DCIT Vs Global Agro Corp (ITAT Delhi)
No Defects, No Additions – From Bogus Sales to 40A(2)(b): AO’s Suspicion vs Evidence — ITAT Finds Books Reliable, Deletes All Additions
In this Revenue appeal against Global Agro Corp, a rice exporter, Tribunal examined multiple additions made by AO in assessment u/s 143(3). Assessee had filed return declaring income of ₹66.28 lakh. AO made four major additions: ₹1.57 crore as bogus cash sales u/s 68, ₹4.81 crore as trading addition by estimating higher GP, ₹1.90 crore disallowance of commission u/s 40A(2)(b), & ₹32.30 lakh disallowance of Court-ordered settlement payment. CIT(A) deleted all four additions & Revenue carried the matter to Tribunal.
On the issue of cash sales treated as bogus, Tribunal noted that rice consignments sent to Gandhidham for export were partly damaged due to moisture. Assessee sorted sub-standard rice & sold it locally in cash near the Port to reduce loss. These sales were recorded in books, supported by bills, reflected in GST returns, & stock positions were not doubted. Insurance company also verified & settled the claim for the fully damaged portion. Tribunal agreed with CIT(A) that AO had not established any falsity in books & mere absence of full address of walk-in buyers cannot render the sales ingenuine. The cash was later transported to Delhi for deposit due to inability of local banks to accept SBN notes during demonetisation. Tribunal held that AO acted on suspicion rather than evidence & upheld deletion of ₹1.57 crore.
