Arusuvai Food Processors Pvt. Ltd. Vs ITO (ITAT Chennai)
No Fresh Credit, No 68- No 68 Addition on Old Balances- Audited Brought-Forward Liabilities Cannot Be Taxed Again u/s 68
The Assessee, engaged in trading of pulses & food grains, appealed against additions u/s 68 & penalty u/s 271(1)(c).
AY 2015-16 & 2016-17 – Additions u/s 68:
AO noticed huge trade payables shown in name of Director, Shri V. Elangovan (₹3.62 Cr & ₹2.37 Cr). Though Elangovan confirmed balances, AO doubted his creditworthiness & treated liabilities as unexplained cash credits u/s 68. CIT(A) upheld the additions.
Before Tribunal, Assessee argued that these were brought-forward trade payables, duly reflected in audited accounts of earlier years (₹5.82 Cr in FY 2013-14, reduced to ₹3.62 Cr in FY 2014-15 & ₹2.37 Cr in FY 2015-16). Since no fresh credit was introduced during relevant years, Sec. 68 had no application. Tribunal agreed, holding that only fresh unexplained credits can be taxed u/s 68. As liabilities were carried forward & partly settled, addition was unsustainable.
AY 2016-17 – Other Additions:
AO also added ₹2.12 Cr payable to M/s Vitan Agro Industries Ltd. & receivables of ₹20.84 lakh (K.C. Food Grains Marketing) & ₹2.17 Cr (Universal Enterprises). Tribunal, after examining purchase bills, VAT/GST filings & audited statements, held these were genuine business transactions. Since they represented trade payables/receivables in ordinary course, Section 68 did not apply. All additions deleted.
