Atul Jindal Vs ITO (ITAT Chandigarh)
Assessee, proprietor of Usha Impex, declared income of Rs.42,83,680/-. Original assessment u/s 143(3) completed on 15.11.2016. PCIT revised the order u/s 263 on 25.03.2019 on the ground that a sundry creditor of Rs.2,02,00,000/- standing in the name of M/s Emkay Industries Ltd. was not properly verified. AO thereafter passed reassessment order u/s 143(3) r.w.s. 263 on 22.12.2019 treating the credit as unexplained u/s 68. CIT(A)/NFAC upheld the addition, primarily influenced by a clerical spelling variation in the ledger where the name was written as “Emm Kay Industries Ltd.” instead of “Emkay Industries Ltd.”
Before Tribunal, Assessee demonstrated that the amount represented commercial advance for supply of 100 tonnes of copper wire. Identity was established through PAN, MCA Master Data, ROC filings, confirmation, audited accounts & past ITAT orders involving the creditor. Creditworthiness was supported by bank statements showing availability of funds & transfers through normal banking channels. Genuineness was shown from complete banking trail—funds received by RTGS & later returned through account-payee banking in FYs 2017-18 & 2018-19. Tribunal held that once PAN & statutory records proved the existence of Emkay Industries Ltd., a typographical error in internal ledgers could not be the basis for treating the credit as bogus. Tribunal further held that non-materialisation of the underlying commercial transaction does not affect the three limbs of s.68. Revenue had not produced any contrary material nor conducted enquiry u/s 133(6) into the creditor’s bank deposits.
