Credits Receivables from Earlier Year's Sales Not Verified: ITAT Restores ₹2.27 Cr Foreign Remittance Addition for Verification [Read Order]
Observing that the Assessment Order clarified what verifications were done to substantiate the assessee's claim that foreign remittances represented receivables from earlier year's sales, the Tribunal restored the matter to the Assessing Officer (AO) for fresh verification.
ITAT - Foreign Remittance - Taxscan
ITAT - Foreign Remittance - Taxscan
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) restored the issue of an addition of ₹2,27,02,883/- made under Section 68 of the Income Tax Act, 1961, back to the file of the Assessing Officer (AO) to verify the assessee's claim regarding foreign remittances received from Russia.
Partap Singh (assessee) for the Assessment Year (AY) 2008-09 the AO had initially made the addition, treating the foreign remittances as unexplained credit under section 68 of the Income Tax Act, based on information from the Investigation Wing, which had received details from DRI (Directorate of Revenue Intelligence).
The DRI's investigation suggested the assessee's firm, M/s Gouri International , was involved in over-invoiced exports of readymade garments to fraudulently avail Duty Drawback and DEPB Credits, with the remittances being the differential amount sent back through Hawala Channels.
Aggrieved by the AO's order, the assessee filed an appeal before the Commissioner of Income tax (appeals) [CIT(A)]. The CIT(A) confirmed the addition made by the AO. Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT.
The Counsel for the assessee argued that the CIT(A) erred in upholding the addition of Rs. 2,27,02,883/-. The counsel for the assessee submitted that the credits received were representing receivables in respect of sales made during the earlier years and, therefore, could not be brought to tax under section 68 of the Income Tax Act.
The two member bench, comprising Mahavir Singh (Vice President) and Krinwant Sahay (Accountant Member) observed that it was not clear from the assessment order or the appellate order as to what verifications were done to confirm the assessee's claim that the credits were receivables for earlier years sales.
The tribunal remanded the matter back to the Assessing Officer to verify the claim of the assessee after giving adequate opportunity of being heard. In the result, the appeal filed by the assessee was allowed for statistical purposes.
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