were taken by the Petitioner from those persons, yet, when entries of the same have not been taken in the books of accounts, they can not be added to the income of the Appellant for the assessment   of   tax,

2- These   entries   have   been   found   by   the   Assessing Officer   on   the   basis   of   Bank   Statement.   No   other   document   was considered by him, before issuing order,

3- Baladin Ram v/s. Commissioner of Income­Tax, U. P. - Even under the provisions embodied in Section 68 of Income­Tax Act, 1961, it   is   only   when   any   amount  is   found   credited   in   the   books   of   the assessee   for   any   previous   year   that   the   section   will apply,   and   the amount   so   credited   may   be   charged   to   tax   as   the   income   of   that previous year, if the assessee offers no explanation or the explanation offered by him is not satisfactory”

4- Commissioner of Income­Tax v/s. Taj Borewells- Unless the following circumstances exist, the Revenue cannot rely on Section 68 of the Act : (a) Credit in the books of an assessee maintained for the year, (b) the assessee offers no explanation or if the assessee offers an explanation the Assessing Officer is of the  opinion  that it is not satisfactory, and the sum so credited   is   chargeable   to   tax   as   “income   from   other   sources”.   The assessee alone has to offer an explanation. If the assessee makes an explanation, it is for the Assessing Officer to accept it or reject it”

5- Sudhir   Kumar   Sharma   (HUF)   v/s. Commissioner of Income­Tax - It has been held that, “When during the assessment proceedings,  Assessment Officer noticed  that  assessee  had deposited huge amount of cash in his bank account; the addition  of the said amount in the income of the assessee by invoking the provisions of Sec. 68 of Income Tax Act is justified. The ouns is on the assessee to explain nature and source of said cash deposits”. A Special Leave Petition was preferred challenging the above judgment; however, Supreme Court has dismissed.

6- It was further deliberated that "Now, Appellant intends to say that he has not maintained books of accounts and therefore, those amounts can not be considered. When Appellant is doing business, then it was incumbent on him to maintain proper books and/ or books of account. It may be in any form. Therefore, if he had not maintained it, then he can not be allowed to take advantage of his own wrong. Burden lies on him to show from where he has received the amount and what is its   nature"

for reading full text of the judgement please refer  link - http://itatonline.org/archives/arunkumar-j-muchhala-vs-cit-bombay-high-court-s-68-argument-that-the-assessee-did-not-maintain-books-of-account-and-so-s-68-will-not-apply-is-not-acceptable-it-is-incumbent-on-every-assessee-d/arunkumar-muchhala-68-bogus-credits/