Krishna Prabhas Agro Oils Private Limited Vs ACIT (ITAT Visakhapatnam)
ITAT Visakhapatnam Deletes Addition u/s 68 on Recorded Sales – AO Cannot Treat Accepted Turnover as Unexplained Cash Credit:
Visakhapatnam Tribunal examined the validity of reassessment u/s 147 & the addition of Rs. 41,74,755/- made u/s 68 for RTGS receipts from M/s Prithvi Traders. Assessee, a manufacturer of edible rice bran oil, had disclosed this amount as part of its regular sales, duly recorded in audited books & supported by invoices, CST forms, bank statements & ledger extracts.
Proceedings were reopened based on information from DCIT, Agra regarding alleged accommodation entries. Tribunal held that AO did have material to form a prima facie belief of escapement, hence the reopening was valid in light of the Supreme Court ruling in Raymond Woollen Mills. The plea of “borrowed satisfaction” was rejected due to absence of supporting evidence.
On merits, Tribunal found that the disputed sum was received through RTGS, recorded as sales in the regular books, formed part of the turnover accepted by AO, & contributed to the declared profits already subjected to tax. Once AO accepted the audited books & trading results, he could not selectively treat a specific sale receipt as unexplained cash credit u/s 68 without first rejecting the books u/s 145(3). Tribunal emphasized that Section 68 cannot be invoked to tax again an amount already forming part of turnover. Reliance was placed on Rahul Cold Storage v. ITO (ITAT Raipur) & High Court rulings in Kailash Jewellery House (Del HC) & Vishal Exports Overseas Ltd. (Guj HC), all confirming that business receipts forming part of accepted turnover cannot be re-taxed u/s 68.
