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TMI Blog2015 (4) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... rd perused. Facts in brief are that besides its activity of actual sale and purchase of Drugs Pharmaceuticals etc., during the year under consideration and also in earlier years, the assessee was indulged in entering into circuitous paper transactions with Litika Group. The assessee entered accommodation (paper) purchase sale transactions. On perusal of total transactions with Litika Group, it was noticed that assessee had received a total payment of Rs. 200.40 crores, whereas, it had made a payment of Rs. 177.45 crores to the same group during the year and in the preceding years. Thus, in the process of executing paper transactions, the assessee had received a net excess payment of Rs. 22.95 crores, over and above the payment made in the circuitous transactions. The excess payment received pertaining to the year under consideration was amounting to Rs. 3,99,50,717/- which has been added by the AO in the income of assessee u/s.69C of the Act. 3. By the impugned order, the CIT(A) deleted the addition after having following observations :- 3.3 I have considered the facts of the case. The appellant was engaged in the business of trading and manufacturing of drugs, vaccine and pharma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord that the amounts pertaining to such paper purchase I sales transactions were routed through normal banking channels and there was no involvement of exchange of cash between the two parties for these circuitous transactions. It was also an admitted fact that all these circuitous transactions had been regularly accounted by the appellant in the books of accounts. The AO has mentioned figures of such circuitous sale I purchase on Page-4 of the assessment order. Perusal of such figures reveals that these circuitous purchase and sales transactions have resulted in additional profits to the appellant. All these circuitous transactions were entered into books of accounts and the profit earned thereon had been duly shown in the Profit and Loss account. The appellant had paid taxes on profits earned on actual transactions and has also paid taxes on profit earned on these circuitous transactions. Thus, it was not a case that the profit earned on such circuitous transactions has been adjusted by the appellant against any expenses or losses. Without prejudice to the morality of such circuitous transactions, by entering into such circuitous transactions, the appellant had not violated any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during survey operations on appellant or during enquiry proceedings, if any made during assessment proceedings. In the assessment order, the AO has also not discussed as to whether any evidences/ documents were found during search operations carried out on Litika Group. There is also nothing on record to suggest that the appellant and the Litika Group of Pune were involved in some other Scam/Scandal involving money laundering or violation of any Law. In the facts and circumstances, the provisions of section 69C of the Act were not attracted/applicable. The excess payment received during the year amounting to Rs. 3, 99,50,717/ - were duly forming part of Gross Sales of the year on which profit was earned and taxes were duly paid. Addition made by the AO, therefore, amounts of double taxation of amount of Rs. 3,99,50,717. The AO has made addition of Rs. 3,99,50,717/- u/s. 69 C of the Act. As discussed above, since the provisions of section 69C were not applicable, therefore the addition made by AO is deleted." Against the above order of CIT(A), the Revenue is in appeal before us. 4. We have considered rival contentions and carefully gone through the orders of the authorities belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08 to 2010-11, the assessee had made payment for such paper transactions totaling to Rs. 177.45 crores, against which it had received payment for paper transaction amounting to Rs. 200.40 crores. Thus, during these years, the assessee had received net excess payment of Rs. 22.95 crores, out of which Rs. 3.99 crores excess payment received were pertaining to the year under consideration. 7. There is no dispute to the fact that transactions entered into by the assessee with the Litika Group were mere paper transactions as accepted by the AO. There is also no dispute to the fact that all the amounts of such paper purchase/sale transaction were routed through banking channels. No transaction of cash dealing was found either during the course of search at Litika Group nor during the course of survey at assessee's premises. It is also a matter of record that all these transactions were entered by the assessee in its regular books of accounts. Such circuitous transactions were entered into books of accounts and the profit earned thereon had been duly shown in the Profit and Loss account. There is also no dispute to the fact that on entire profit earned on actual transactions as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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