Addition u/s 68 is Beyond Jurisdiction of Assessing Officer as Turnover already reflected in books of the Assessee: ITAT quashes addition [Read Order]

The Amritsar bench of Income Tax Appellate Tribunal (ITAT), while quashing the addition made by the lower authorities held that addition under section 68 of Income Tax Act, 1961 is beyond jurisdiction of assessing officer as the turnover already reflected in the books of the assessee.

Section 68 of Income Tax Act provides that if any sum found credited in the books of the assessee for any previous year, the assessee did not explain the nature and source of the sum or the assessing officer is not satisfactory about the explanation of the assessee ,that income shall be taxed as the income of the assessee for that particular year.

The assessee Raj Kumar is a proprietor of M/s Radhika Sales Corporation, and is engaged in the business of the wholesale/retail of sugar, refined oil, ghee and other allied karyana items. The assessee is registered under Punjab VAT Act in 2005. During the assessment year the assessee’s turnover Rs.10, 38,81,637/-

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. Aggrieved assessee filed an appeal before the CIT(A).

The CIT (A) passed the order in ex parte and upheld the decision. Against the order assesee filed a second appeal before the tribunal.

Rohit Kapoor, counsel for the assessee submitted that the assessee, during the course of assessment proceedings explained that he was in the business of sale / purchase of sugar, refined oil and other allied items and the said cash was deposited out of sale proceeds, cash withdrawal and out amount realized from debtors during the year consideration.

The assessee further submitted that assessee had not  inflated the sales to cover unaccounted money and assessed the total income at Rs. 2,82,17,200/-

S. R. Kaushik, Counsel for the revenue submitted that assessee has not furnished the sales bills. The addition of Rs 2,74,00,000/- was made under section  68 of the Income Tax Act on account of unexplained cash deposit and the same is taxed under section  115BBE of the Income Tax Act at the rate of 60%.

The two member bench of M. L. Meena, Accountant Member and  Anikesh Banerjee, Judicial Member observed that “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 the same amount.”

Further, the bench allowed the appeal of the assessee and held that the addition under Section 68 Income Tax Act is beyond jurisdiction of the AO as the turnover is already reflected in the books of the assessee.

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