Case Law Details
ACIT Vs Debashis Roy (ITAT Kolkata)
ITAT Kolkata held that liabilities which are incurred as trading liabilities with corresponding purchases cannot be subject matter of addition under section 68 of the Income Tax Act.
Facts- AO during the course of assessment proceedings observed that the assessee has shown huge sundry creditors of Rs.4,35,27,806/- as on 31/03/2015 and called upon the assessee to furnish details thereof and also prove the genuineness of these liabilities. Accordingly, AO issued notices u/s 133(6) to 39 parties on 14/11/2017 on test check basis. However, 26 notices issued to the creditors were returned unserved whereas two creditors have denied to have had any transactions with the assessee and the remaining did not respond at all to the notices issued u/s 133(6).
AO called upon the assessee to produce the books of accounts, ledger, purchase invoices in respect of 39 parties which were duly furnished. The assessee also furnished the bills, documents pertaining to purchase bills, challans and AO did not find any mistake or deficiencies in these documents. However, he added the entire closing balance standing at the credit of these parties which aggregated to Rs.4,19,07,168/- as unexplained cash credit u/s 68 of the Act reasoning that the assessee has not furnished complete details and evidences.
CIT(A) allowed the appeal of the assessee.
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