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Appellate order under section 68 upheld by Tribunal based on nature of transactions and maintained accounts. The first appellate order granting relief under section 68 of the Act was challenged by the Revenue. The CIT(A) partially allowed the additions made by ...
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Appellate order under section 68 upheld by Tribunal based on nature of transactions and maintained accounts.
The first appellate order granting relief under section 68 of the Act was challenged by the Revenue. The CIT(A) partially allowed the additions made by the Assessing Officer under section 68, based on the nature of transactions and the assessee's maintained accounts. The CIT(A) upheld the deletion of certain amounts, considering them as trade advances deposits. The Department's appeal was dismissed by the Tribunal citing CBDT instructions, which have statutory recognition under section 268A of the Act, regarding the tax effect limit for filing appeals.
Issues involved: 1. Challenge to first appellate order by Revenue regarding relief under s. 68 of the Act. 2. Maintainability of appeal by Department based on CBDT instructions.
Issue 1 - Relief under s. 68 of the Act: The Revenue contested the first appellate order, questioning the relief granted by the CIT(A) regarding additions made under s. 68 of the Act. The AO had added Rs. 1,17,000 and Rs. 3,31,700 under s. 68, which the CIT(A) partially allowed and deleted, respectively. The CIT(A) found the additions unsustainable due to the nature of the transactions and the regular books of accounts maintained by the assessee. The CIT(A) upheld the deletion of Rs. 1,17,000, considering it as trade advances deposits and not a loan or cash credit. Similarly, the addition of Rs. 3,31,700 was also deleted as it represented money received from trade creditors during the course of business by the assessee.
Issue 2 - Maintainability of appeal based on CBDT instructions: The Department raised a preliminary objection against the maintainability of their appeal, citing CBDT Instructions No. 2 of 2005 and No. 5 of 2007 and 2008. The Department argued that the tax effect in the appeal did not exceed the prescribed limit for filing an appeal before the Tribunal. The Departmental Representative contended that the CBDT instructions now have statutory recognition u/s 268A of the Act, making violation of these instructions enforceable by the affected party, i.e., the assessee. The Tribunal upheld the preliminary objection, dismissing the appeal based on the CBDT instructions.
Separate Judgment by Judges: No separate judgment was delivered by the judges in this case.
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