TMI Blog2013 (11) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... which are available in the books of account. Since Assessee furnished details of debtors and also the entries made in the books of account, both the AO and the CIT(A) have erred in considering recoveries from deposits as cash credits - It is also not the case of the AO that investments made in Sree Rayalaseema Steel Rerolling Mills from unexplained sources. Having explained the source of investment in the other firm being recoveries from debtors, the same cannot be doubted just because Assessee recovered them in cash – Decided in favor of Assessee. - ITA No. 264/Hyd/2011 - - - Dated:- 13-11-2013 - Shri B. Ramakotaiah And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Shri A. Srinivas For the Respondent : Shri B. Yadagiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors realized by it along with the amounts which were transferred to M/s Rayalaseema Steel Re-Rolling Mills Ltd. AO, however, did not accept the explanation of Assessee on the reason that in the absence of details like address, source of payments, the deposits in the bank account cannot be accepted. The AO also was of the opinion that Assessee did not explain the reasons as to why sundry debtors paid such huge amounts in cash and why it did not insist upon receipt of this amount through cheques/DDs. Ultimately, he held that Assessee did not file any information supporting receipt of the amount and availability of such amount for payment to M/s Rayalaseema Steel Re-rolling Mills Ltd. Therefore, the AO held that the said amount received and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in M/s Rayalaseema Steel Rerolling Mills was to the extent of Rs. 3.33 crores out of which the amounts paid by way of pay orders and cheques were the amounts received out of debts. He referred to the order of the AO to submit that all the amounts were received in the books of account as trade receipts and so question of treating the same as cash credit does not arise. It was further submitted that all the details as required including list of debtors were furnished to the AO and it is not correct to state that Assessee did not furnish any details. 5. The learned DR, however, relied on the orders of the AO and CIT(A) to submit that Assessee has shown large amounts of cash credits and the same are nothing but unexplained income of Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected. As can be seen from the orders of the AO, Assessee has invested the amount of Rs. 3.3 crores in other firm not only by recovering the debtors but also by transferring some of the recoverables, which were accepted by the AO as such. The AO and CIT(A) wrongly were of the opinion that cash receipts can be treated as cash credits but, trade receipts in cash is not prohibited under the law and only when payments are made in cash towards purchase there are provisions to disallow the amount. However, in this case, Assessee's sales have been accepted as well as Assessee's books of account have been accepted in earlier years and there are outstanding debtors which have to be recovered. Just because Assessee has recovered them in cash, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 68 cannot be applied to the trade recoveries made by Assessee during the year. 8. It is also not the case of the AO that investments made in Sree Rayalaseema Steel Rerolling Mills from unexplained sources. Having explained the source of investment in the other firm being recoveries from debtors, the same cannot be doubted just because Assessee recovered them in cash. As seen from the list furnished in the page 2 of assessment order, the recoveries were deposited from 30-07-2005 to 28-03-2006 over a period of time in various denominations, therefore, it cannot be said that Assessee has recovered in a single day and invested in the other firm. The sales were already accepted in the earlier years and the recovery of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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