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2023 (9) TMI 1458 - AT - Income TaxAddition u/s 69A - addition based on entries of cash amount in the loose sheets - AO held that the cash amount received through hawala for the relevant year is treated as unexplained money - HELD THAT - According to ld. AO, the entire cash sales reflected in the loose sheets pertain to the assessee when there are corresponding sales which has been accounted in the books of M/s. Samaira Enterprises. If that premise of the AO is to be accepted then sale of M/s. Samaira Enterprises would be nil which cannot be the case, because this entity has shown sales and is assessed to tax since past. Thus, based on these documents and the ld. CIT (A) has given his elaborate finding for his conclusion and given direction to the ld. AO wherein, he has directed the ld. AO to verify and cross check, whether the sales adopted by him from the loose sheets appears in the cash book / bank book / sales of M/s. Samaira Enterprises or not and similar exercise to be undertaken with respect to expenses of the outgoing in the loose sheets seized and impounded from the search proceedings. We do not find any reason to tinker with such a direction which is based on the facts and material on record. Accordingly, order of the ld. CIT(A) is confirmed on the grounds raised by the Revenue is dismissed. Unaccounted purchase - unexplained expenditure u/s.69C - CIT(A) deleted addition - HELD THAT - Appellant has brought on record sufficient documentary evidences to justify its claim of genuineness of purchase of Spice Compound, which have not been controverted by the AO during assessment proceedings. No adverse view has been taken by the AO with respect to veracity of various documentary evidences or the claim made. AO has solely relied on the statements of two employees, which have later been clarified by the deponents Considering these facts, the addition as unexplained expenditure u/s.69C is correctly deleted. Addition u/s.68 - statement recorded during the search and survey - HELD THAT - Once ld. AO is being directed to verify the assessee records and ascertain the correct figure of sales made to M/s. Samaira Enterprises and if there is any discrepancy, then remedial action has to be taken in the case of M/s. Samaira Enterprises as the same would constitute corresponding purchases in its hand. It is only with the direction ld. CIT(A) has directed to delete in the hands of the assessee. We do not find any infirmity in such direction because all these transactions have been stated to be recorded in the books of accounts of M/s. Samaira Enterprises. Addition u/s.69C - Purchase invoices demonstrating that the two invoices represent purchase of Nirmali Seeds of export quantity and balance invoices showing purchase of Tukda Nirmali Seeds at a lower price - CIT(A) deleted addition - HELD THAT - Once it has been found that there is no evidence of cash payments against the purchase of nirmali seeds from the said party, then addition made by the ld. AO itself does not have any basis, accordingly, the ld. CIT(A) has rightly deleted the said addition.
Issues Involved:
1. Deletion of addition under Section 68 of the Income Tax Act. 2. Deletion of addition under Section 69A of the Income Tax Act. 3. Deletion of addition under Section 69C of the Income Tax Act. Issue 1: Deletion of Addition under Section 68 The Revenue challenged the deletion of an addition of Rs. 4,63,52,504/- under Section 68 of the Income Tax Act for A.Y. 2021-22. The Assessing Officer (AO) argued that cash sales were unaccounted, based on loose sheets found during a search. The CIT(A) found that the sales were recorded in the books of M/s. Samaira Enterprises, which regularly filed returns and paid taxes. The CIT(A) directed the AO to verify the records of M/s. Samaira Enterprises and deleted the addition in the hands of the appellant. This decision was upheld as the AO failed to prove the sales were unaccounted. Issue 2: Deletion of Addition under Section 69A The AO made an addition of Rs. 2,27,19,500/- under Section 69A, treating cash receipts as unexplained money. The CIT(A) found that the sales were recorded in the books of M/s. Samaira Enterprises and the loose sheets were not reliable evidence. The CIT(A) directed the AO to verify the records of M/s. Samaira Enterprises and deleted the addition. This decision was upheld as the AO failed to prove the cash receipts were unexplained. Issue 3: Deletion of Addition under Section 69C The AO made an addition of Rs. 4,72,00,000/- under Section 69C, treating purchases as unexplained expenditure. The CIT(A) found that the purchases were supported by invoices, transport documents, and stock records. The CIT(A) deleted the addition as the AO failed to disprove the documentary evidence. This decision was upheld as the AO relied solely on employee statements without corroborating evidence. Additional Issues: - Addition of Rs. 11,20,000/- under Section 69C: The AO added this amount based on an email suggesting under-invoicing. The CIT(A) found no evidence of cash payments and deleted the addition. - Addition of Rs. 13,85,294/- under Section 69A: The AO added this amount based on loose sheets. The CIT(A) directed the AO to verify the records of M/s. Samaira Enterprises and confirmed the addition only where verification was not possible. Conclusion: The Revenue's appeals for A.Y. 2019-20, 2020-21, and 2021-22 were dismissed as the CIT(A)'s decisions were based on substantial evidence and proper verification directives. The AO's reliance on uncorroborated statements and loose sheets was insufficient to sustain the additions.
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