ITO, WARD-22(3), NEW DELHI vs. SATCAB SUBSCRIBER SERVICES P.LTD, NEW DELHI

The only effective issue to be decided in this appeal is as to whether the sales disclosed by the assessee in the sum of Rs. 93,34,85,432/- could be considered as a separate addition u/s 68 of the Act treating the same as unexplained cash credit in the in facts and circumstances of the instant case.

We have heard the rival submissions and perused the material available on record. The assessee is engaged in the business of marketing and distribution of e-recharge services. It purchases online e-recharge vouchers from DTH operators and sells it to various distributors/retailers/online aggregators. The return for AY 2018-19 was filed by the assessee company declaring total income at Rs. 6,67,457/-. The assessee has shown total sales of Rs. 521,49,00,678/- and purchase of Rs. 5,31,19,37,769/-. The party wise details of purchase and sales together with the sample bills of each party above Rs. 10 lacs were called for verification by the ld AO during the course of scrutiny assessment proceedings. The assessee furnished the same vide letter dated 21.12.2020. In order to verify the veracity of the assessee’s claim, notice u/s 133(6) of the Act stood issued to 2 parties from whom purchases were made and 30 parties to whom sales were made seeking certain details from the suppliers and customers. Out of 30 parties to whom notice u/s 133(6) of the Act were issued, 17 parties to whom the total sales made to the tune of Rs. 103,74,91,639/- did not respond. Accordingly, the ld AO doubted the genuineness of the sales made to these 17 parties. Further, the ld AO noted that 1 party namely Oxigen Services India Pvt. Ltd had denied the sale transaction with the assessee. Accordingly, a show cause notice stood issued to the assessee as to why the transactions with 17 parties and Oxigen Services India Pvt. Ltd should not be added to the total income of the assessee. The assessee replied that all the sales made are genuine and legitimate sales made through regular banking channels. The assessee furnished all the documents relating to KYC and had proved the creditworthiness of the customers. It was also submitted that the assessee had duly disclosed the transaction with these parties as its sales and offered the same to tax and hence there is no question of making separate addition which would result in double taxation. The assessee on its part furnished all the KYC information related to customers in the form of sale invoices raised to the customers, ledger account of the customers as appearing in its books, bank statement duly highlighting the receipts from the concerned customers, financial statement of customers which are listed companies and copy of GST returns filed by the assessee which support the billings made to the customers before the ld AO. The assessee also submitted the sale confirmation from the customers before the ld AO. With regard to the transaction with Oxigen Services India Pvt. Ltd, the assessee stated that it had made sale of Rs. 5,28,06,389/- to this party and furnished the details of the KYC information, copy of GST return and ledger account of Oxigen Services Pvt. Ltd to prove the genuineness of sales made thereon. Since, the said party had denied having any transaction with the assessee in response to the notice issued u/s 133(6) of the Act, the ld AO proceeded to treat the sales made to such party as ingenuine and added the same as unexplained cash credit u/s 68 of the Act. With regard to 17 parties to whom total sales of Rs. 103,74,91,639/-, the ld AO observed that assessee had merely furnished confirmation from the parties and had not furnished their bank statement and returns of income to prove the genuineness of the sales. Out of 17 parties, 5 parties responded to the second notice issued u/s 133(6) of the Act and furnished the requisite details. Accordingly, the ld AO considered the sales made to those 5 parties as genuine and added the differential sales of Rs. 88,06,79,043/- made in respect of 12 parties as unexplained cash credit u/s 68 of the Act.