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2015 (12) TMI 445 - ITAT DELHI

2015 (12) TMI 445 - ITAT DELHI - TMI - Addition on net profit on account of alleged fake cash sales - CIT(A) deleted the addition - Held that:- In AY 2009-10 assessee has not provided any relevant details on which AO could have made any inquiry of cash sales in contradistinction to facts of AY 2008-09 where assessee has provided the relevant details available with it including C forms issued by the parties. Therefore, for this year AO was handicapped in absence of any details and made addition o .....

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AY 2009-10 following his order in case of assessee for AY 2008-09 in absence of any details of cash sales and in absence of any inquiry made by CIT (A). Therefore, in the interest of justice, we set aside the appeal of AY 2009-10 back to the file of AO with a direction to inquire, verify, and deal with cash sales recorded by the assessee in accordance with law after affording sufficient and necessary opportunity of hearing to the assessee. - Decided in favour of revenue for statistical purposes .....

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oth these appeals are being decided by a common order, as it was the common stand of the parties before the Bench that the arguments advanced are same due to similarity in facts and law would apply mutatis mutandis to both the appeals. 02. Brief facts of the case is that assessee is a private limited company engaged in manufacturing of M S Ingots at Hardiwar and income derived by the company form its eligible unit is subject to deduction u/s 80 IC of the Income tax Act. a. For A Y 2008-09 it fil .....

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ortunity of hearing to the assessee, assessment was made treating that sales made to Mr Navin Jain as ingenuine. Subsequently a letter was received from Addl Commissioner of Income tax, mandi Gobindgarh stating that Shri Navin Jain is not having any transactions with the assessee company and his sources of income is brokerage and salary. Therefore AO recorded the reasons and issue notice u/s 148 of the act on 28/06/2010 holding that income of ₹ 1,60,56,844/- has escaped the assessment. In .....

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ing year relevant to this AY. Therefore AO asked assessee to file details with respect to other parties also for which Assessee submitted that it is not possible to submit their details but explained that it has relied on information given by the purchasers and also stated that since the purchases of goods havebeenaccepted merely because sales is made in cash, no additions can be made. Therefore AO was of the view that cash sales made by the assessee of ₹ 6,25,10,89/- is bogus and hence af .....

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e cash sales. b. For AY 2009-10 Assessee field return of income on 30.9.2009 for ₹ 10260/- after claiming deduction u/s 80 IC of ₹ 7170850/-. During that year assessee has clocked sales of ₹ 32,22,43,737/- out of which cash sales is ₹ 4,69,00,467/-. During the course of assessment, AO asked for the details of cash sales made by the assessee such as names and address of the parties. However, Assessee submitted only the figure of cash sales but did not furnish ACIT V Dev Bh .....

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d that for Ay 2008-09 some of the parties to whom cash sales have been made are not in existence or are of small means and not having any business dealing with the assessee. Therefore AO has worked out a comparable Net profit earned by the assessee of ₹ 17,00,296/- and denied the benefit of deduction u/s 80 IC on that amount. He further justified that addition u/s 68 of that amount is rightly made by AO. He also submitted that CIT (A) has erred in deleting the addition without appreciating .....

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e voucher and bills and those were examined. Those books were also produced before CIT (A) at his direction for verification. Further original assessment for that year was also completed u/s 143(3) of the act where in 133 (6) inquiry letters were sent to other parties also and in that proceedings the books of accounts were produced. None of the authorities could find any defect in the books of accounts. Further, he submitted that when the purchases quantity is accepted by AO then sales of that q .....

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sales when cash sales is already part of the profit shown by the assessee. He further submitted that AO has estimated the ACIT V Dev Bhoomi Steels Private Limited net profit on cash sales and made addition u/s 68 of the act where the salesis already credited to the profit and loss account. He also submitted that CIT (A) hasseen the daily sales and position of stock and held that there is no discrepancy in the details and therefore addition has been rightly deleted. He further submitted that fac .....

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ction u/s 80 IC of the act. While going through orders of lower authorities we have come to an understanding that the facts of the case for both the years are not similar however, the manner of making additions is similar. In this background we are deciding the issue for both the years separately as under. 07. For AY 2008-09, Company recorded sales of ₹ 31,03,42,972/- out of which ₹ 6,25,10,899/- is recorded as cash sales. On inquiry in original assessment, one Shri Navin Jain buyer .....

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O CST Registration forms as well as C forms made available by the purchasers. Therefore it is not in dispute that for AY 2008-09 , assessee has submitted the complete details available with it such as names, address, details of sales tax registration, copies of C forms submitted by the purchasers, sales bills showing the quantity sold, rates and amount received etc. Assessee is manufacturer of the goods and after manufacturing;these goods have been sold either in cash or cheque or on credit. The .....

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numbers, weight, rates etc. is also produced before AO as well as before CIT (A). It is also not alleged by the revenue that rates mentioned in those sales are not comparable or the goods have not moved out of the factory of assessee. Merely because some of the persons who have purchased goods from the asseseee in cash and issued sales tax forms to the assessee, have not responded to the queries or refuses the transactions cannotbe the sole basis for the making of this kind of addition particula .....

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orne out from records of the manufacturing activities of the assessee, merely because the parties who have purchased from assessee in cash by giving proper sales tax C Forms are not traceable, no adverse inference can be drawn against the assessee. It is alsointeresting that though assessee has credited the full sales realised in cash in the profit and loss account as cash sales still AO has made an addition u/s 68 of the act of only Net profit earned by the assessee. In fact, net profit is not .....

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