India Kawasaki Motors Private Limited Vs DCIT (ITAT Pune)
Section 68 Inapplicable to Genuine Trade Payables; Pune ITAT Upholds Deletion of ₹1.50 Crore Addition
India Kawasaki Motors Pvt. Ltd., engaged in manufacturing motorcycles and spare parts, declared a business loss of ₹6.83 crore for AY 2021-22. The dispute involved two separate adjustments.
The AO added ₹1,50,14,517 under section 68 for differences in trade-payable balances relating to Kawasaki Heavy Industries Ltd. (₹1.33 crore) and UNO Minda Ltd. (₹17.06 lakh). The addition was based on differences in confirmations, non-response to section 133(6) notices and absence of stamped reconciliations.
The CIT(A) deleted the addition after finding that the liabilities arose from genuine purchases and that the assessee had furnished reconciliations explaining the differences, including timing differences. The AO had not disputed the purchases or established that they were fictitious.
The ITAT upheld the deletion, observing that the assessee had established the identity of the creditors and genuineness of the underlying purchase transactions. Mere differences in balances or non-response by third parties could not justify treating genuine trade payables as unexplained cash credits under section 68. The Revenue’s appeal was therefore dismissed.
Separately, CPC had reduced the assessee’s business loss by ₹1,80,08,945 under section 143(1)(a) due to a mismatch concerning a GST refund reported in the tax audit report. The assessee contended that the GST amount had never been claimed as an expense and that treating the refund as income resulted in double taxation.
