During the course of the assessment of M/s Chandni Enterprises (a Proprietorship firm), the Income tax officer, observed that the assessee has shown some credit entries (aggregating to ₹ 40 lakh) in his books of accounts

Cash Credits [Section 68]: As per the provision of Section 68 of the Income-tax Act, 1961, any sum found credited in the books of account of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to Income-tax as the income of the assessee of that previous year. Unexplained Money [Section 69A]: Moreover as per the provision of Section 69A of the Income-tax Act, 1961, where, in any financial year, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or the valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for that financial year. Amount of Investments, etc., not fully disclosed in Books of Account [Section 69]: As per the provision of Section 69 of the Income-tax Act, 1961, where, in any financial year, the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for that financial year. Based on the above points, the action of the assessing officer of treating the credit as deemed Income of the assessee and issue of demand notice seems justified as the assessee could not submit the proof of deposit, addresses of the depositors and other details or could not justify.