The Delhi bench Income Tax Appellate Tribunal (ITAT) directed readjudication in absence of cogent material to prove the cash transactions with respect to purchase of chemicals .
The Assessee, Polyspin Filteration India Pvt. Ltd had made purchases of certain chemicals from M/s Krishna Enterprise to the tune of Rs 4,28,960/- during the year under consideration.The assessee made the payments to the said party by way of account payee cheques through regular banking channels.
Accordingly the AO made an addition of Rs 2,28,960/- in the assessment on the pretext that the assessee had received the said sum from M/s Krishna Enterprise.
Aggrieved by the order assesee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal filed by the assessee . Thereafter the assessee filed an appeal before the tribunal.
During the adjudication V. Raja Kumar, the counsel for assessee argued that assessee had only made payment of Rs 2,28,960/- and not received any sum from them. Hence the addition made by the AO in the sum of Rs 2,28,960/- under Section 68 of the Income Act is hereby directed to be deleted.
Om Parkash, Department representatives argued that invoice issued by the supplier contains a lot of deficiencies as it does not contain the signature of the receiver of goods, details of delivery of goods and the details of Order Number thereon.
The tribunal observed that the no cogent material has been brought on record by the revenue evidencing the cash trail between the assessee and M/s Krishna Enterprise.
Further the bench observed that the payments made to M/s Krishna Enterprise out of its regular banking channels In such a situation the revenue had not brought any material on record to prove that subsequent to payment by banking channels to the supplier, the supplier had in turn given back the cash to the assessee after reducing his / her commission if he / she is an accommodation entry provider. Therefore the entire addition has been made in the hands of the assessee only on suspicion. After analyzing the submission of both parties, the bench comprising M. Balaganesh, (Accountant Member) directs readjudication in absence of cogent material to prove the cash transactions with respect to purchase of chemicals .
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