ITAT directs Readjudication in respect of sale of Gyrovator to customers out of Unaccounted Purchases [Read Order]

The Income Tax Appellate Tribunal (ITAT), Raipur bench, directed re-adjudication in respect of the sale of a gyrovator to customers out of its unaccounted purchases.

The assessee, Shivam Tractor, engaged in the business of trading tractors, trolleys, and spare parts, filed its return of income for A.Y. 2013-14 on 08.03.2016, declaring an income of Rs. 4,93,500.

Thereafter, the assessee's case was selected for scrutiny. After scrutiny, the AO passed an assessment order by making an addition regarding unaccounted sales of Gyrovetor.

Aggrieved by the order, the assessee filed an appeal before the CIT(A), who dismissed the appeal. Therefore, the assessee filed a second appeal before the tribunal.

Before the bench, R.B. Doshi, counsel for the assessee, argued that the gyrovator was provided free of cost to its customer, viz. Shri. Krishan Kumar Soni, as per the policy/scheme of the company. Therefore, there was no justification in treating it as an unaccounted sale.

Satya Prakash Sharma, counsel for the Revenue, argued that the sale of gyrovator was not accounted for by the assessee in its total gyrovator sales. Also, the aforesaid sale of gyrovator was not included in the sale of the tractor. The assessee could neither submit the purchase details corresponding to the aforesaid sale transaction nor the quantitative details of sales.

The tribunal observed that the A.O. had summarily claimed, without placing any material on record, that the assessee firm had sold the gyrovator out of its unaccounted purchases.

The tribunal pointed out that if the purchase of the gyrovator was accounted for in the books of accounts of the assessee firm, then the addition in its case was liable to be restricted only to the extent of profit that would be made by carrying out the sale of the same outside its books of account.

After reviewing the facts and records, the single-member bench of Ravish Sood (Judicial Member) restored the file to the AO for re-adjudication in respect of the sale of the gyrovator to the customers out of its unaccounted purchases.

To Read the full text of the Order CLICK HERE

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