Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2008 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2008 (10) TMI 253 - AT - Income TaxUnexplained Cash credit - Addition on Investment in purchases of books and substantial cash introduced in the books of account - Third Member order - difference of opinion on certain points between the members - Whether the issue relating to source of investment in purchases should be restored back to the file of the AO for fresh decision as proposed by the ld. AM - Assessee described as 'a loss making company', again showed loss in return for the AY 1995-96 - AO treated, cash introduced in the books of account on account of sale of books was treated as unexplained and added to the total income u/s 68. The investment in the books was also treated as unexplained and sum was added on this account. Assessee submitted that the sale of books to the assessee was duly reflected in the books of associate company. The legal books had been sold and there was no dosing stock left. Therefore, the purchases and sales had to be accepted - CIT(A) was satisfied by the explanation of the assessee - CIT observed that existence of shareholders was established and money received from them was well founded. Therefore, he deleted both the additions. HELD THAT:- I am inclined to hold that assessee has not been able to establish that cash was represented sale proceeds of books. I do not find any substance in the finding of ld CIT (A) that sales should be accepted as it is recorded in the books of account of the assessee. In my considered opinion, some evidence of sale generating extraordinary income of about 100 per cent in hands of a loss making company in purchase of books from a sister concern i.e. in an item not carried in routine, was required to be placed by the assessee. Mere entries of sale to justify credit were not good enough. It is accordingly held that the assessee has failed to establish that credit represented sale consideration of books. Having held so, I am inclined to hold that addition was not made by the AO in this case. It is evident that by adding and deducting the same amount the AO practically did not make any addition for unexplained sale of books. Ultimately what has been left of transactions of sale and purchase of books is the disallowance of purchases. If relief is allowed, it would result in assessment of income lower than returned. Introduction of cash could be held to be income from "undisclosed sources". As the amount already stood credited to the books of account of the assessee as income, the matter was required to be left by recording an appropriate finding. There is no addition of amount in the computation of the income. In the circumstances the question of deletion cannot arise. The effective addition made as noted and no addition. Therefore, relief cannot be allowed to the assessee. This position unfortunately has not been taken into account by the ld CIT (A) or by the ld JM. Question of sustaining addition is being separately considered. I, therefore, hold that there is no addition in the assessment order. The amount stood already credited in the P&L account. It is receipt from "undisclosed sources" and could not be deleted. I, therefore, answer question No. 1 in the negative. The amount was neither required to be deducted nor added in the income of the assessee. AO had also challenged delivery of books to the assessee. Shri Sampath during the course of hearing of appeal had vehemently contended that the assessee and M/s. Haryana Wool & Allied Industries (P.) Ltd. were operating from the same premises. In this connection, he relied upon observations made by ITAT in the case of the assessee for AY 1996-97. The ld JM in the proposed order had accepted the claim of the assessee but ld AM had raised certain doubts and has further held that source of investment in purchase is not clear from the order of the AO and the CIT(A). Therefore, this aspect was restored to the AO for fresh scrutiny. There is no doubt that assessee, before the A.O. adopted a non-cooperative attitude and did not furnish evidence called for to prove investment. No evidence was furnished before CIT (A) of delivery and investment in purchase. The plea that the assessee and M/s. Haryana Wool & Allied Industries (P.) Ltd. are operating from the same premises has been advanced for the first time before the Tribunal, although adverse finding was recorded by the AO in the assessment order. The claim relating to payment of purchase money and of delivery of books is required to be verified by the AO. The ld Members of the Tribunal in the AY 1996-97 were also not called upon to examine the issue whether the assessee and M/s. Haryana Wool & Allied Industries (P.) Ltd. were operating from the same premises and in their order has made only a passing observation. It is not a finding of fact. Although purchase and sale of books has been claimed by the assessee as part and parcel of transaction, yet it is different. Purchase has been claimed to be made from the sister concern for a stated consideration. Sale had been claimed to be made to other outside parties. Purchase and sale are, therefore, two distinct transactions discussed as one in orders impugned before me. It is possible that assessee may be able to establish purchase of books, though sale of the same books has not been accepted. In that case, addition of will have to be allowed as a deduction. The parties before me could not draw my attention to any relevant evidence on record on the basis of which the issue could have been resolved. Therefore, on facts, I agree with proposed order of ld AM that this question should be restored to the file of the AO for re-determination in accordance with law. Therefore, the matter may now be placed before the regular Bench for an appropriate order, in accordance with law.
|