2023 (10) TMI 252 - AT - Income Tax

Tribunal rules in favor of assessee, dismissing Revenue's appeal & granting relief.

ACIT, Central Circle-18 Versus Mrs. Neena Hardeep Singh, New Delhi

ACIT, Central Circle-18 Versus Mrs. Neena Hardeep Singh, New Delhi - TMI Issues Involved:1. Addition on account of peak export.2. Addition on account of bogus sales to M/s. Golden Harvest.3. Addition on account of bogus purchase from M/s. Thakur Associates.4. Addition on account of unexplained cash credit.5. Disallowance of fabrication expenses.6. Deduction under section 80HHC.Summary:1. Addition on Account of Peak Export:The Ld. AO considered the export sales to an entity in the Netherlands as doubtful based on an investigation report. However, the Ld. CIT(A) noted that the assessee provided 11 documents substantiating the exports, including statutory documents for customs clearance. The Tribunal found no evidence to dispute the genuineness of these documents and noted that the export proceeds were received through banking channels. Consequently, the addition of Rs. 1,18,41,518/- was deleted by the Ld. CIT(A) and upheld by the Tribunal.2. Addition on Account of Bogus Sales to M/s. Golden Harvest:The Ld. AO considered the sales to M/s. Golden Harvest as bogus without any inquiry or confronting the assessee. The Ld. CIT(A) observed that the payments were received through banking channels and no adverse evidence was available. The Tribunal upheld the deletion of the addition of Rs. 74,96,688/- by the Ld. CIT(A).3. Addition on Account of Bogus Purchase from M/s. Thakur Associates:The Ld. AO branded the purchases from M/s. Thakur Associates as bogus based on the statement of Rahul, nephew of the proprietor, without allowing cross-examination. The Ld. CIT(A) found this to be a violation of natural justice and noted that the payments were made through banking channels. The Tribunal upheld the deletion of the addition of Rs. 76,88,380/- by the Ld. CIT(A).4. Addition on Account of Unexplained Cash Credit:The Ld. AO added the opening balance of Rs. 16,09,094/- as unexplained cash credit, which the Ld. CIT(A) deleted. The Tribunal upheld this deletion, noting that Section 68 of the Act cannot be invoked for outstanding balances at the beginning of the financial year.5. Disallowance of Fabrication Expenses:The Ld. AO disallowed Rs. 5,65,490/- of fabrication expenses, considering the purchases and sales as non-genuine. The Ld. CIT(A) deleted this addition, and the Tribunal upheld this decision, noting that the assessee had provided all necessary details and the Ld. AO had not made any inquiries to contradict the claim.6. Deduction under Section 80HHC:The Tribunal noted that the deduction under section 80HHC of the Act should be allowed as a natural consequence of the nature of income derived. The issue was restored to the files of the Ld. AO for re-computation in accordance with the law.Conclusion:The Tribunal dismissed the appeal of the Revenue and allowed the cross-objections of the assessee for statistical purposes, directing the Ld. AO to give consequential effects as per the directions.