Sarwo Natraj Agro India Private Limited Vs ACIT (ITAT Hyderabad)
The case before the Income Tax Appellate Tribunal (ITAT), Hyderabad, involved an appeal against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2017–18. The assessee, engaged in manufacturing and trading edible oil, had filed its return declaring total income of ₹38,85,020. During investigation, a third-party statement indicated that a concern, M/s Rameshwaram Impex, was allegedly engaged in providing accommodation entries without genuine business activity. Based on this information, the Assessing Officer (AO) examined transactions between the assessee and the said concern, where the assessee had recorded sales and received ₹84,83,800 through banking channels.
The AO treated the amount as unexplained cash credit under Section 68, citing deficiencies such as lack of stamped invoices, absence of purchase orders and delivery challans, and reliance on the third-party statement. Additionally, the AO disallowed 10% of certain expenses amounting to ₹11,60,640 due to lack of supporting vouchers. These additions were upheld by the Commissioner (Appeals).
Before the Tribunal, the assessee submitted that the transactions were duly recorded as sales in its books and supported by invoices, waybills, ledger accounts, Form C, and stock records. It was also emphasized that payments were received through proper banking channels and that the AO had neither rejected the books of account nor identified any specific defects in the documents. The assessee further argued that the addition was based solely on a third-party statement without corroborative evidence, and no adverse material was produced from the proprietor of the concerned entity.
