2024 (7) TMI 442 - HC - Income Tax

Addition u/s 68 - unexplained cash credit - Addition made as the said amount as the respondent assessee received it on account of transaction of sales made on NSEL - Tribunal has deleted the addition after taking into consideration the fact that the said amount is already accounted in the books of account of the respondent assessee - HELD THAT - Considering the facts of the case, it is not disputed by the appellant Revenue that the amount of Rs. 108.97 Crores is credited in sales account offering as income by the respondent assessee and therefore, addition made by the AO u/s 68 of the Act was rightly deleted. Addition on account of non-genuine purchases - Tribunal arrived at a finding of fact on the basis of the Special Audit Report, wherein it is pointed out that the respondent assessee had shown purchase of Cotton Wash Oil (CWO) more than the sales shown - HELD THAT - Tribunal, considering reconciliation provided by the assessee with regard to purchase of 10,180 Metric Ton of CWO for Rs. 59.70 Crores on delivery basis came to the conclusion that purchase of 10,180 Metric Tons of CWO for Rs. 59.70 Crores cannot be said to be excessive as it is established by the assessee on the basis of the supporting evidence that such purchase was duly recorded and corresponding sale was also proved having been duly recorded and recognized income in the books of account of the assessee and therefore, addition was rightly deleted by the Tribunal. Disallowance of interest expenses - HELD THAT - Tribunal has recorded a finding of fact that as per the balance-sheet of assessee, there was a capital and reserved to the extent of Rs. 420 Crores with the assessee copany at the relevant time which was sufficient to give interest through advances in question. The Tribunal, therefore, rightly deleted the disallowance made by the Assessing Officer on account of interest expenses.

Summary

Issues:
- Whether the Appellate Tribunal erred in deleting additions under various sections of the Income Tax Act?
- Whether the respondent's transactions were genuine and correctly accounted for?
- Whether the Tribunal's findings were based on factual evidence and justified the deletion of additions made by the Assessing Officer?

Analysis:
- The Tax Appeal was filed by the Revenue challenging the order of the Income Tax Appellate Tribunal (ITA) regarding additions made for the Assessment Year 2011-12 under different sections of the Income Tax Act, 1961.
- The respondent, engaged in trading of edible and non-edible oils, became a client of M/s. N. K. Proteins Limited for trading on the NSEL platform.
- The Assessing Officer had made additions for unexplained credits, non-genuine purchases, cash credits, and interest expenses, which were confirmed by the CIT(A).
- The Tribunal allowed the appeal filed by the respondent, deleting the additions, based on factual findings and evidence presented.
- The Tribunal found that the amounts in question were properly accounted for by the respondent and were not unexplained cash credits under Section 68 of the Act.
- The Tribunal also considered the transactions in the context of similar cases and previous assessment years, where similar issues were resolved in favor of the assessee.
- The Tribunal justified the deletion of additions by examining the evidence of transactions, reconciliations, and confirmations provided by the respondent and associated parties.
- The Tribunal's decision to delete the additions was based on factual findings and proper accounting treatment of the transactions by the respondent.
- The Tribunal further held that no substantial questions of law arose from the impugned order, leading to the dismissal of the appeal by the High Court.

This detailed analysis highlights the key legal and factual aspects of the judgment, emphasizing the reasoning behind the Tribunal's decision to delete the additions made by the Assessing Officer and confirmed by the CIT(A).