S. 68 Of Income Tax Act Not Attracted When There Is No Unexplained Amount In Bank Statement: Gujarat High Court

The Gujarat High Court stated that there cannot be any income escapement by the assessee if there is no unexplained amount in the bank statement on record. The Bench of Justice Bhargav D. Karia and Mauna M. Bhatt observed that “the reason given by the Assessing Officer for alleged escapement of Rs.3,25,00,000/- is not sustainable since there is no unexplained amount in the bank statement on record since the assessee did not retain the amount of Rs.3,25,00,000/- and as such the ingredients of Section 68 are not attracted……” Section 148 of the Income Tax Act, 1961 gives the Assessing Officer the power to reassess tax returns if income is inaccurately reported. Notice is sent under Section 148 or 148A for reassessment. Section 68 of the Income Tax Act, 1961 requires taxpayers to provide explanations for any cash credits that can raise concerns about their authenticity or source. The assessee/petitioner is the legal heir of the late Mahasukhlal Navnidhlal Parekh, who filed an income tax return for the year 2015-16 on 31.08.2015. Mahasukhlal passed away on 30.09.2019. A reassessment notice under Section 148 of the Income Tax Act was issued for the 2015-16 tax year. The authorities issued an order and notice in July 2022, claiming that Rs. 3.25 crore was unaccounted for from a loan his late father had given in 2015, leading to the reassessment. The assessee has challenged the notice issued under Section 148 of the Income Tax Act, 1961 before the High Court. The assessee contended that the loan was given on 04.09.2014 and it was repaid on 21.09.2015 and therefore there cannot be any escapement of income for the year under consideration. The bench noted that there is no escapement of income since the amount was received by the late father of the assessee on 04.09.2014 from Mr. Hardik Parekh and was paid by NEFT to Ms. Darshana Doshi on the same day. Similarly, the amount was received back on 19.09.2015 from Ms. Darshana Doshi and returned to Mr. Hardik Parekh. In such circumstances, there is no escapement of income of the late father of the assessee is concerned. “The reason given by the Assessing Officer for alleged escapement of Rs.3,25,00,000/- is therefore not sustainable since there is no unexplained amount in the bank statement on record since the assessee did not retain the amount of Rs.3,25,00,000/- and as such the ingredients of Section 68 are not attracted,” added the bench. In view of the above, the bench allowed the petition. Counsel for Petitioner/ Assessee: SN Divatia Counsel for Respondent/ Department: Karan G Sanghani Case Title: Amee Mahasukhlal Parekh as Lr of Late Mahasukhlal Navnidhlal Parekh v. Income Tax Officer Ward 1(1)(1) Or His SuccessorLL Citation: 2024 LiveLaw (Guj) 158 Case Number: R/Special Civil Application No. 18254 of 2024 Click Here To Read/Download The order

S. 68 Of Income Tax Act Not Attracted When There Is No Unexplained Amount In Bank Statement: Gujarat High Court

Mehak Dhiman

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