The Income Tax Appellate Tribunal (ITAT), Amritsar Bench, has recently, in an appeal filed before it, held that no addition can be made under Section 68 of the Income Tax Act, for turnover already reflected in the books of the assessee.
The aforesaid observation was made by the Amritsar ITAT, when, an appeal was filed before it by the assessee, against the order of the Commissioner of Income Tax (Appeals) NFAC, Delhi, passed under Section 250 of the Income Tax Act 1961, for A.Y. 2017-18, as emanated from the order of the Income Tax Officer, Ward 3(3), Amritsar order dated 31.12.2019.
The grounds of the assessee’s appeal being that, the CIT(A) NFAC has erred in law and in facts, in confirming the assessment order passed by the AO assessing the total income at Rs. 2,82,17,200/- as against returned income of Rs. 8,17,200, and further that the CIT(A) NFAC has erred in deciding the appeal without considering the request for adjournment filed by the appellant on 11.08.2022, the assessee also added to its ground of appeal that the CIT(A) NFAC has erred in deciding the appeal without calling/ downloading the replies submitted by the appellant during assessment proceedings , thus ignoring the vital documents such as, cash book, purchase bills, ledger and VAT returns and therefore that the order of CIT(A) NFAC, is against the principles of natural justice , for the CIT(A) NFAC has erred in passing a non-speaking order which is against the law even if the assessee was not represented before it.
The aforesaid being the grounds of the assessee’s appeal, the brief facts of the case were that the assessee was a proprietor of M/s Radhika Sales Corporation, Dhab Wasti Ram, Amritsar, engaged in the business of the business of wholesale/retail of sugar, refined oil, ghee and other allied karyana items, who was registered under Punjab VAT Act in 2005.
The assessee had deposited cash in bank account amount to Rs 4,09,50,000/- during demonetization. And, during the assessment year, the assessee’s turnover was Rs.10,38,81,637/-.
Thereafter, the AO completed the assessment under section 143(3) making addition of Rs 2,74,000,00/- out of total cash deposited during demonetization period at Rs 4,09,50,000/-. The addition was made by the AO alleging that the appellant had inflated the sales to cover unaccounted money and assessed the total income at Rs. 2,82,17,200/-.
As per assessee, the amount deposited in bank, was on account out of his turnover, which was declared in the P & L a/c during filing of the return. And therefore, he was of the view that the same amount will be doubled tax.
Aggrieved, the assessee filed an appeal before the CIT(A), who passed an order in ex parte, thus upholding the decision of the AO. And, it is being aggrieved by this, that the assessee has filed the present appeal before the ITAT.
Hearing the opposing contentions of both sides as presented by Sh. Rohit Kapoor, CA the AR on behalf of the assessee, and by Sh. S. R. Kaushik, the CIT. DR, on behalf of the Revenue, and thereby perusing the materials available on record, the ITAT observed:
“In our considered view, the AO has no right to calculate sales on hypothetical basis ignoring the evidence submitted during the course of assessment proceedings in the form of VAT return, purchase bills and quantitative details. Once the amount is declared as turn over cannot be called concealed income and be taxed doubly on same amount.”
“We further relied on order of ITAT, Mumbai Jet Freight Logistics Ltd. v. Commissioner of Income-tax Appeal (NFAC). The addition Under Section 68 is beyond jurisdiction of the ld. AO as the turnover is already reflected in the books of the assessee. So, the addition amount of Rs 2,74,00,000/- is quashed”, the coram of Dr. M. L. Meena, the Accountant Member, and Anikesh Banerjee, the Judicial Member added.
Thus, the Amritsar ITAT finally held:
“In the result, the appeal of the assessee bearing ITA No. 195/Asr/2022 is allowed.”
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