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TMI Blog2015 (4) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... d sales, the assessee had paid due taxes on profit earned on all these transactions. In the instant case the assessee has neither incurred any expenses nor was not found to have incurred any expenditure, therefore, there is no question of explanation regarding source of such expenditure. Accordingly, there was no justification on the part of the AO’s action for making any addition u/s.69C. Neither during the course of search at Litika Group nor during the course of survey at assessee’s premises nor during the enquiries made after survey reveal that assessee had transferred cash of ₹ 3.99 crores to Litika Group. There is also nothing on record to suggest that assessee and Litika Group were involved in some scam/scandal involving money laundering or violation of any law. After considering all these factual position, the CIT(A) recorded detailed finding at para 3.3 of his appellate order and held that provisions of Section 69C are not attracted. It is also not the case of the department that excess payment received during the year amounting to ₹ 3.99 crores was not forming part of the gross results of the assessee on which profit was earned and taxes were duly paid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. 3. By the impugned order, the CIT(A) deleted the addition after having following observations :- 3.3 I have considered the facts of the case. The appellant was engaged in the business of trading and manufacturing of drugs, vaccine and pharmaceuticals and allied products. During the year, the appellant had sales/turnover of ₹ 280.64 crores. As discussed above, the Investigation Wing of the Department carried out search action u/s.132 of the Act on the premises of Litika Group of Pune. The search action of Litika Group revealed that such group had circuitous / paper transactions with the appellant. Consequently, the Investigation Wing of the Department carried out a survey action at the premises of appellant company. Such survey action revealed that during assessment year 2007-08,2008-09 and AY 2009-10, the appellant entered into circuitous transactions with Litika Group by issuing accommodation/paper sale / purchase bills. The year-wise break-up of such accommodation transactions were as under:- Year Total Accommodation sales Total Accommodation purchases Profit on such accommodation tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant. All these circuitous transactions were entered into books of accounts and the profit earned thereon had been duly shown in the Profit and Loss account. The appellant had paid taxes on profits earned on actual transactions and has also paid taxes on profit earned on these circuitous transactions. Thus, it was not a case that the profit earned on such circuitous transactions has been adjusted by the appellant against any expenses or losses. Without prejudice to the morality of such circuitous transactions, by entering into such circuitous transactions, the appellant had not violated any provisions of the I T Act. On such paper transactions, the appellant earned profit on which the appellant had paid the taxes. Thus, the appellant had also paid taxes on the profits which was not real income of the appellant but it was mere profit arising out of paper circuitous transactions. Thus, so far as appellant is concerned, there was no loss of Revenue to the Department on account of appellant's entering into such circuitous transactions. During all these years, the appellant had received excess' amount of ₹ 22.95 crores on account of such circuitous transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d/applicable. The excess payment received during the year amounting to ₹ 3, 99,50,717/ - were duly forming part of Gross Sales of the year on which profit was earned and taxes were duly paid. Addition made by the AO, therefore, amounts of double taxation of amount of ₹ 3,99,50,717. The AO has made addition of ₹ 3,99,50,717/- u/s. 69 C of the Act. As discussed above, since the provisions of section 69C were not applicable, therefore the addition made by AO is deleted. Against the above order of CIT(A), the Revenue is in appeal before us. 4. We have considered rival contentions and carefully gone through the orders of the authorities below and also deliberated on the judicial pronouncements cited at bar with regard to addition to be made u/s.69C of the IT Act. 5. From the record, we found that assessee is engaged in the business of trading and manufacturing of drugs. The assessee was having business dealing with Litika Group of Pune. There was search at the premises of Litika Group u/s.132. During the course of search it was found that Litika Group had entered into various circuitous paper transactions with the assessee. Thereafter survey was also under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up were mere paper transactions as accepted by the AO. There is also no dispute to the fact that all the amounts of such paper purchase/sale transaction were routed through banking channels. No transaction of cash dealing was found either during the course of search at Litika Group nor during the course of survey at assessee s premises. It is also a matter of record that all these transactions were entered by the assessee in its regular books of accounts. Such circuitous transactions were entered into books of accounts and the profit earned thereon had been duly shown in the Profit and Loss account. There is also no dispute to the fact that on entire profit earned on actual transactions as well as circuitous transactions of purchase and sales, the assessee had paid due taxes on profit earned on all these transactions. It is not the case of the AO that profit earned on such circuitous transactions have not been accounted for by the assessee in its books of accounts, nor it is the case of AO that such profit was adjusted against any expenses or losses. Thus, there is no loss to the department insofar as assessee has paid due taxes even on the profit earned on such circuitous transact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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