ITO Vs Bansal Insulation Products Pvt. Ltd (ITAT Delhi)
Reopening Saved But ₹8.31 Cr Cash Credit Addition Quashed- Half of Purchases Cannot Be Treated as Bogus Without Enquiry – ITAT Delhi: Rebukes AO for Blind Reliance on Investigation Wing
The matter arose out of reassessment proceedings initiated against Assessee wherein AO had made an addition of ₹8.31 crore u/s 68 on account of alleged accommodation entries & further added ₹16.62 lakh as commission said to have been paid to entry operators. CIT(A) deleted the additions & also held that the assessment itself was barred by limitation. Aggrieved, Revenue carried the matter to Tribunal while Assessee filed a cross-objection.
Revenue strongly contended that Assessee had routed its own funds through fictitious entities & AO rightly treated the same as unexplained cash credits. It was further argued that commission at the rate of 2% was correctly added since such accommodation entries could not have been obtained without payments to entry operators. Department also assailed CIT(A)’s finding that the reassessment order dated 27.03.2022 was invalid, contending that Assessee had itself undertaken before the Delhi High Court not to contest the limitation of notice dated 31.03.2021 issued u/s 148.
On the other hand, Assessee defended the order of CIT(A) by submitting that section 68 was wrongly invoked since the transactions were not loans or deposits but genuine purchases of raw materials. It was pointed out that payments were made through banking channels, the vendors’ bank statements & ledger accounts were furnished, production records & VAT returns corroborated the purchases, & no discrepancy was pointed out in the documentary evidences. It was argued that AO had failed to carry out any independent verification & relied entirely on investigation wing reports without correlating them with Assessee’s records.
