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TMI Blog2019 (8) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of recovery of sales consideration. Once the assessee sold the goods, the buyer of the goods becomes the debtor of the assessee and any receipt of money from him is the realisation of such debt and therefore, we are of the opinion that in respect of recovery of sale consideration, Section 68 cannot be applied. No justification for upholding the addition of ₹ 59,51,29,517/-. The same is deleted. Addition u/s 68 - appellant company failed to prove the genuineness of the unsecured loans - HELD THAT:- AO has made the assessment in a hurried manner. No discussion with regard to the evidences filed by the assessee i.e., the confirmation of the creditors and their income tax details. The assessee has agreed before us to produce Shri Dharmender Rathee before the AO. It would meet the ends of justice if the orders of authorities below on this point are set aside and matter is restored to the file of the AO. We order accordingly and direct the AO to consider all the evidences produced by the assessee in this regard. We further direct him if after considering the evidences produced by the assessee he requires the presence of Shri Dharmender Rathee, he will give a suitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 68 or 69C of the Act. 3.1 That the ld.CIT(A) was not justified in confirming the above addition of ₹ 59,51,29,517/- despite producing all the necessary evidence regarding purchase of goods; namely mobile phones imported from China and corresponding high sea sales made to the above four parties. 3.2 That during the course of assessment proceedings, statement of Director Shri Deepak Aggarwal was recorded u/s 131(1) of the Act, wherein he clearly explained the modus operandi of the trading business of mobile phones carried on by the appellant company and also produced bills with respect to mobile phones imported from China and copies of high sea sales agreements and hence, the ld.CIT(A) was not justified in confirming the addition made by the Assessing Officer. 4. At the time of hearing before us, it is stated by the learned counsel that the assessee derives income from import of mobile phones from China and its sale in India. That during the year under consideration, total sales were at ₹ 62,91,41,642/-, out of which, high sea sales are at ₹ 59,11,29,517/- and the local sales at ₹ 3,80,12,124/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the cash sales or cash receipt. Cash receipt has been prohibited under Section 269ST only with effect from 1st April, 2017. That as per Customs Act/Rules, each and every high sea sales agreement is to be approved by the custom authorities and in assessee s case also, each and every high sea sales agreement is duly approved by them and copies of all such approvals by the office of Commissioner of Customs are furnished in the paper book. He also stated that complete details of the buyer are to be given to the custom authorities and no high sea sales agreement can be approved unless the buyer has an importer exporter code. He stated that the assessee makes the high sea sales to mainly four buyers and all of them are having importer exporter code. The details with regard to such importer exporter code in respect of each buyer is furnished in the paper book. That the delivery of goods from the custom authorities is taken by those buyers after the payment of excise duty. The necessary document in this regard was also produced before the Assessing Officer and copy of the same is given in the assessee s paper book. He, therefore, stated that merely because the considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Ltd. 361 ITR 258. 6. CIT Vs. Navodaya Castle Pvt.Ltd. 2014] 367 ITR 306 (Del). 7. Navodaya Castle Pvt.Ltd. Vs. CIT [2015] 56 taxmann.com 18 (SC). 8. PCIT Vs. NDR Promoters Pvt.Ltd. 2019-TIOL-172-HC-DEL-IT. 9. Sumati Dayal Vs. CIT SC 1995 AIR 2009 (SC). 10. CIT Vs. Durga Prasad More 82 ITR 540 (SC). 11. CIT Vs. O. Mohankala 291 ITR 287. 12. Pratham Telecom India Pvt.Ltd. Vs. DCIT 2018-TIOL-1983-HCMUM- IT. 13. PCIT Vs. Bikram Singh 399 ITR 407 (Delhi). 6. In the rejoinder, it is stated by the learned counsel that none of the decisions relied upon by learned DR would be applicable because in this case, it is not in fact a credit at all but it is the recovery of the sale consideration of the goods sold by the assessee. 7. We have carefully considered the arguments of both the sides and perused the material placed before us. Admittedly, the assessee derives income from import of mobile phones from China and its sales in India. The major portion of the assessee s sales is by way of high sea sales i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny has filed inaccurate particulars of income therefore the penalty u/s 271(1)(c) is hereby initiated. Addition :- ₹ 59,11,29,517/- 8. In the first paragraph above, the Assessing Officer mentioned the amount of ₹ 59,11,29,517/- is hereby disallowed u/s 68 of the Act and added back to the total income of the assessee company . It seems that the Assessing Officer has probably not understood the scope of Section 68. Section 68 is not for the purpose of allowability or disallowability of any deduction and moreover, the question of disallowance may arise in respect of any expenditure or allowance claimed by the assessee. In respect of a sale consideration, there cannot be any question of any disallowance. In the second paragraph above, the Assessing Officer has alternatively applied Section 69C. Section 69C is also for unexplained expenditure. Admittedly, there is no question of any unexplained expenditure in the case under appeal before us and therefore, Section 69C is also not applicable. 