DCIT Vs B. Braun Medical India Pvt Ltd (ITAT Mumbai)
The case of DCIT vs. B. Braun Medical India Pvt. Ltd. before the Income Tax Appellate Tribunal (ITAT) Mumbai revolved around an addition of ₹2 crore under Section 68 of the Income Tax Act. The Revenue challenged the deletion of this addition by the Commissioner of Income Tax (Appeals) [CIT(A)], arguing that B. Braun provided contradictory explanations regarding the transaction. The Assessing Officer (AO) had treated the amount as an unexplained liability since no response was received from Santosh Trust, the alleged creditor, to a notice issued under Section 133(6). However, B. Braun maintained that the amount was an advance payment made in the financial year 2015-16 for goods that were never supplied, leading to a provision for doubtful advances in subsequent years. The company argued that this was an asset, not a liability, and provided bank statements as supporting evidence.
ITAT Mumbai upheld the CIT(A)’s ruling, emphasizing that Section 68 applies only to cash credits in the relevant year. Since the transaction pertained to the assessment year 2016-17 and did not involve a fresh credit in the year under review, the tribunal found the addition unjustified. The tribunal noted that the mistake in listing the amount under sundry creditors without a negative sign did not change its nature. Citing a precedent from the Bombay High Court, ITAT ruled that unexplained credit must be considered in the year it appears and cannot be taxed retrospectively. Accordingly, the Revenue’s appeal was dismissed.
