Income Tax Department challenged ITAT deleting disallowance of excess expenditure and addition under Section 68. High Court found raise no substantial questions of law and dismissed appeal.
Appeal dismissed; impugned order of ITAT affirmed.
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PR. COMMISSIONER OF INCOME TAX DELHI- 7 ..... Appellant
Through: Mr. Zoheb Hossain, Sr. SC with Mr. Sanjeev Menon, Jr. SC..
versus
M/S PRAYAG POLYTECH PVT. LTD. ..... Respondent Through: Mr. Ved Jain and Mr. Nischay Kantoor, Advs.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV
O R D E R % 24.01.2024
“A. Whether, on the facts and circumstances of the case and in law, the ITAT has erred in deleting the disallowance of the excess expenditure of Rs. 3,73,50,300/-, by giving a perverse finding on fact that the addition was ad-hoc, without giving any credence to the fact that except for the ledger account, the assessee did not produce any documentary evidence in support of the expenses, even though specifically asked to do so by the Assessing Officer, or before the Commissioner of Income Tax (Appeals)?
B. Whether, in the facts and circumstances of the case and in law, the ITAT has erred in deleting the addition of Rs. 1,06,20,125/made under Section 68 of the Income Tax Act on account of unexplained advances from customers, ignoring the fact that the assessee had not furnished any addresses of the customers from whom advances were claimed to have been taken, nor any such evidences produced during the appellate proceedings before CIT(A),
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and as such the assesseefailed to discharge its onus to prove the identity and creditworthinness of the alleged customers and genuineness of the claimed advances?”
“8. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the books of accounts produced by the assessee during the course of assessment proceeding were never doubted and were not rejected. The addition is only on the basis of presumption and assumption that decrease in sales amounts to decrease in expenses. The ledger accounts were very much produced before the Assessing Officer and the same was before the CIT(A). Merely on the basis of conjecture, the ad-hoc addition cannot be made without any tangible reason to do so. Therefore, Ground no.2 is allowed.”
“9. As regard Ground No.3, relating addition of Rs.1,06,20,125/ - on account of advances from the customers, the Ld. AR submitted that the assessee duly filed the details of advances received from customers alongwith the details of current liabilities. The documents were not doubted. The Ld. AR further submitted that these advances have been cleared in the subsequent years. The sales invoices have been raised in the subsequent years and copies of ledger accounts for three Financial Years i.e. 201415, 2015-16 and 2016-17 were submitted before the authorities and the assessee demonstrated that these are regular advances. The Ld. AR submitted that these parties are regular customers and the assessee has supplied the goods to those parties in the normal course of business and these advances have been adjusted against such supply of goods in the subsequent year. Thus, there cannot be addition holding the same advances as unexplained. The Ld. AR relied upon the decision of Tribunal in case of ACIT vs. Montage Enterprises Pvt. Ltd. (ITA No.4014/ Del/ 2011 dated 14.01.2019).
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The Ld. AR further submitted that thisaddition made is on the basis of arbitrariness and by indulging into surmises without providing any cogent reasons.”
YASHWANT VARMA, J.
PURUSHAINDRA KUMAR KAURAV, J.
JANUARY 24, 2024/p
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2 issues framed by the court
Whether the ITAT erred in deleting the disallowance of excess expenditure as ad-hoc addition without credence to lack of documentary evidence.
Whether the ITAT erred in deleting the addition under Section 68 for unexplained advances ignoring lack of customer addresses and evidence.
Colour shows how this judgement treated each authority
ACIT vs. Montage Enterprises Pvt. Ltd.Referred¶20
ACIT vs. Montage Enterprises Pvt. Ltd. (ITA No.4014/ Del/ 2011 dated 14.01.2019)
1 provisions across 1 enactments
PR. COMMISSIONER OF INCOME TAX DELHI- 7
M/S PRAYAG POLYTECH PVT. LTD.
YASHWANT VARMA
PURUSHAINDRA KUMAR KAURAV
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
