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TMI Blog2024 (12) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of trade debts by debtors may not have any relation with their returned income. It is another fact that creditworthiness of three creditors has already been accepted by Ld. AO. Therefore, the impugned addition is not sustainable in law. By deleting the same, we allow the corresponding grounds as raised by the assessee. Insurance Claim written-off - AO alleged that the same was afterthought to reduce the business income and accordingly, added the same to the income of the assessee - HELD THAT:- Upon perusal of Profit Loss Account for the year ending 31-03- 2016, it could be seen that the assessee has offered to tax insurance claim recoverable for Rs. 58.78 Lacs by way of credit to Profit Loss Account. In this year, this claim has been rejected by the insurance company which is evident from claim-rejection letter. Considering the same, this claim has been written-off / reversed by way of debit to Profit Loss Account. Any claim arising out of trading stock which has been offered to tax but not recovered subsequently would certainly be available as business deduction to the assessee. Therefore, we delete the impugned addition and allow the corresponding grounds as raised by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and Sri Maruti Timbers and the addition u/s. 68 was wholly unjustified and unsustainable on the facts of the case. 3.The CIT(A) NFAC further failed to appreciate that the assessee had discharged its onus of proving that the amounts were the realization from those trade debtors and is evidenced by the entries in the books of accounts and hence the addition of the amount as unexplained money is untenable in law and facts of the case. 4.The CIT(A) NFAC further failed to appreciate that the nature of business of assessee is that there are regular cash sales and had been consistently depositing the cash in the bank accounts throughout the year and hence there was no reason to suspect that the amounts deposited are the unexplained money of assessee. 5.The CIT(A) NFAC was not justified in confirming the addition only based on surmises and conjectures and without adverting to the regularly maintained books of accounts duly audited and hence confirming the addition was wholly unjustified and unsustainable on the facts of the case. 6.The CIT(A) NFAC was not justified in confirming the application of sec. 115BBE since the source of the cash deposits was only the business of timber sales and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drew attention to various documents as placed on record. The Ld. Sr. DR also advanced arguments and referred to the findings of lower authorities. Having heard rival submissions and upon perusal of case records, the impugned issues are adjudicated as under. The assessee being a partnership firm is stated to be trading in timber. 3. Addition of cash deposits 3.1 To verify the source of cash deposited by the assessee during demonization period, the case was subjected to scrutiny. It transpired that the assessee deposited cash of Rs. 579.81 Lacs during entire financial year out of which sum of Rs. 129.99 Lacs was deposited during demonetization period. 3.2 The assessee submitted that cash was received from various parties which were duly recorded in the books of accounts. The cash as available with the assessee was sourced to make these deposits. The assessee stated the cash was received from six debtors as detailed in the assessment order. The Ld. AO perused documentary evidences for each of the six parties and rendered factual finding. The creditworthiness of three parties was accepted. Two parties did not file return of income and therefore, it was held that amount received from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts have not been rejected and no defect has been pointed out in the books. The quantum of sale has also been accepted by Ld. AO. The assessee has reflected substantial sales of Rs. 21.61 Crores. When the sales have been made which is offered to tax and the debtors have been realized which have duly been recorded, the same could not be added again since taxing the same amount twice is impermissible. The allegation of Ld. AO that the assessee made non-genuine sale is not backed-up by any concrete material on record. The settlement of trade debts by debtors may not have any relation with their returned income. It is another fact that creditworthiness of three creditors has already been accepted by Ld. AO. Therefore, the impugned addition is not sustainable in law. By deleting the same, we allow the corresponding grounds as raised by the assessee. 4. Insurance Claim written-off 4.1 The assessee reversed recovery of insurance claim for Rs. 58.78 Lacs. The Ld. AO alleged that the same was afterthought to reduce the business income and accordingly, added the same to the income of the assessee. 4.2 During appellate proceedings, the assessee explained that during floods of December, 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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