| Case ID |
102cbd32-8bbc-411c-8bb1-cd7dec82e256 |
| Body |
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| Case Number |
IT REFERENCE No. 111 OF 1998 |
| Decision Date |
Feb 29, 2008 |
| Hearing Date |
|
| Decision |
The court held that the burden of proof under section 68 of the Income-tax Act requires the assessee to explain the nature and source of cash credits in their accounts. Specifically, when credit entries are made in the names of close relatives, such as a non-earning spouse and a minor child, the assessee must provide satisfactory evidence regarding the source of funds from which these relatives obtained the money to invest. In this case, the assessee failed to provide such evidence, leading to the conclusion that the explanation offered was not satisfactory. The decision emphasizes that establishing the credibility of transactions is crucial, particularly when the financial capacity of the creditor is in question. The court reiterated that the three key conditions under section 68 include the identity of the creditor, their capacity to advance the amount, and the genuineness of the transaction. The lack of information about the source of funds from the relatives resulted in the dismissal of the assessee's claims. |
| Summary |
In the case of Banarsi Prasad v. Commissioner of Income Tax, the Allahabad High Court examined the provisions of section 68 of the Income-tax Act, 1961 concerning cash credits. The case revolved around the financial transactions recorded in the books of the assessee, where substantial amounts were credited from his wife and minor son, both of whom lacked a verifiable source of income. The court highlighted the importance of establishing the source of funds when dealing with cash credits from close relatives, emphasizing that mere claims without substantial evidence do not suffice. The ruling clarified the need for the assessee to demonstrate the legitimacy of transactions, especially when relatives are involved, as this poses additional scrutiny under tax regulations. The court's decision reinforces the necessity for detailed financial disclosures in tax matters to ensure compliance with the law and uphold the integrity of financial transactions. This case serves as a critical reference point for similar cases involving cash credits and the obligations of taxpayers to substantiate their claims with credible evidence. |
| Court |
Allahabad High Court
|
| Entities Involved |
Not available
|
| Judges |
SUSHIL HARKAULI,
SUDHIR AGARWAL
|
| Lawyers |
Krishna Agrawal,
Rishi Raj Kapoor
|
| Petitioners |
Banarsi Prasad
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
2008 SLD 4130,
(2008) 303 ITR 239
|
| Other Citations |
CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC),
CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 781 (SC),
Dy. CIT v. Rohini Builders [2002] 256 ITR 360 (Guj.),
Nemi Chand Kothari v. CIT [2003] 264 ITR 254 (Gauhati),
CIT v. Jauharimal Goel [2008] 296 ITR 263 (All)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
68
|