DCIT Vs Bharat Varshney (ITAT Agra)
ITAT Agra Deletes Rs.6.77 Cr Addition – AO Ignored Documentary Evidence- GST, VAT & Loan Entries Explained- Bank Credits Reconciled by Scrap Trader
ITAT Agra dismissed Revenue’s appeal & upheld CIT(A)’s order deleting addition of Rs.6,77,45,526/- made u/s 68. Tribunal found that assessee had successfully reconciled bank credits with books of account, & AO’s action of treating difference as unexplained credits was unjustified
Assessee, proprietor of M/s G.M.C. Enterprises, engaged in scrap trading, declared income of Rs.31.42 lakh. AO noted that bank credits during the year were Rs.35.23 crore (after sweep entries), while sales as per books were Rs.26.96 crore. After adjustments, AO proposed to treat Rs.6.77 crore as unexplained & added it u/s 68 r.w.s. 115BBE.
Before CIT(A), assessee furnished detailed reconciliation showing that the excess credits were on account of GST on sales (Rs.4.85 crore), VAT refund, internal bank transfers, refund from creditors, sweep bank interest, short-term loan of Rs.1.61 crore, TDS contra entries & returned cheques. Supporting ledgers, GST & VAT details, and bank statements were also filed. CIT(A), after detailed examination, found the reconciliation tallying with bank records & deleted the addition.
Revenue argued that CIT(A) ignored audit report where the loan from “Gvan Metal Co.” was not mentioned, & that sundry debtors treatment was not properly examined. ITAT, however, upheld CIT(A)’s findings, holding that omission in audit report cannot override cogent documentary evidence & that AO had failed to exercise due diligence in examining reconciliation. Accordingly, ITAT dismissed Revenue’s appeal & confirmed deletion of Rs.6.77 crore addition
