DCIT (OSD) Vs Gulshan Polyols Limited (ITAT Delhi)
The Assessing Officer, relying mainly on the survey statement of an alleged entry operator, treated the assessee’s recorded sales of ₹48.29 lakh as unexplained cash credits under section 68 and purchases/sales return of ₹5.30 lakh as unexplained expenditure. He ignored extensive documentary evidence produced by the assessee, including sale invoices on a “billed to – shipped to” basis, transporter certificates, vehicle and GR details, stock register showing quantitative reduction on each sale, and full receipt of sale proceeds through banking channels.
The CIT(A) noted that the AO had neither supplied the third-party statement to the assessee nor granted cross-examination, and had also failed to verify independent parties such as the end consignee (Satwik Feeds) and the transporter (Limra Roadways) despite their complete details being available on the invoices. The stock records and bank statements clearly supported actual movement of goods and realization of sale proceeds without any cash component.
Upholding this reasoning, the Tribunal held that once sales are duly recorded in the books and supported by invoices, stock register and bank receipts, they cannot again be brought to tax as unexplained credits under section 68. Reliance solely on an untested third-party statement without corroborative enquiry violates principles of natural justice.
Regarding the alleged bogus purchases, the Tribunal accepted the assessee’s evidence that the amount represented sales return rather than accommodation purchases, and that the AO had not rebutted the documentary trail.
Accordingly, the deletion of additions of ₹48.29 lakh (u/s 68) and ₹5.30 lakh (u/s 69C) was upheld, the Revenue’s appeal was dismissed, and the assessee’s cross-objections were treated as infructuous.
FULL TEXT OF THE ORDER OF ITAT DELHI
