2015 (8) TMI 215 - AT - Income Tax

Addition on account of unaccounted sales - CIT(A) deleted part addition - Held that - AO without controverting the submissions/evidence furnished by the assessee treated the total cash deposits as income of the assessee. The AO did nothing to demonstrate that the purchase of retail business had been accounted for in the purchase of whole sale business. The above finding of the ld.CIT(A) has not been controverted by the Revenue by placing any material on record. Under these facts, we do not any reason to interfere with the order of the ld.CIT(A), same is hereby confirmed - Decided against revenue. Addition made on account of bogus cash-credit- CIT(A) directing the AO to verify the contentions of the assessee regarding addition - Held that - Out of these nine persons, three persons are assessed to tax and their identity is also established, accordingly appellant has proved identify, genuineness of the transactions and creditworthiness of the creditors in respect of these persons.As far as genuineness of the transactions with other six persons is concerned, confirmation from these persons are already on record. Since amounts involved are small and these persons are intimately related with the appellant, it can be safely assumed that these amounts are accrued with these persons over a period of time. In this regard, the appellant has rightly placed reliance on Sunil Dua v/s. CIT (2008 (1) TMI 634 - Delhi High Court ) In view of the above facts, loans from these should be accepted. It will be worthwhile to mention here that my predecessor in appeal - Decided against revenue.

Summary

Issues:
- Deletion of addition of unaccounted sales
- Direction to verify the contentions of the assessee regarding bogus cash credit
- Upholding the order of the Assessing Officer
- Restoration of the issue to the file of AO for verification
- Disallowance of loss in shares derivative transactions

Deletion of Addition of Unaccounted Sales:
The appeal by the Revenue challenged the deletion of an addition of Rs. 8,00,850 made on account of unaccounted sales. The Assessing Officer (AO) had initially made this addition based on discrepancies in the assessee's reported sales. The Commissioner of Income Tax (Appeals) upheld a partial addition of Rs. 1,62,000 and directed the AO to verify the remaining amount. The Tribunal upheld the CIT(A)'s decision, emphasizing that the AO failed to demonstrate how the retail business purchases were accounted for in the wholesale business transactions. The Tribunal confirmed the deletion of Rs. 8,00,850, as the evidence provided by the assessee was not refuted by the Revenue.

Direction to Verify Bogus Cash Credit:
The appeal also contested the direction given by the CIT(A) to the AO to verify the assessee's contentions regarding a bogus cash credit of Rs. 1,60,000. The Revenue argued against this verification, claiming that the CIT(A) was not justified in restoring the issue to the AO. However, the Tribunal upheld the CIT(A)'s decision, noting that the Revenue did not challenge the deletion of this addition in a separate appeal. The Tribunal found no reason to interfere with the CIT(A)'s order, thereby rejecting the Revenue's appeal on this ground.

Disallowed Loss in Shares Derivative Transactions:
The assessee raised a cross objection regarding the disallowance of a loss in shares derivative transactions amounting to Rs. 3,28,097. The Tribunal dismissed the grounds related to this loss, as the issue had become academic due to the deletion of the addition by the CIT(A). The Tribunal rejected this ground of the cross objection, stating that the authorities had the power to verify the cash credit, contrary to the assessee's argument based on section 44AF of the Income Tax Act.

Conclusion:
The Tribunal dismissed both the Revenue's appeal and the Assessee's cross objection, upholding the CIT(A)'s decision on the deletion of additions related to unaccounted sales and bogus cash credit. The Tribunal also rejected the cross objection's grounds related to the loss in shares derivative transactions, as the issue had been rendered academic. The judgment was pronounced on July 31, 2015, in Ahmedabad.