Double Taxation: ITAT Deletes ₹19.03 Lakh Addition u/s 68 on Recorded Sales Receipts [Read Order]
Since the Assessing Officer did not doubt the sales reflected in the books, the bench concluded that treating the cheque receipts as unexplained cash credits was unjustified and directed deletion of the addition
ITAT Mumbai, Double Taxation, Sales Receipts
ITAT Mumbai, Double Taxation, Sales Receipts
The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the ₹19.03 lakh addition made under Section 68 of Income Tax Act,1961 on recorded sales receipts, holding that the income had already been offered to tax and a further addition would result in double taxation.
Gosrani Impex Private Limited, appellant-assessee, was a textile manufacturing company. It filed its return for AY 2017-18 declaring income of Rs. 59,66,530/-. The case was selected for scrutiny, and the Assessing Officer (AO) sought details regarding transactions of Rs. 19,03,396/- with M/s. Hariram Jagdish Prasad.
The assessee initially denied having any dealings with the said party. However, on verification of bank statements of both entities, the AO found cheque payments routed to the assessee. When questioned, it explained that the sales were procured through a commission agent, R.K. Textile Agency, and submitted confirmation along with details of related sales to various customers.
The AO relied on a statement of Shri Gopal Maroo, partner of M/s. Hariram Jagdish Prasad, admitting involvement in accommodation entry activity, and treated the receipts as unexplained cash credits under Section 68.
The Commissioner of Income Tax (Appeals)[CIT(A)] sustained the addition, leading to the present appeal before the tribunal.
The assessee counsel submitted that the assessee had already provided sales bills, delivery challans, bank statements, and audited financials to prove that the amount of Rs. 19,03,396/- related to genuine sales made through a commission agent.
It was pointed out that the company had a turnover of nearly Rs. 60 crore, and the disputed amount was very small in comparison. It was also highlighted that the AO did not question the sales or the audited books.
The counsel argued that since the sales were already recorded in the books, making another addition under Section 68 would lead to double taxation. Reliance was placed on court rulings that held additions could not be made only on the basis of statements from third parties without proper verification.
The Departmental counsel, however, argued that the Investigation Wing found M/s. Hariram Jagdish Prasad to be involved in accommodation entries, and therefore, the AO was right in treating the amount as bogus and making the addition under Section 68.
The two member bench comprising Pawan Singh (Judicial Member) and Renu Jauhri (Accountant Member) considered the submissions and reviewed the documents placed on record. It found that the assessee had shown sales of Rs. 19,03,396/- to six parties and filed supporting documents such as invoices and delivery challans.
Although payments for these sales came through cheques issued by M/s. Hariram Jagdish Prasad, the Tribunal noted that the amount was already recorded in the books as part of the total sales.
Since the income had already been offered to tax, the appellate tribunal held that making another addition under Section 68 would amount to double taxation. It also observed that the AO had not questioned the genuineness of the sales documents submitted.
Accordingly, the tribunal concluded that the addition made under Section 68 was not justified and directed the AO to delete the same.
Accordingly the appeal was allowed.
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