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TMI Blog2016 (5) TMI 1575X X X X Extracts X X X X X X X X Extracts X X X X ..... thus allowed a relief to the assessee to the extent of 2,67,09,704/- being the amount already offered as income by the assessee in the form of sales and restricted the addition of 4,68,02,738/- made by the Assessing Officer under section 68 to the extent of 2,93,00,034/-. Having regard to all the facts and circumstances of the case, we find no infirmity in the impugned order of the ld. CIT(Appeals) giving this relief to the assessee and upholding his impugned order on this issue, we dismiss the appeal filed by the Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2,18,00,000/- received from M/s. V.K. Minerals on account of sales made to them. In this respect it is submitted that these additions have been made by the A.O. on the alleged ground that the above- mentioned parties were not found at the addresses provided by the assessee. The A.O. in the course of assessment had deputed an Inspector at Assansol and an Inspector at Kolkata to make enquiry in respect of the said parties. It is stated in the assessment order that on such enquiry, the above-named parties were not found at the addresses as available and provided by the assessee. During the course of assessment in response to the show cause notice issued by the A.O., the assessee furnished copies of the party's Ledger Account, copies of forwarding letters issued by the said party and copies of the 'C' Forms issued by the said parties in respect of the sales made to them, The A.O. in respect of Sahara Minerals simply dismissed the copies of 'C' forms submitted by the assessee which show that the said concern was registered under VAT and CST. He gave no reason-for coming to the said conclusion that the said party was non-existent, even though the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... implies that neither the amount of ₹ 1,00,00,523/- has been received by the assessee nor the amount of ₹ 1.00 crore as actually been paid by the assessee, but these are simply book entries without actual movement of money in the hands of the assessee. It is clearly apparent from the same that the said amount of ₹ 1,00,00,523/- cannot be treated as cash credit in the hands of the assessee u/s.68 of the Act since no amount has been actually received by the assessee during the year. Therefore, it is clear that even if the contention of the A.O. for the sake of argument be accepted as true, then the maximum amount which could have been added in the hands of the assessee was only ₹ 1,00,93,034/- and not the amount of ₹ 4,68,02,738/- as added by the A.O. u/s.68 of the IT Act. Therefore, the balance amount of ₹ 3,67,09,704/- has been added wrongly in the hands of the assessee and is required to be deleted. Therefore, it is requested that on facts as well as on law, the entire addition of ₹ 4,68,02,738/- cannot be added in the hands of the assessee and your goodself is kindly requested to allow full relief to the assessee". 5. The abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly maintained in the name of both the concerns i.e., M/s. Sahara Minerals and M/s V.K. Minerals. The assessee received ₹ 2,50,00,000/- from M/s. Sahara Minerals and ₹ 2,18,02,738/- from M/s. V.K. Minerals on different dates during the financial year 2006-07 relevant to the assessment year 2007-08. The assessee claimed that the amount of ₹ 2.5 Crores and ₹ 2.18 Crores were received on account of sales of iron ore made to these concerns. The assessee produced the copies of some Railway Receipts which shows booking of railway wagon and dispatch of iron ore in the name of Mls Sahara Minerals and M/s V.K, Minerals. However, the Assessing Officer found that M/s. Sahara Minerals and M/s. V.K. Minerals were non-existent on the said addresses which were maintained in the records of the assessee. 16. During the appellate proceeding on enquiry the A.R. submitted that railway receipts were not sent by post or dak but were sent by hand/through person. It did not give further details of the persons. The assessee was given two opportunities by the Assessing Officer to produce both the persons but did not produce the same. Even during appellate proceedings he showed his i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly two sales instances in the case of M/s. Sahara Minerals and one sale instance in the case of M/s. V.K. Minerals while there are 45 cheques (Appox) and 21 Cheques/DDs received for the said sales respectively. 19. In these facts and circumstances there is a double addition i.e on account of sales and also on account of cash credit u/s 68 of I.T. Act, 1961. The conditions for addition under section are fulfilled. The identity of the creditors either who has issued cheques or who had deposited cheques/money has not been established. Similarly, the genuineness of the transactions has also not been established since it is a sale to fictitious persons w ose business particulars and receipt/dispatch of goods could not be established. The creditworthiness could also not be established as the source of deposit of money in the account of M/s. Lanxess Enterprise and M/s. Topaz Sales Corporation maintained with ICICI Bank could not be verified since the concerns are non-existent and fictitiously created to defraud the revenue by depositing unverifiable deposits. Even the identity of buyers could not be established and assessee could not produce them before Assessing Officer who had purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l entry are as follows:- Debit Credits 1,18,02,738 2,18,02,738 Closing balance: 1,00,00,000/- Journal entry: Credit Feegrade & Co. Pvt. Ltd. 1,00,00,000/- 22. The existence of M/s. V.K. Minerals is unknown and no evidence has been produced to establish its identity. Therefore, all the money coming as credit in the non-existing entity is an unexplained cash credit. The repayment out of unexplained cash credit is not a set-off since that amount (Payment) has not come as income in the accounts of the assessee, while the sales have been treated as income. The cash credits are taxed under special provision u/s 68 in which the addition is on credited amount and not on the balance amount in the account. Section 68 provides as follows:- 68. Cash credits. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered 'by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. 23. There are held to be total cash credits as per b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of M/s. Sahara Minerals (copy placed at pages 31 & 32 of the paper book) and of M/s. V.K. Minerals (copy placed at pages 33 & 34 of the paper book), the ld. CIT(Appeals) found that sales made to the said two parties amounting to ₹ 1,49,06,966/- and ₹ 1,18,02,738/- were duly accounted for and offered by the assessee as its income and since the amounts in question treated to be unexplained cash credits by the Assessing Officer were claimed to be received against the said sales, the ld. CIT(Appeals) held that such addition under section 68 to the extent of corresponding sales already declared by the assessee as income would result in double addition. As already noted by us, this position was accepted even by the Assessing Officer also in the remand report submitted to the ld. CIT(Appeals). The ld. CIT(Appeals) thus allowed a relief to the assessee to the extent of ₹ 2,67,09,704/- being the amount already offered as income by the assessee in the form of sales and restricted the addition of ₹ 4,68,02,738/- made by the Assessing Officer under section 68 to the extent of ₹ 2,93,00,034/-. Having regard to all the facts and circumstances of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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