TaxTMI 
TaxTMI 
TaxTMI 
2025 (1) TMI 1571
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....ct, 1961 (for short 'the Act'). 4. The Tax Appeal No.569 of 2023 pertains to the Order passed by the Tribunal in ITANo.2463/Ahd/2018 and was admitted by this Court vide order dated 17.10.2023 on the following substantial questions of law in case of KFC Industries Private Limited: "(a) Whether, on the facts and circumstances of case and in law, the ld. ITAT has erred in deleting the addition of Rs.51,78,64,090/- made u/s. 68 of the Act on account of bogus purchases? (b) Whether, on the facts and circumstances of the case and in law, the learned ITAT has erred in disregarding judgment of this Hon'ble Court in the case of N.K.Industries Ltd vs. DCIT [2016] 72 taxmann.com 289 (Gujarat), as confirmed by the Hon'ble Supreme Court by order dated 16.01.2017 passed in Special Leave to Appeal (C) CC No. 769 of 2017?" 5. Tax Appeal No.213 of 2024 is pending for admission wherein, following similar two questions are proposed by the Revenue in case of KFC Exports Private Limited arising out of the ITA No.2464/Ahd/2018: "(a) Whether in the facts and circumstances of the case and in law, the learned ITAT has erred in deleting the addition of Rs.52,21,66,403/- made u/s 68 of the Income Tax....
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.... reported in 2016 72 taxmann.Com 289 [Gujarat]. 7.6. Being aggrieved, the assessee preferred Appeals before the CIT (Appeals) contending that all the ledger accounts and other sales and purchases registers were filed which were not considered by the Assessing Officer at the time of framing the assessment and the assessee was engaged in circular transactions and therefore, the purchases made by the assessee could not have been treated as unexplained cash credit under Section 68 of the Act. 7.7. It also appears that the assessee, without prejudice to the contention raised before the CIT (Appeals), also submitted that the assessee has earned income by providing accommodation entries at the rate of 0.02% of the sales amount recorded in the books of accounts and therefore, addition should be restricted accordingly. 7.8. The CIT (Appeals), after considering the submissions made by the assessee, came to the conclusion that there was no movement of the goods but the assessee has only entered into a circular transaction of sales and purchase and therefore, the CIT (Appeals) restricted the addition of difference between the sales and purchases in both the cases as the assessee has not don....
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....the books of the assessee and the assessee offers no explanation about the nature and source thereof or the explanation offered by the assessee is not in the opinion of the Assessing Officer satisfactory. In such a situation the sum so credited may be charged to income tax as the income of the assessee of the relevant previous year. But that is not the position here. It has been the consistent stand of the assessee which has been accepted by the First Appellate Authority and affirmed by the Tribunal that the business of the assessee centered around customers/beneficiaries making deposits in cash amounts and in lieu thereof taking cheques from the assessee for amounts slightly lesser than the quantum of deposits, the difference representing the commission realized by the assessee. The cash amounts deposited by the customers I.e., the beneficiaries had been accounted for in the assessment orders of these beneficiaries. Therefore, question of adding such cash credits to the income of the assessee, more so when the assessee was only concerned with the commission earned on providing accommodation entries does not arise. 12.2 It is also important to note that the assessee being engaged....
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....e reference to the Judgment of Hon'ble Gujarat High Court in the case of NK Industries Ltd vs. DCIT reported in 72 taxmann.com 289 wherein the gross profit at the rate of 25% on the bogus purchases was adopted to determine the income of the assessee. However, the facts of the case on hand are different from the facts of the case of NK Industries (supra). The assessee being NK Industries Ltd was not engaged in circular transaction by way of providing accommodation entries for commission. In that case, the assessee was one of the beneficiary of the accommodations entries which were provided by the other parties whereas in the case on hand the assessee is middleman and engaged in the circular transaction. Thus, in our humble understanding we are of the view that the principles laid down by the Hon'ble Gujarat Han Court in the case of NK Industries (supra) cannot be applied in the given facts and circumstances. 12.6 In the view of the above and after considering the facts in totality, we do not find any reason to interfere in the finding of the learned CIT-A. At the time of hearing the id DR has not brought anything on record contrary to the finding of the Id. CIT-A. Accordingly,....