Tribunal overturns CIT(A) decision, deletes unjustified addition under Income-tax Act

The Tribunal allowed the appeal, overturning the CIT(A)'s decision to sustain an addition of Rs. 27,50,000 under section 68 of the Income-tax Act for the assessment year 2008-09. The Tribunal found that the addition was unjustified as the assessee had conducted genuine sales transactions with M/s M.Y. Paper Products Pvt. Ltd., and the amount received from them should not have been added without considering the sales made. Consequently, the Tribunal deleted the addition, setting aside the CIT(A)'s order.

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Issues:
1. Addition made under section 68 of the Income-tax Act.
2. Genuineness of transactions with M/s M.Y. Paper Products Pvt. Ltd.
3. Assessment year 2008-09.

Analysis:
The appeal was against the CIT(A)'s order related to the assessment year 2008-09. The only ground pressed was the sustenance of an addition of Rs. 27,50,000 made under section 68 of the Income-tax Act. The Assessing Officer observed a closing credit balance in the account of M/s M.Y. Paper Products Pvt. Ltd. and issued notices to verify the transactions. While M/s Saket Paper Products Pvt. Ltd. complied, M/s M.Y. Paper Products Pvt. Ltd. did not, leading to the addition. The CIT(A) upheld the addition, causing the assessee's grievance.

Upon review, the Tribunal found that the assessee had made sales transactions with M/s M.Y. Paper Products Pvt. Ltd. during the year. The Assessing Officer added the entire amount received from M/s M.Y. Paper Products Pvt. Ltd. without considering the sales made to them. The Tribunal noted that the genuineness of sales transactions was not in question. Consequently, the Tribunal held that adding the amount under section 68 for receipts from a customer with whom sales were conducted was incorrect. Thus, the addition was deemed unjustified and was consequently deleted, overturning the CIT(A)'s decision.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and deleting the addition. The judgment was pronounced in open court on 17.10.2017.

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