DCIT Vs NM Industries Private Limited (ITAT Delhi)
Trade Debtor Receipts Cannot Be Taxed Again – Double Addition of ₹3.75 Cr Deleted, Revenue’s Appeals Dismissed ITAT Delhi:
Assessee engaged in trading of edible oils, filed returns declaring income of ₹3.89 crore (AY 2013-14). Assessment was reopened u/s 147 based on Investigation Wing report alleging that Assessee routed its own funds of ₹3.75 crore through bank account of Nikhil Agencies & withdrew cash. AO treated ₹3.75 crore received from Nikhil Overseas as unexplained cash credit u/s 68.
CIT(A) deleted addition, noting that ₹3.75 crore was recovery from trade debtor Nikhil Overseas. Trade receivable list showed balance reduced from ₹3.75 crore as on 31.03.2012 to ₹38,969 as on 31.03.2013. Hence, receipt was merely realization of sales already credited to P&L in earlier year. Addition amounted to impermissible double taxation.
Tribunal upheld CIT(A)’s reasoning, holding that AO merely relied on Investigation Wing report without independent verification. Since receipt was through banking channel & supported by books, addition u/s 68 was unsustainable.
For AY 2014-15, AO made addition of ₹50.96 lakh (Lal Ji Agencies) & ₹17.51 crore (Lokendra Trading Co.) alleging non-genuine debtors. CIT(A) deleted addition after verifying trade receivable schedules, showing amounts already reflected in earlier year’s turnover & reduced in subsequent year. Tribunal affirmed deletion, holding that recovery from trade debtors cannot be taxed again as unexplained income.
