Gosrani Impex private Limited Vs CIT (Appeals) (ITAT Mumbai)
Assessee, Gosrani Impex Pvt. Ltd., engaged in manufacturing textiles, filed return for AY 2017-18 declaring income of ₹59.67 lakh. During scrutiny, AO received investigation-wing information from Kolkata regarding M/s Hariram Jagdish Prasad, a concern allegedly providing accommodation entries in the form of cheques in lieu of cash. AO noted that Assessee received ₹19,03,396 from this concern & , based on the partner’s statement before the Investigation Wing, treated the amount as unexplained cash credit u/s 68.
Assessee explained that it had no direct transaction with M/s Hariram Jagdish Prasad – the payments were received through a commission agent M/s R.K. Textile Agency against genuine textile sales. It furnished sale invoices, delivery challans, & an affidavit from the commission agent confirming that the collections were made on behalf of Assessee. Despite this, AO made the addition & CIT(A) upheld it, relying solely on the third-party statement without granting cross-examination.
Assessee’s Contention:
- The sum of ₹19,03,396 formed part of recorded turnover of ₹59.94 crore & had already been offered to tax.
- Addition u/s 68 therefore resulted in double taxation.
- AO neither confronted Assessee with the alleged statement nor provided cross-examination opportunity.
- Relied on CIT v. Odeon Builders Pvt. Ltd. [2019] 110 taxmann.com 64 (SC) & ACIT v. Hirapanna Jewellery (ITAT Visakhapatnam) where additions based solely on third-party statements were struck down.
Tribunal’s Findings:
- Assessee had produced evidence — sale bills, delivery challans, & bank statements — proving that the impugned sum represented genuine sales routed through an agent.
- AO did not dispute the overall sales turnover or genuineness of the books.
- The payments received via M/s Hariram Jagdish Prasad had already been included in sales income, hence taxing again u/s 68 would amount to double taxation.
- The third-party statement of Gopal Maroo was not confronted to Assessee nor corroborated independently.
- Following the ratio of Odeon Builders (SC), addition could not be sustained when based solely on untested third-party information.
Since the impugned receipts were part of disclosed turnover & properly recorded, addition of ₹19,03,396 u/s 68 was unjustified. AO directed to delete the addition.
