Addition u/s 68 towards unexplained sales unsustainable as not proved as bogus

DCIT Vs Subhash Chand Gupta (ITAT Delhi)

ITAT Delhi held that sales cannot be added under section 68 of the Income Tax Act unless they are proved as bogus on the basis of some reliable evidences.

Facts- In the course of assessment proceedings, the assessee was required to furnish the details of sales made by the assessee for the financial year relevant to the assessment year under consideration as the assessee has shown sales only for April to June 2017 only for three months. Assessee has submitted part-wise details in respect of 18 parties to whom the assessee made sales. The assessee was required to furnish confirmation of accounts, PAN numbers, addresses, ITR in respect of Bajrang Enterprises, Om International, Puja Traders, Tirupati trading, Vardhaman Traders. Since the assessee could not submit the PAN related with the above parties, AO could not issue notice u/s 131 /133(6) of the Act.

Therefore, the AO made addition u/s 68 in respect of the sales made to the above parties observing that the assessee has not explained the credits upto the satisfaction of the AO. On appeal the Ld.CIT(A) deleted the addition.

Conclusion- We do not see any infirmity in the order passed by the Ld.CIT(A) in holding that the sales cannot be added u/s 68 unless they are proved as bogus on the basis of some reliable evidences. Thus, we sustain the order of the CIT(A) and reject the grounds raised by the Revenue.

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