INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 on account of unexplained sundry creditors - Validity -

Assessee had shown certain amount as liability to sundry creditor AO made addition under section 68 on the ground that assessee failed to discharge its responsibility to prove the genuineness of transaction with creditors and also the identity and creditworthiness of the sundry creditor. Tribunal deleted the addition made by AO. Held: Advances were received through cheques, but not in cash. Assessee submitted that the said outstanding amount from creditors were adjusted out the sale of potatoes, tamarind etc. in subsequent assessment year and also produced the invoices before CIT(A). No evidence was brought on record to show that sales for the subsequent assessment year were not accepted by AO. The receipt of advances from customers was a starting point and conclusion of transaction is the relevant sales. AO isolated the transaction of advances received against the sales and at the same time, did not examine the genuineness of sales made to the trade creditor which is part and parcel of the total turnover. Therefore, addition made by AO was rightly deleted by Tribunal.

REFERRED : Dy. CIT v. Madhava Hi-Tech Cold Storage Pvt. Ltd. [ITA No. 462/Viz/2016 & TA No. 480/Viz/2016, dt. 16-11-2018] : 2018 TaxPub(DT) 7332 (Visakhapatnam-Trib) Merilyn Shipping & Transports v. ACIT (2012) 136 ITD 0023 (Visakhapatnam) : 2012 TaxPub(DT) 1009 (Visakhapatnam-Trib)

FAVOUR : In assessee's favour

A.Y. :

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