TaxTMI 
TaxTMI 
2016 (5) TMI 1575
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....e present case is a Company, which is engaged in the business of Mining. The return of income for the year under consideration was filed by it on 27.10.2007 declaring total income of Rs. 1,40,92,62,755/-. On the basis of information received from the Investigation Wing that some money has been transferred during the year under consideration to the Bank account of the assessee from the Bank accounts of M/s. Lanxess Enterprise and M/s. Topaz Sales Corporation, enquiry was made by the Assessing Officer, which revealed that the said two concerns were not in existence at the address given. He, therefore, called upon the assessee to explain as to how the money was transferred to its Bank account from the Bank accounts of non-existent concerns. In reply, the assessee submitted that it had no transactions with the said two concerns and whatever money was received through cheques from the said two concerns was on account of sales made to other two concerns, namely M/s. Sahara Minerals and M/s. V.K. Minerals. It was also stated by the assessee that the sales made to M/s. Sahara Minerals and M/s. V.K. Minerals were of iron ore and evidence in the form of copies of the concerned Railway receip....
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....arent from the ledger account of M/s. Sahara Minerals, as furnished, that the assessee had shown sales of Rs. 1,49,06,966/- from the said concern during the present financial year. This implied that the said amount of Rs. 1,49,06,966/- already stood credited in the profit and loss account of the assesese as the income of the assessee. The A.O. by adding the same amount of Rs. 1,49,06,966/- being part of the receipts of Rs..2,50,00,000/- has in effect made a double addition firstly by way of sales and again as an addition u/s.68 of the I T Act. if the A.O. was of the opinion that the said amount of Rs. 1,49,06,966/- was to be added u/s.68 of the IT Act then he could have firstly reduced the sales of the assessee i.e. income of the assessee by the said amount and then added the said amount u/s.68 of the I.T Act. This would in effect have been revenue neutral since no addition in effect would have been made in the hands of the assessee. Similarly, in the case of M/s. V. K Minerals, the assessee had actually received an amount of Rs. Rs. 1,18,02,215/- from M/s. V.K. Minerals during the year. Against the said receipt of Rs. 1,18,02,215/-, the assessee had made sales of Rs. 1,18....
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....on 06.07.2011, the following comments were offered by the Assessing Officer:- "At the time of assessment proceedings it was found that the credit entries of Rs. 2,50,00,000/- and Rs. 2,18,02,738/- which were shown to have received from M/s. Sahara Minerals and M/s. V.K. Minerals were not found and the amount received was treated as cash credit in the hands of the assessee. From the submission made by the assessee it appears that except Rs. 1,00,93,034/-, balance amount of Rs. 3,67,09,704/- has been already credited in the profit and loss account, so it cannot be added twice. The contention of the assessee seems to be justified, which is a matter of verification". 6. After considering the submissions made by the assessee, the remand report submitted by the Assessing Officer and the other material available on record, the ld. CIT(Appeals) proceeded to decide the issue vide paragraph nos. 15 to 23 of his impugned order, which read as under:- "15. I have carefully considered the observations of the Assessing Officer in the assessment order, remand report and submissions of the assessee during the appellate proceedings. The Assessing Officer during the asse....
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....the Assessing Officer. The Assessing Officer observed that cheques were received from non-existent concerns i.e., Lanxess Enterprises and Topaz Sales Corporation by the assessee through concerns M/s. Sahara Minerals and M/s. V.K. Minerals which also were non- existent. The Assessing Officer was not satisfied regarding the fact that money was received on account of sales. Therefore, he added the entire sum of Rs. 2,50,00,000/- and Rs. 218020738/- totaling of Rs. 46802738 as unexplained cash credit u/s 68 of the Income-tax Act, 1961. The assessee had submitted that out of receipt of Rs. 2.5 crores a sale of Rs. 1,49,07,966/- was made to M/s. Sahara Minerals and the Assessing Officer was required to reduce he said sum out of cash credit because it has already been shown as income in the form of sales. There cannot be double addition on the same account. The closing balance was Rs. 1,,00,93,034/- only. 17. Similarly in the case of M/s. V.K. Minerals, he submitted that out of Rs. 2,18,02,738/-, the assessee has shown sales of Rs. 1,18,02,000/- and, therefore, the said addition of Rs. 1,18,02,738/- is a double addition i.e., on account of sales and as cash credit. He further sub....
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....ssessee, however, has submitted that the addition should not be double since one part of it has already come as sales in the profit and loss account as income/sale. If the parties are non- existent then sales although may be in the fictitious name have been accounted in the accounts and against that no money received except these cash credits /cheques. The undersigned agrees with the assessee on this issue and holds that double addition cannot be made of the same amount. The discretion was with the Assessing Officer, he could have treated the whole as unexplained cash credit but set-off of the sales was required to be given out of Profit & Loss Account. It does not matter during assessment for taxation purposes whether the whole addition is as unexplained Cash Credit or part of it is unexplained cash credit and part of it has come in the Profit and Loss Account as sales since tax amount will be the same. 21. The assessee has filed the copy of account of M/s. Bonai Industrial Company Ltd.; Barbil, Keonjhar, which shows that an amount of Rs. 1,00,00,523/- has been transferred from the account in the name of M/s. V.K. Minerals on being a letter dated nil on 31st March, 2007. ....
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...., therefore the net addition of Rs. 2,00,93,034/- can be done after giving benefit of set- off of sales amounting to Rs. 2,67,09,704/-.(Total of sales income and addition of unexplained cash credit amounts to Rs. 4,68,02,738/- Therefore, the net addition of Rs. 2,00,93,034/- is upheld out of unexplained cash credits (amounting to Rs. 4,68,02,738/-) in the books of the assessee. This ground of appeal is partly allowed". The ld. CIT(Appeals) thus sustained the addition of Rs. 4,68,02,738/- made by the Assessing Officer on account of unexplained cash credit under section 68 to the extent of Rs. 2,00,93,034/- thereby giving relief of Rs. 2,67,09,704/- to the assessee. Aggrieved by the same, the Revenue has preferred this appeal before the Tribunal. 7. We have heard the arguments of both the sides and also perused the relevant material available on record. Although the ld. D.R. has contended before us that in the absence of any nexus between the corresponding sales and the amounts in question, there was no case of double addition and the ld. CIT(Appeals) was not justified in giving set off of Rs. 2,67,09,704/- on account of income stated to be declared by the assessee on account o....