TaxTMI 
TaxTMI 
2019 (12) TMI 972
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....is letter has been placed on record. Thereafter, notices were served through Department on the OL, but none has come present on behalf of the assessee, even after service of repeated notices. Under the compelling circumstances, we proceed to decide the appeals ex parte qua the assessee. 3. First we take cross appeals for the Asstt.Year 2001-02 i.e. appeal of the Revenue in ITA No.1928/Ahd/2014 and appeal of the assessee in ITA No.1758/Ahd/2014. 4. Sole ground for our adjudication in the Revenue's appeal for A.Y.2001-02 reads as under: "1. The ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 9,33,00,000/- made u/s.68 of the Act without properly appreciating the facts of the case and the material brought on record." While in the assessee's appeal following two grounds are raised: "1. The ld.CIT(A) erred on facts and in law in confirming retaining income of Rs. 1,57,10,000/- which was offered to tax by the appellant instead of restricting the same at Rs. 2,57,500/- from rotation of funds in the guise of software business by ignoring the principles of real income theory. 2. The ld.CIT(A) has erred on facts and in law in d....
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....e ld.CIT(A) who deleted the addition made under section 68 of the Act made by the AO but directed the AO to bring entire sale consideration under section 68 in the year in which funds came to the books of the assessee. Assessee and Revenue both had preferred appeal before the Tribunal. The Tribunal after hearing both the parties restored the matter back to the file of the AO with a specific direction to determine as to whether the provisions of section 68 could be applied in the case of the assessee; whether software transactions accounted in the books were in the nature of accommodative; whether entire sale consideration was required to be brought to tax as directed by the ld.CIT(A), and whether income, if any, from such activities would be assessable under the head 'income from other sources' or under the head 'income from business'. According, the ld.AO initiated fresh assessment. In the fresh assessment assessee furnished detailed submissions and chart indicating circular movement of funds through specific bank accounts. After considering the details and submissions of the assessee, the ld.AO held that the assessee failed to establish genuineness of the so-called creditors s....
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....st round of proceedings and the material available on record. It is noted that grounds of appeal from 1 to 9 are interlinked and are related to the addition of Rs. 9.33 crores under section 68 of the Act. These grounds are accordingly decided together. In this case, the appellant had shown trading of customized software and had shown profit out of it. During the course of first-round of assessment proceedings, the AO made enquiries from the buyers and sellers of the software and it was noted that the transactions were not genuine and could not be verified. The matter reached the honourable ITAT Ahmedabad who had set it aside to the file of the AO. The honourable ITAT directed that the AO should verify whether the trading of customized software was for rotation of transactions of companies and whether, to those transactions section 68 will apply or the entire turnover and be considered for the purpose of assessment. It was further directed that the AO should also examine that whether the transactions were back-to-back transaction or accommodation entries. It was also directed that the AO should verify whether the appellant's income was income was income from other sourc....
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....at the, creditors and debtors which. came to the books of the appellant as a consequence of accounting of purchase and sale of software were squared off by rotating funds from bank statement of Trance Techno group companies, which was shown as debtors in the books again the software sales, to the account of the appellant and then to the % .Recount of suppliers, shown as creditors in the books against the software purchases, and then from the account of the suppliers to the account of Trance Techno Group companies who brought in the funds in the bank account for rotating the funds leading to retention of funds by Trance Techno Group companies. It is also been pointed out by the appellant that for that purpose bank account of all the parties were opened in the same bank and in the same branch. The appellant has therefore, submitted that an amount of Rs. 2,57,500/- should be brought to tax the against the income of Rs. 1,57,10,000/- recorded in the books of accounts applying principles of real income theory. I have carefully considered all the facts on record and various submissions, it is noted that there is no dispute that both purchase and sales transactions recorded in th....
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....oods Ltd in HDFC, Vejalpur branch account on 19/2/200T and claimed that the said amount was paid back to A &A- Software: to the extent of Rs. 1,11,50,000/- and to Carrier Information Technology to .the extent of Rs. 13.5 Lacs on the same date as part of rotation of funds. Similarly an amount of Rs. 21 lakh was received from Skylid Telecommunications Ltd on 23/03/2001 and was claimed to be paid back Carrier Information Technology on and 07/03/2001 to the extent of Rs. 20 lakh and, therefore, the appellant had claimed that only Rs. 1 lakh was retained and earned from the amount so received. It is also seen that ROC fees of the appellant were paid by Trance Techno Foods Ltd amounting to Rs. 7500 on 19/02/2001. Similarly the appellant has also admitted to have earned Rs. 1.5 Lacs in cash which were brought in the books in the name of Shri Nilesh Xadiwala. Therefore, the appellant and accordingly claimed that the/only income earned but not disclosed in the books worked out to Rs. 2,57,500/-. On examination of the flow of funds mentioned in the paper book it is noted that the appellant had explained the sources of funds received in HDFC, Vejalpur branch from Trance Techno Foods ....
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.... income." 8. A perusal of the above order would indicate that the ld.CIT(A) has recorded a finding of fact demonstrating that creditors amounting to Rs. 9.33 crores did not deserved to be added in the hands of the assessee, because the ld.CIT(A) had made detailed analysis of fund flow statement and bank accounts placed before him. The ld.CIT(A) was of the view that amounts have been generated from group concerns, and they were routed and ultimately a cheque of Rs. 1.25 crores was received from Trance Techno Foods Ltd. in HDFC Bank, Vejalpur Branch on 19.2.2011 and out of that amount, a sum of Rs. 1,11,50,000/- was paid to A& A Software, and Rs. 13.5 lakhs paid to Carrier Information Technology. Thus, the ld.CIT(A) found a reconciliation of fund flow, and thereafter observed that addition under section 68 was not required to be made in the hands of the assessee. In other words the ld.CIT(A) has recorded a finding of fact that nothing has been retained by the assessee, which has been considered as unexplained cash credit. The assessee has explained fund flow i.e. demonstrating transactions were back to back, and were in the nature of accommodation entries. Similarly, the ld.CIT....
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....was no argument on behalf of the assessee, therefore, the same stands rejected. 14. Qua ground no.2, we heard the ld.DR and considered the material available on record. We find that the ld.CIT(A) has noted that the assessee has retained an amount of Rs. 7,79,000/-, and these receipts were not part of rotation of funds for squaring up the accounts of the parties brought on the books of the assessee by recording sale and purchase of software. These details have been noticed by the CIT(A) in his impugned order as under: Amount received by cheque no 453264 on 18/12/2001 in Vijaya Bank Account from Skylid Telecommunication Ltd and retained by the appellant Rs. 22,000/- Amount received by cheque no 453266 on 22/12/2001 in Vijaya Bank Account from Skylid Tetecommunication Ltd and retained by the appellant Rs. 70,000/- Amount received by cheque no 200026 on 03/05/2001 in Vijaya Bank Account from Trans Techno Foods Ltd and retained by the appellant Rs. 6,00,000/- Amount received by cheque no 200037 on 03/05/2001 in Vijaya Bank Account from Trans Techno Foods Ltd and retained by the appellant Rs. 87,000/- Total Rs. 7,79,000/- 15. The ld.CIT(A) treated the ....