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| The Tax Publishers2022 TaxPub(DT) 5630 (Mum-Trib) INCOME TAX ACT, 1961
Section 68
Where amount was received through circular trading from Compact Agencies to M/s. SSK Ispat and Power Ltd., to assessee, in this transaction, AO was unable to verify by issuing notice under section 133(6) to the party and Appellate Authority during the appeal proceedings did not take proper consideration to verify this party in respect of this transaction thus, lack of verification was adjudicated by CIT(A) hence, in any case, unverified sundry creditors could not be allowed for rejecting the addition made under section 68. So, accordingly, the addition made on account of assessee having indulged in circular trading transactions with other two companies namely SSK Ispat 'and C A, was set aside and matter was remanded back to file of CIT(A) for further adjudication.
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Income from undisclosed sources - Addition under section 68 - Unexplained sundry creditors -
AO noticed that there was a change in the shareholding of the assessee company during the year and assessee had indulged in circular trading transactions with other two companies namely SSK Ispat 'and C A and hence concluded that 'assessee had inflated its purchases and added back an amount of outstanding sundry creditors and the transactions pertaining to such sundry creditors were sham and added the same under section 68. However, CIT(A) rejected the addition. Aggrieved by order of CIT(A) revenue was in present appeal. Held: Amount was received through circular trading from C A to M/s. SSK Ispat and Power Ltd., to assessee. In this transaction, AO was unable to verify by issuing notice under section 133(6) to the party. So accordingly, the addition was made under section 68. Appellate Authority during the appeal proceedings did not take proper consideration to verify this party in respect of this transaction. Lack of verification was adjudicated by CIT(A). Where the existence and credentialism of the party is in question the section 68 will start to play. In any case, un-verified sundry creditors could not be allowed for deletion of addition made under Section 68. So, accordingly, the addition was set aside and matter was remanded back to file of CIT(A) for further adjudication considering the above-mentioned discussion of Tribunal.
REFERRED :
FAVOUR : Matter remanded to CIT(A)
A.Y. :
IN THE ITAT, MUMBAI BENCH
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