Revenue's appeal dismissed, addition under Income Tax Act deleted. Tribunal upholds Commissioner's decision.

The appeal filed by the Revenue was dismissed, and the addition made under section 68 of the Income Tax Act was deleted by the Commissioner of Income Tax (Appeals) and upheld by the Tribunal. The Commissioner found the Assessing Officer's observations regarding cash sales to be untenable, as purchases were confirmed and sales proceeds were recorded in the profit and loss account. Additionally, the admission of additional evidence by the Commissioner without providing an opportunity to the Assessing Officer was deemed appropriate, leading to the dismissal of the Revenue's appeal.

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Issues involved:
The only issue in this appeal is against the order of ld. CIT(Appeals) deleting the addition made by the Assessing Officer u/s. 68 of the I.T. Act.

Details of the Judgment:

Issue 1: Addition made u/s. 68 of the I.T. Act
The Assessing Officer observed that the assessee, a Company engaged in scrap trading, credited sales of Rs. 78,77,282/- and declared purchases at Rs. 1,57,57,619/-. The purchases were made from Official Liquidator, Jharkhand, with bills enclosed. The assessee failed to produce documentary evidence for cash sales, leading to the addition of Rs. 78,77,281 u/s. 68. Ld. CIT(Appeals) allowed the claim, stating that cash was collected from parties interested in purchasing materials, with deliveries made later. The AO's observations were deemed untenable as the purchases were confirmed, and the sales proceeds were recorded in the profit and loss account. The addition u/s. 68 was deleted by ld. CIT(Appeals).

Issue 2: Admission of additional evidence
The Revenue objected to ld. CIT(Appeals) admitting evidence without providing an opportunity to the AO. The purchases were made under the order of Hon'ble Jharkhand High Court, with payments confirmed. The AO made the addition without fault found in the books of accounts. In the absence of book rejection, treating sales as cash credits was deemed improper. Ld. CIT(Appeals) rightly deleted the addition, which was confirmed. The appeal filed by the Revenue was dismissed on this issue.

In conclusion, the appeal filed by the Revenue was dismissed, and the addition made u/s. 68 of the I.T. Act was deleted by ld. CIT(Appeals) and upheld by the Tribunal.

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