2010 (1) TMI 1217 - AT - Income Tax

2013 (5) TMI 225 - AT

Issues Involved:
1. Addition of Rs. 8 lacs on account of unexplained cash credit.
2. Addition of Rs. 26,39,294 on account of bogus purchases.
3. Addition of Rs. 9,46,579 on account of advances written off.
4. Addition of Rs. 6,97,440 on account of duty drawback income.
5. Addition of Rs. 30,363 under Section 40A(3).
6. Addition of Rs. 4,80,891 under Section 40(a).
7. Addition of Rs. 30,000 as undisclosed income.

Issue-wise Analysis:

1. Addition of Rs. 8 lacs on account of unexplained cash credit:
The AO noticed cash credits of Rs. 1 lac, Rs. 2 lacs, and Rs. 5 lacs deposited in the capital account of a partner, Mr. Gopal Bhasin, but treated them as undisclosed cash credit due to lack of documentary evidence. The CIT(A) admitted additional evidence showing these amounts were withdrawn from Mr. Bhasin's proprietary firm, B2B Connectors, and deposited into the partnership firm. The Tribunal upheld the CIT(A)'s decision, agreeing that the assessee was prevented by sufficient cause from producing the evidence during the assessment and confirmed the deletion of the Rs. 8 lacs addition.

2. Addition of Rs. 26,39,294 on account of bogus purchases:
The AO disallowed purchases from certain parties due to non-submission of confirmations and payments mostly made in cash. The CIT(A) admitted additional evidence, including confirmations from the parties, and deleted the addition. The Tribunal agreed with the CIT(A) that the assessee had submitted sufficient evidence to prove the genuineness of the purchases and confirmed the deletion of the Rs. 26,39,294 addition.

3. Addition of Rs. 9,46,579 on account of advances written off:
The AO treated advances received from M/s BHP Industries Ltd. as a liability no longer required to be paid. The CIT(A) deleted the addition, referencing a Tribunal decision that liabilities can only be examined in the year they were credited. The Tribunal upheld the CIT(A)'s decision, noting that the AO did not prove the liability had ceased and that the assessee had acknowledged the liability in its balance sheet.

4. Addition of Rs. 6,97,440 on account of duty drawback income:
The AO added this amount, stating the assessee failed to account for duty drawback on an accrual basis. The CIT(A) upheld the addition, citing that the assessee followed the mercantile system of accounting and could not selectively apply the cash basis. The Tribunal agreed but remanded the issue back to the AO to quantify the duty drawback accurately.

5. Addition of Rs. 30,363 under Section 40A(3):
The AO made this addition for cash payments exceeding Rs. 20,000, which was not covered by any exclusion clauses of Rule 6DD. The CIT(A) confirmed the addition, and the Tribunal upheld the CIT(A)'s decision, noting the absence of any satisfactory explanation from the assessee.

6. Addition of Rs. 4,80,891 under Section 40(a):
The AO disallowed expenses for non-deduction of TDS on freight and cartage expenses paid to M/s Committed Cargo Care (P) Ltd. The CIT(A) upheld the addition, and the Tribunal agreed, noting that the assessee did not deduct TDS as required under Section 194C.

7. Addition of Rs. 30,000 as undisclosed income:
The AO added Rs. 30,000 due to a negative cash balance of Rs. 20,888. The CIT(A) confirmed the addition. The Tribunal found the addition of Rs. 30,000 excessive and reduced it to Rs. 20,888, providing the assessee relief of Rs. 9,112.

Conclusion:
The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal, providing detailed justifications for each decision based on the evidence and legal precedents.

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