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M/s. Bhagyanagar Oil Industries Versus Income Tax Officer, Ward-9 (2) , Hyderabad

2015 (9) TMI 598 - ITAT HYDERABAD

Addition under section 68 - amount payable by the assessee to farmers towards purchase of sunflower seeds as unexplained cash credits - Held that:- As rightly submitted by the Ld. Counsel for the assessee, the impugned credits being trade credits of the assessee on account of purchase of sunflower seeds are not in the nature of cash credits as envisaged under section 68 and the same therefore cannot be added to the income of the assessee by invoking the said provision. Moreover, as pointed by hi .....

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failure of the assessee to establish the identity of the concerned creditors/suppliers. It is also observed that the resultant profit arising from the relevant transactions of purchase and sale of sunflower seed was duly disclosed by the assessee in the trading account. Thus addition u/s 68 deleted - Decided in favour of assessee.

Unexplained expenditure under section 69C - whether the amounts in question representing liabilities which had ceased to exist could be added to the total .....

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y applicable when it is established that the said liabilities as shown by the assessee actually ceased to exist in the year under consideration itself. We, therefore, confirm the addition made on this issue by invoking the provisions of section 41(1) - Decided against assessee.

Validity of the assessment - Held that:- The present case however is not such a case where notice under section 148 is issued to give effect to any finding or direction contained in the appellate order of the T .....

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ated:- 12-6-2015 - P M Jagtap, AM And Saktijit Dey, JM,JJ. For the Appellant : Mr K L Rathi and Mr Siddarth Toshnival For the Respondent : Mr Rajat Mitra ORDER Pe: P M Jagtap , AM. This appeal filed by the assessee is directed against the order of the Ld. CIT(A)-VI, Hyderabad dated 15.06.2012 and the grievance of the assessee is projected therein in the form of following grounds : 1. "The learned CIT(Appeals) erred in confirming the Assessment Order passed by I.T.O under section 143(3) read .....

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tion. 4. That the learned CIT(Appeals) erred in holding that the opening balance standing to the credit of M/s. Ammireddy Oil Limited & M/s.Krishnaveni Agrotech Products of ₹ 2,27,952/- & 1,91,992/- respectively are to be added u/s. 69C although both are brought down balances. 5. That the learned Authorities below should not have ignored the fundamental fact that the Assessee had filed Audit Report in Form 3CB & 3CD to prove that the Assessee has maintained complete and correct .....

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assigned by the Ld. CIT(A) are wrong, insufficient and illegal. 8. Any other ground that may arise at the time of hearing of the appeal." 2. As submitted by the Ld. Counsel for the assessee at the time of hearing before us, Ground Nos. 1, 2, 5, 7 and 8 are general in nature which do not call for any specific adjudication. 3. The issue involved in ground No.3 relates to the addition of ₹ 54,49,961 made by the A.O. under section 68 of the Act and confirmed by the Ld. CIT(A) treating the .....

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2.2007, the total income of the assessee was determined by the A.O. at ₹ 59,14,923 after making additions of ₹ 54,49,961. The appeal filed by the assessee against the said order was dismissed by the Ld. CIT(A) and when the assessee filed a further appeal before the Tribunal, the Tribunal vide its order dated 12.11.2010 set aside the orders of the authorities below and restored the matter to the file of the A.O. for completing the assessment afresh, after giving proper and sufficient .....

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uthorities stating that there were no such persons available on the given address. The A.O. therefore issued a commission to the ITO, Ward-1, Adoni who deputed his Inspector to conduct enquires with the concerned creditors. Such enquires made by the Inspector revealed that the address of the creditors given by the assessee as "Market Yard, Allur, Adoni" was not sufficient to trace the creditors. He also reported that it was not possible to find out the address of the said creditors as .....

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that the concerned credit balances appearing in the name of the seven farmers were not satisfactorily explained by the assessee in terms of section 68 and accordingly, the aggregate amount of ₹ 54,49,961 of such credits was added by him to the total income of the assessee under section 68 of the Act. 5. On appeal, the Ld. CIT(A) confirmed the addition made by the A.O. under section 68 observing that the primary onus to explain the relevant credits was on the assessee and the assessee havin .....

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eeds are not in the nature of cash credits as envisaged under section 68 and the same therefore cannot be added to the income of the assessee by invoking the said provision. Moreover, as pointed by him from the trading account of the assessee for the year under consideration placed at page No.24 of the paper book, the corresponding seeds purchased from the seven farmers for ₹ 54,49,961 were sold in the year under consideration itself for ₹ 58,89,195 and the said sale was duly credite .....

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ng account. Having regard to all these facts of the case, we are of the view that the addition made by the A.O. and confirmed by the CIT(A) by treating the trade creditors as unexplained cash credits under section 68 is not sustainable. We therefore delete the same and allow ground No.3 of assessee's appeal. 7. The issue involved in ground No.4 relates to the addition made by the A.O. on account of credit balances appearing in the books of account of the assessee in the name of M/s. Ammiredd .....

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was no such outstanding balance as on 31.03.2005 and the assessee had already paid the entire amount to M/s. Ammireddy Oil Ltd. Similarly, the liability of ₹ 1,91,992 shown in the books of account of the assessee as payable to M/s. Krishnaveni Agrotech Products was found to be non-existent by the A.O. on the basis of enquiries made with the said party who confirmed that the entire amount was received from the assessee and there was no outstanding balance as on 31st March, 2005. The credit .....

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Ld. CIT(A), the assessee failed to reconcile the difference appearing in the accounts of the two parties as per its books of account and as per the books of the said two parties. As regards the alternative contention of the assessee that the amounts appearing in the name of the said two parties being trade credits could not be added as unexplained cash credits by virtue of provisions of section 68, the Ld. CIT(A) found merit in the same. He however held that the corresponding amounts representi .....

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in the contention of the Ld. Counsel for the assessee that the corresponding expenditure on account of purchases having been incurred by the assessee in the immediately preceding year i.e., A.Y. 2004-05, addition under section 69C treating the same as unexplained expenditure could be made only in A.Y. 2004-05 and not in the year under consideration i.e., A.Y. 2005-06, it is observed that the amounts in question representing liabilities which had ceased to exist could be added to the total incom .....

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