The Kolkata Bench of Income Tax Appellate Tribunal has held that GST paid on the sale of the byproduct of coal and total purchase price collected as a middleman cannot be added u/s 68 of the Income Tax Act,1961.
G.S. Atwal & Company (Engineers) Pvt. Limited,the assessee company was engaged as Del-Credere Commission Agent by Tata Steel Limited. The assessee used to earn commission income for the sale of by-products of coal, i.e. Tailings, Washery Rejects, etc. to the Brick-Bhatta Owners, Hardcore Owners and other users at a fixed price. In this process, it would get a commission @ Rs.133/- per Ton for Tallings and Rs.25/- per Ton for Washery Rejects.
It works as an agent for the purchase of those goods by alleged brick-Kilen owners, etc. It has filed its return of income for A.Y. 2011-12 on 12.08.2011 disclosing a total income of Rs.2,68,79,830/-. Similarly in A.Y. 2012-13, it filed its return of income on 18.09.2012 declaring total income at ‘NIL’. The assessment order was passed on 30.03.2015 [under section 147 read with section 143(3) in A.Y. 2011-12 and on 26.03.2015 under section 143(3)]. This assessment was reopened and a fresh assessment order was passed on 28.08.2017.
The Assessing Officer has made the addition of Rs.46,76,77,656/- and Rs.27,70,88,000/-. Both these additions are being made under section 68 on account of unexplained cash credits.CIT(Appeals) has deleted this addition on the ground that the assessee has made payments to Tata Steel Limited through the banking channel for the purchase of materials.
It was observed that A.Y. 2011-12 has already undergone scrutiny on the same points in an assessment passed under section 147 and four years have expired in both years. The second condition is income should have escaped on account of the failure of the assessee to disclose fully and truly all material facts necessary for assessment for that assessment year. This is an aspect, which is required to be demonstrated by the ld. Assessing Officer in the reasons itself.
It was evident that Assessing Officer has alleged failure of the assessee demonstrating which information was not disclosed by the assessee fully and truly. There is no evidence with the Revenue to demonstrate that the assessee has failed to disclose all material facts fully and truly for assessments of its income in A.Y. 2011-12 and 2012-13.
It was observed that there is no fresh information available regarding the Revenue. Four years have expired from the end of the relevant years and, therefore, protection provided to the assessee in the proviso appended to section 147 is available.
A Coram of Shri Rajpal Yadav, Vice-President (KZ) & Shri Rajesh Kumar, Accountant Member viewed that the assessee has worked as an agent, where it took the money from the ultimate purchasers of the coal residua and had paid sales tax/GST on the sales made by it.
The Tribunal upheld the quashing of the reassessment proceedings and dismissed the appeal.
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