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2022 (11) TMI 1299 - AT - Income TaxUndisclosed sales - AO found difference between Tax Audit Report & Audited Accounts in local sales - CIT-A deleted the addition - HELD THAT:- CIT(A) considered the submissions of the assessee including the tax audit report and other details/particulars and based on the same deleted the addition stating that AO acted in an erroneous manner by comparing the particulars of sales to AEs reported u/s 40A(2)(b) with the sales figure reported in the Profit & Loss Account - also find merit in the appellant's case that the sales made was in the nature of deemed exports since the aforesaid body corporate is located in an SEZ and hence it was rightly reported by way of export sales. It is noted that once the sales made to M/s Pacific Jute Ltd is excluded, the sales to related entities within the territory of India (excluding deemed exports) which was lower than the overall local sales - In the circumstances impugned addition made by way of unrecorded local sales was untenable on the given facts of the case - Decided in favour of assessee. Addition u/s 68 - unexplained increase in short term borrowings under the head ‘advance received from the parties’ and increase in liability under the had ‘trade payables for goods - CIT(A) considered the submissions of the assessee including the tax audit report and other details/particulars, deleted the addition - HELD THAT:- AO did not consider aspect while making additions of sundry creditor under Section 68 of the Income Tax Act there was no case for disallowance for corresponding purchase, no addition could be made under Section 68 inasmuch as it is not in dispute that the creditors outstanding related to purchases and the trading results were accepted by the AO. We are, therefore, of the opinion that no substantial question of law arises for consideration in this case - AO was unjustified in adding the net increase in current liabilities invoking Section 68 of the Act. The Ld. AO is accordingly directed to delete the impugned addition in full. - Decided in favour of assessee.
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