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2021 (1) TMI 824 - AT - Income TaxAddition u/s. 68 on account of difference in amount realized from trade debtors as against amount outstanding - HELD THAT - Being a trade debtor, creditworthiness and genuineness of the transaction is not disapproved by the Ld. A.O. particularly when the amount has been advanced to the said company and realized subsequently leaving only a balance of ₹ 4,93,383/- similar to the transaction made in the case of the earlier addition in respect of M/s. Kwality Dairy Ltd. which has been rightly taken into consideration by the ld. CIT(A) without any ambiguity so as to warrant any interference. Hence, we confirm the same. The challenge made by the Revenue is thus without any basis and thus rejected. In the absence of any merit, the appeal preferred by the Revenue stands dismissed.
Issues:
1. Deletion of addition of ?21,66,30,814/- made under section 68 of the Income Tax Act, 1961. 2. Challenge to the deletion of the addition by the Revenue. Analysis: 1. The appeal concerned the deletion of an addition of ?21,66,30,814/- made under section 68 of the Income Tax Act, 1961. The Revenue challenged the deletion of this addition, which was divided into two parts: ?13,82,40,814/- and ?7,83,90,000/-. The dispute arose from discrepancies between the amounts realized from trade debtors and the outstanding amounts. The Revenue contended that the excess amounts realized should be added back to the income of the assessee. However, the assessee argued that the amounts were part of regular business transactions and not unexplained income. The CIT(A) deleted the addition after considering the evidence provided by the assessee, including bank statements and confirmations from parties involved. 2. In the first part of the addition, the Revenue claimed that the assessee had realized excess amounts from trade debtors, leading to the addition of ?13,82,40,814/-. The CIT(A) found that the amounts were received through banking channels, duly audited, and confirmed by parties involved. The appellant had also advanced money to various parties during the year, which the AO had not considered. The CIT(A) concluded that the provisions of section 68 did not apply to the trade debtors, and hence, the addition was deleted. 3. Moving to the second part of the addition, amounting to ?7,83,90,000/-, the Revenue argued that this sum was unexplained income. However, the assessee provided detailed accounts showing the transactions with the trade debtor, Dewana Dairy. The CIT(A) noted that the trade debtor had a running account with the appellant for years, and the amounts received and advanced were properly documented. The CIT(A) found no reason to treat the amount as unexplained income under section 68 and deleted the addition. 4. The Tribunal confirmed the CIT(A)'s orders, emphasizing the genuineness and creditworthiness of the transactions, especially in the context of regular business dealings with the trade debtors. The Tribunal found no grounds to interfere with the CIT(A)'s decision and dismissed the Revenue's appeal. The judgment highlighted the importance of considering all relevant evidence and circumstances before making additions under section 68 of the Act. In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the additions made by the Revenue under section 68 of the Income Tax Act, 1961, emphasizing the need to consider the genuineness and regularity of business transactions before treating amounts as unexplained income.
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