Adhishwar Nivesh Pvt. Ltd. Vs ACIT (ITAT Delhi)
Bogus Sundry Debtors Theory Collapses: ITAT Deletes ₹65.19 Lakh Addition Based on Past-Year Presumptions
AO treated sundry debtors of ₹26.05 lakh relating to AY 2014-15 & ₹39.14 lakh relating to AY 2015-16 aggregating to ₹65.19 lakh as fictitious investments, relying heavily on observations made in earlier year that Assessee was a mere name lender & business transactions were sham. CIT(A) upheld the addition, also rejecting Assessee’s objection on limited scrutiny.
Tribunal noted that for AY 2015-16, trade receivables as on 31.03.2015 were NIL & no adverse material was brought on record to establish that sales of shares or cotton knitted fabrics during the year were bogus. Tribunal followed co-ordinate Bench ruling in Fabulous Nivesh Pvt. Ltd., holding that once AO treats entire business as non-genuine, additions on account of sundry debtors arising from such alleged business cannot simultaneously survive, especially when no specific bogus transaction is identified in the relevant year. It was further held that sundry debtors pertaining to earlier AY cannot be taxed again in subsequent year. Accordingly, addition of ₹65.19 lakh was deleted in full. Issue regarding expansion of limited scrutiny was left open as academic. Appeal allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
