No addition can be made on basis of credit entry not enter in books of account of assessee : ITAT [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) ruled that  no addition could be made on the basis of credit entry not entered in the book of account of the assessee .

Today Retail Network Pvt Ltd, the taxpayer, after filing return of income while processing the assessment the Assessing Officer received information of the assessee’s transaction with Reebok India Co. Ltd obtained directly from the party under Section 133(6) of the Income Tax  Act, 1961.

On comparison of the copy of account of the assessee sent by Reebok India Limited, the Assessing Officer noticed a difference of Rs. 90,76,128/–.

After reconciling the difference, the Assessing Officer found that there is a credit amount given by Reebok India Co. Ltd to the assessee amounting to Rs. 54,41,961/–, which has not been shown by the assessee.

Accordingly, AO made an addition of Rs. 54,41,961/– on account of credit appearing in the books of accounts of Reebok India Ltd, which has not been accounted in the books of account of the assessee.

Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeal) (CIT(A)) who deleted the addition . Against The order revenue filed appeal before the tribunal.

Salil Agarwal, Counsel for the assessee submitted that assessee did not receive goods from reebok after issuing the sale invoice and which was already informed to Reebok India Co Ltd for correcting it in  their account book. Therefore assessee did not pass any entry in its books of account.

Vivek Vardhan, counsel for the revenue, strongly supported the findings of the Assessing Officer.

The tribunal after considering the submission of the both parties observed that the only reason for making the addition is that Reebok India Co. Ltd has passed a credit entry in its books of account, which was not there in the books of the assessee

Thus, when the assessee did not receive any goods, it did  not enter its books of account . Reebok India Co. Ltd, had debited the assessee, passed credit entry in their books of account thus  there is no differences

After reviewing the facts and submission the two member bench of the tribunal comprising N.K. Billaiya (Accountant Member) and Saktijit Dey (Judicial Member) dismissed the appeal filed by the revenue.

To Read the full text of the Order CLICK HERE

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