TaxTMI 
TaxTMI 
2023 (1) TMI 1215
X X X X Extracts X X X X
X X X X Extracts X X X X
....out independent application of mind. This is further evident from glaring feature of reasons recorded that while drawing alleged inference of income escapement of Rs 16 lacs, how stated transaction is seen as accommodation entry in hands of assessee herein is unfathomable and beyond comprehension and breaks the live nexus (cause and effect) test completely. Even Ld CIT-A has not been able to overcome said debility in reasons recorded. 3. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the order passed by Ld AO u/s 143(3) without appreciating that assessee is into the business of trading in scrap, which is an unorganized sector and primary mode of transaction is done in cash which have been disregarded. 4. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in not restoring the returned income declared by assessee in its return of income. 5. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in not deleting the addition made by Ld AO which was also unlawful and made in violation of principles of natural justice as no back material is confronted and cross examined to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e by invoking the provisions of Section 40A(3) and also addition of Rs. 10,52,532/- and Rs. 5,46,169/-. However, in respect of the ad hoc disallowance of 1/10th of the expenditure amounting to Rs. 2,50,330/- the ground of the assessee's appeal was allowed and the addition was deleted. Aggrieved against the order of learned CIT(Appeals) the assessee is in appeal before this Tribunal. 4. Learned counsel for the assessee reiterated the submissions as made in the submissions filed by the assessee. For the sake of clarity the same are reproduced as under: "1. This appeal has been instituted against the order dated 23/12/2018 passed by Income Tax Officer Ward 2(4), Faridabad and further against CIT(A). 2. That Id CIT(A) has erred in sustaining the addition without appreciating the fact that the whole assessment order is based on a 3rd party statement without corroborating the same with other relevant evidence. 3. That there are plethora of judgments which in nutshell says that sole reliance on third party statements cannot be a sole basis of additions: I. ITA No. 373 OF 2005 Kolkata High Court in BANGODAYA COTTON MILLS LTD: Sole reliance on third party statement was reject....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s no jurisdiction, pertinent to mention here that if there is any sum outstanding towards vendor then nothing is placed on records to show that vendor has done any efforts to recover the sum from applicant which clearly show that in actual nothing is outstanding, then it is beyond doubt that disallowance of purchases is not tenable merely on the pretext of third party statement without corroborating it with any other document. Violation of section 40A(3). 8. That applicant had made the purchases of Rs.59,995/- from M/s Vasu Steel, AO made verification from the said vendor and it was communicated that the payment has been made by the applicant on a single date, however the fact is that applicant has made the payment on various dates of total sum of Rs.59,995/. Pertinent to mention here that purchases are never doubted by AO. 9. That provision of section 40A(3) is designed to counter evasion of a tax through claims for expenditure shown to have been incurred in cash, however if transaction is verified and identity of payee is of no doubt then there is no violation of this section. I. Hon'ble ITAT, Delhi in Shri Radhey Shyam Manchanda case (ITA No. 5238/Del/2016) takin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ltd. V. DCIT (Ahmedabad ITAT) ITA No. 1166/Ahd/2014, We also note that the provisions of section 68 cannot be applied in relation to the sales receipt shown by the assessee in its books of accounts. It is because the sales receipt has already been shown in the books of accounts as income at the time of sale only crux at page no. 77 of compilation of case laws. II. New Pooja Jewellers v. ITO (Kolkata ITAT) ITA No.1329/Kol/2018; held that when a receipt is accounted as income, no separate addition of the same amount as income of the assessee under any other Section of the Act can be made as it would be a double addition crux at page no. of compilation of case laws. 16. That thus in light of the judgments above it can be concluded that once the sales are reflected in credit side of profit and loss account it automatically gets offered to tax. If the purchaser did not account for the transaction in their books, the assessee cannot be penalized. The applicant is responsible for his books only and not for the books of other parties which is beyond the control. The applicant is making necessary entries in its regular books of accounts and in the stock register. Applicant has furnis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....na Traders has made purchases of Rs.28,63,255/- from the appellant and has made cash payment of Rs.23,63,255/-. Thus the appellant has shown unexplained cash receipts in its books of account for Rs.10,52,532/-. The appellant could not furnish any documentary evidence for the receipt of such cash payments from M/s Haryana Traders has claimed. The onus was on the appellant to explain the source and nature of such cash receipts credited in its books of account, duly supported with documentary evidence. The appellant has failed to do so. The results of enquiries have been communicated to the appellant. In the circumstances, there is merit in the addition of Rs.10,52,532/- made by the AO. The same is hereby confirmed u/s 68 of the Act. Ground No. 3 of the appellant is Dismissed." 7. It is stated by the assessee that requisite sale was duly reflected in the statutory return filed before the Excise and Sales-tax authorities. The assessee has stated that sales are duly supported by the requisite evidences. The fact that the sale was made and it is supported by the evidences, is required to be verified by the assessing authority. Therefore, the issue is restored to the file of the Assessi....