The Tax Publishers2020 TaxPub(DT) 5468 (Gau-Trib)

INCOME TAX ACT, 1961

Section 68

Assessee placed on record copy of invoices raised by suppliers which inter alia comprised of details of purchases, name, address, PAN, VAT details. Also, some of the suppliers were non-residents and some had closed down and it was the reason why AO's notice under section 133(6) could not be served. However, no adverse comments or qualifications were given in this regard. Further, no specific infirmity or defect was pointed out by AO in respect of the books of account of assessee. Accordingly, AO was not justified in making addition under section 68.

Income from undisclosed sources - Addition under section 68 - Receipt of unsecured loan - Notices under section 133(6) returned unserved

AO in order to verify genuineness of sundry creditors of assessee issued notices under section 133(6) to three suppliers, however, two of the notices were not responsed and one returned unserved. Accordingly, AO treated amount concerned as unexplained credit under section 68 and made addition. Held: Among three sundry creditors, first two sundry creditors who supplied goods to the assessee were foreign entities and non-residents of India, which fact is discernible from their postal address and they were both residents of Bhutan one, M/s. 'B' whose proprietorship concern had been closed down due to financial problems so it could be presumed that it was the reason why AO's notice under section 133(6) could not be served upon it, so no adverse view was warranted against sundry creditor. Assessee has placed on record copy of invoices raised by suppliers which inter alia comprised of details of purchases, name, address, PAN, VAT details. The quantity and value of purchases formed part of the audited accounts, quantitative details, gross profit margin and also various accounting ratios of assessee. In the report furnished by tax auditor in Form 3CA, no adverse comments or qualifications were given in this regard. Further, no specific infirmity or defect was pointed out by AO in respect of the books of account of assessee. Accordingly, AO was not justified in making addition under section 68.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15



IN THE ITAT, GUWAHATI BENCH

A.T. VARKEY, J.M.

Nirja Khatuwala v. ITO

I.T.A. No. 41/Gau/2019

27 November, 2020

In favour of assessee.

Appellant by: Akkal Dudhwewala, Authorised Representative

Respondents by: Jayanta Khanra, Departmental Representative

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