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2023 (7) TMI 1263 - AT - Income TaxUnexplained cash credit u/s 68 - payment made by its debtors through the third party - HELD THAT - It is the settled business practice that one has to recover the money from the party against sales. If the version of the department is accepted, then it is implied that no payment has been received by the assessee from M/s Shaikh Traders which is against the prevailing business norms. As such, the revenue before doubting the adjustment entry made by the assessee, should have brought something on record so as to justify that the sale was bogus, or the payment was received by the assessee in an unaccounted form or in the undisclosed bank account of the assessee or by any other mode. But no such detail has been brought on record by the revenue. It is also pertinent to note that the AO in his remand report has clearly stated that receipt of money does not pertain to the year under consideration as it was received on 24th February 2012 financial year 2011-12 but the addition has wrongly been made in the year under consideration. Be that as it may be, it will not have any bearing on the given facts of the case. It is for the reason that the addition made by the AO which was subsequently confirmed by the CIT-A is not sustainable for the reasons elaborated above. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed.
Issues Involved:
1. Validity of reopening of assessment under Section 147 of the Income Tax Act. 2. Non-supply of adverse materials and lack of opportunity to cross-examine deponents. 3. Confirmation of addition of Rs. 1,42,78,300 under Section 68 of the Income Tax Act. 4. Allegation of double taxation due to inclusion of the amount in sales. Summary: Issue 1 and 2: Validity of Reopening of Assessment and Procedural Fairness At the outset, the learned counsel for the assessee submitted that the assessee instructed not to press ground No. 1 and 2 challenging the validity of the reopening of the assessment under Section 147 of the Act on various counts. Accordingly, these grounds were dismissed as not pressed. Issue 3: Addition of Rs. 1,42,78,300 under Section 68 The primary issue raised was the confirmation of the addition of Rs. 1,42,78,300 made by the Assessing Officer (AO) on account of unexplained cash credit under Section 68 of the Act. The AO initiated proceedings based on materials and statements found during a search and seizure operation involving M/s Jalaram Finvest Ltd, which was alleged to provide accommodation entries. The assessee argued that the amount was received against sales made to M/s Shaikh Traders and provided sales ledgers and invoices as evidence. However, the AO treated the sum as unexplained cash credit due to the absence of specific party names and confirmations. Issue 4: Double Taxation Allegation The assessee contended that the confirmation of the addition resulted in double taxation since the amount was already included in its sales. The learned CIT-A disagreed, asserting that the onus was on the assessee to provide confirmation from M/s Shaikh Traders that the payment was made by Jalaram Group on their behalf, which the assessee failed to do. Tribunal's Findings: The Tribunal noted that the assessee had shown the receipt of money from M/s Jalaram Finvest Ltd against sales made to M/s Shaikh Traders in its return of income. The Tribunal also acknowledged that M/s Jalaram Finvest Group was engaged in cheque discounting, a fact accepted by the learned CIT-A and upheld by the ITAT. The Tribunal found that the revenue had not disproved the assessee's contention and had not conducted necessary enquiries from the concerned parties. The Tribunal concluded that the amount received by the assessee could not be deemed unexplained cash credit under Section 68 of the Act and directed the AO to delete the addition. Outcome: The appeal for the assessment year 2013-14 was partly allowed in favor of the assessee. The findings for the assessment year 2013-14 were also applied to the assessment year 2014-15, resulting in the appeal for 2014-15 being partly allowed as well. Both appeals filed by the assessee were partly allowed. Order Pronouncement: The order was pronounced in the Court on 30-06-2023 at Ahmedabad.
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