9. Further, we find the stand of the Assessing Officer to be contradictory. On one hand, he mentioned the high sea sales to be not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as doubted the genuineness of sales mainly on two grounds (i) the buyer parties were not found available at the address given by them and (ii) they made most of the payment in cash for the goods purchased by them. However, we find that in the documents of custom authorities giving approval of high sea sales agreement, the name and address of the buyer of goods is mentioned and it is the same address which is given by the assessee to the income tax authorities. Therefore, it cannot be stated that such party was not available at the time when the assessee made the sales. Moreover, all the buyers of goods from high sea sales have importer exporter code. Copy of importer exporter code of all the buyers is placed in the paper book and we find that this importer exporter code also gives the name and address of the parties to whom importer exporter code is given, its phone number, e-mail address, date of establishment, banker details, name of the directors etc. That the delivery of goods is taken from the custom authorities by those buyers and not the assessee. In the document for export clearance, the name of those buyers is mentioned as importer of the goods and not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... casionally but the claim of the appellant of having won a number of jackpots in three or four seasons not merely at one place but at three different centres, namely, Madras, Bangalore and Hyderabad appeared, prima facie, to be wild and contrary to statistical theories and experience of frequencies and probabilities. (iii) The appellant s books did not show any drawings on race days or on the immediately preceding days for the purchase of jackpot combination tickets, which entailed sizeable amounts varying generally between ₹ 2,000 and ₹ 3,000. The drawings recorded in the books could not be co-related to the various racing events at which the appellant made the alleged winnings. (iv) While the appellant s capital account was credited with the gross amount of race winnings, there were no debits either for expenses and purchases of tickets or for losses. (v) In view of the exceptional luck claimed to have been enjoyed by the appellant, her loss of interest in races from 1972 assumed significance. The Settlement Commission took the view that winnings in racing became liable to income-tax from April 1, 1972, but one would not give up an activity yielding or likely to yield ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, Section 68 cannot be applied. In view of the above, we find no justification for upholding the addition of ₹ 59,51,29,517/-. The same is deleted. 16. Ground No.4 of the assessee s appeal reads as under :- That on the facts and circumstances of the case, the Ld.CIT(A) has wrongly confirmed the addition of ₹ 1,02,00,000/- made u/s 68 of the Act on the ground that the appellant company failed to prove the genuineness of the unsecured loans taken from the following persons who are also the directors in the appellant company :- (i) Shri Deepak Aggarwal - ₹ 32 lakhs (ii) Smt. Krishna Aggarwal - ₹ 50 lakhs (iii) Shri Ram Kumar Aggarwal - ₹ 15 lakhs (iv) Smt. Minakshi Aggarwal - ₹ 5 lakhs 17. At the time of hearing before us, it is stated by the learned counsel that all the above persons are directors in the assessee company. They all are assessed to tax in their independent capacity. They have duly furnished their confirmation along with bank account as well as computation for assessment year 2013-14 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order whether such summon was served upon him and, if served, on which date he was supposed to appear before the Assessing Officer. It is also not clear when the summon was actually sent and whether it was tried to be served through notice server or by post and, if by post, when the summon was actually posted. The date of assessment order is 29th December, 2016. The above facts clearly show that the Assessing Officer has made the assessment in a hurried manner. He has not made any discussion with regard to the evidences filed by the assessee i.e., the confirmation of the creditors and their income tax details. The assessee has agreed before us to produce Shri Dharmender Rathee before the Assessing Officer. Considering all these facts, in our opinion, it would meet the ends of justice if the orders of authorities below on this point are set aside and matter is restored to the file of the Assessing Officer. We order accordingly and direct the Assessing Officer to consider all the evidences produced by the assessee in this regard. We further direct him if after considering the evidences produced by the assessee he requires the presence of Shri Dharmender Rathee, he will give a sui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. From the above, it is clear that Section 69C would be applicable when (i) the assessee has been found to have incurred an expenditure and (ii) he offers no explanation about the source of such expenditure. In the case under consideration before us, the Assessing Officer has doubted with regard to the genuineness of incurring of the expenditure itself while the precondition for applicability of Section 69C is that there is no dispute with regard to incurring of expenditure. Section 69C would come into play only when the Assessing Officer doubts the source of incurring such expenditure. In this case, there is no doubt with regard to the source of such expenditure because the same is duly debited in the assessee s books of account. Therefore, Section 69C is wrongly applied by the Assessing Officer for the purpose of disallowance of expenditure. Now coming to the allowability of the expenditure, it was stated by the learned counsel that the Assessing Officer has never asked the assessee to produce the vouchers of the expenditure. He did not raise any query before making above disallowance and no adequate opportunity of being heard was allowed to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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