2023 (4) TMI 1432

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....e without prejudice to one another. 1. The order u/s. 263 of the Act is bad in law. 2. The learned Pr. CIT has erred in law as well as on facts in not considering the submissions of the appellant on the strength of which the assessment order was neither erroneous nor prejudicial to the interest of revenue and therefore, the provisions of Section 263 of the Act were not applicable to the case of the appellant. 3. The learned Pr. CIT has erred in law as well as on facts in setting aside the assessment order passed by the Id. A.O. u/s. 144 of the Act and directing de-novo assessment regarding the verification of issue of treating the alleged unexplained sundry creditors of Rs. 18,83,64,331/- as cash credits u/s. 68 of the Act and....

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.... section 68 of the Act r.w.s. 115BBE of the Act @ tax rate of 60%. However, the AO erred in facts and in law by applying the normal rate of tax as opposed to the higher tax rate of 60% and therefore, the assessment order passed by the AO is erroneous and prejudicial to the interest of Revenue. In response, the assessee submitted that the creditors represent trading liabilities and therefore cannot be taxed under section 68 of the Act. Further, the assessee also placed reliance on several decisions which have held that trade creditors being trading liabilities cannot be taxed u/s 68 of the Act. The Counsel for the assessee further submitted before PCIT that increase in balance of advances from customers in the year under consideration was on....

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....of the Act. In the case of Manoj Aggarwal v. DCIT [2008] 113 ITD 377 (Delhi Special Bench), the ITAT made the following observations: Thus, there is marked difference between a credit representing a liability payable by the assessee and a credit representing monies received from another person. It is because of this distinction that, a liability for purchase which has been credited in the account of the supplier cannot be added under section 68, more so when the purchase has been accepted as genuine and a deduction therefor has been allowed. In all other cases including the case of a credit representing the sale proceeds of an asset, the provisions of section 68 are applicable and it is for the assessee to prove satisfactorily the nature ....

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....on the purchases made on credit. 9. We, accordingly, answer the question referred to us in affirmative, i.e., in favour of the assessee and against the revenue. There will be no order as to costs. 5.3 In the case of PCIT v. Kulwinder Singh 99 taxmann.com 449 (Punjab & Haryana), the High Court made the following observations: A perusal of the order passed by the Tribunal shows that the assessee had shown numerous sundry creditors along with details in his balance sheet. The assessee being a road Contractor received material for the construction of the road. The amounts in question represented purchases made on credits. According to Section 68 of the Act, where any sum is found credited in the books of account of an assessee maintained....