INCOME TAX OFFICER, WARD-11(1),KOL, KOLKATA vs. KISH ENGINEERING PVT LTD, KOLKATA

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ITA 1566/KOL/2025Status: DisposedITAT Kolkata11 November 2025AY 2015-2016Bench: SHRI RAJESH KUMAR (Accountant Member), SHRI PRADIP KUMAR CHOUBEY (Judicial Member)7 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision on both issues. It found the partial disallowance of expenses reasonable due to lack of complete evidence and confirmed the deletion of the addition for trade advances, citing Supreme Court and co-ordinate bench decisions.

What were the facts?

The Assessing Officer disallowed expenses for lack of evidence and added unsecured loans as unexplained cash credit. The CIT(A) partly allowed the expenses and deleted the addition for unsecured loans, treating it as a trade advance.

What were the issues?

Whether expenses claimed without sufficient evidence can be disallowed, and whether trade advances adjusted against sales bills constitute unexplained cash credit under Section 68.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

For Appellant: Shri S.K. Tulsiyan &, Ms. Lata Goyal, AR
For Respondent: Shri Dipu Koley, DR
Hearing: 28.10.2025Pronounced: 11.11.2025

This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 29.05.2025 for the AY 2015-16.

2.

In all the grounds there are two effective issues raised by the Revenue.

3.

First, effective issue is against the order of ld. CIT (A) deleting the addition partly equal to 50% of the total disallowance of ₹25,76,473/- in respect of “other expenses and interest expenses” without any basis that too without any evidences from the assessee.

7.

The second effective issue raised by the Revenue is against the order of ld. CIT (A) deleting the addition of ₹3,60,00,000/- as made by the ld. AO in respect of unsecured loans of ₹3,60,00,000/- from Wesman Thermal Engineering Process Pvt. Ltd.

8.

Accordingly, the assessee was called upon to furnish he details/ evidences qua the said loan creditor. However, the assessee failed to furnish any reply except the copy of account and therefore, the assessee has failed to discharge the onus cast upon the assessee under section 68 of the Act. Accordingly, the ld. AO disallowed and added a sum of ₹3,90,00,000/- as unexplained cash credit u/s 68 of the Act in the books of the assessee comprising ₹3,60,00,000/- from

10.

After hearing the rival contentions and perusing the materials available on record, we note that the assessee has not raised any loan from Westman Thermal Engineering Process Pvt. ltd. as observed by the ld. AO and ld. CIT (A) has correctly observed that amount received was on account of trading advance received in the ordinary course of business which was adjusted against the sale bills. We note that the assessee has regularly been receiving advances from said customer which were being regularly adjusted against the sale bills as is apparent from the copies of ledger accounts available in the paper book from page no.108 to 122 in respect of A.Y. 2015-16 and from page no. 134 to 175 in respect of A.Y. 2016-17. The case of the assessee is squarely covered by the decision of Hon'ble Apex Court in “"Section 68, of the Income-tax Act, 1961-Cash credit (Trade advance) - In course of assessment, Assessing Officer made additions to assessee's income under section 68 in respect of trade advances - Commissioner (Appeals) and Tribunal deleted said addition finding that trade advances received by assessee were adjusted against sales made in subsequent years. High Court upheld order passed by Tribunal. Whether, on facts, SLP filed against decision of High Court was to be dismissed Held, yes [Para 2][In favour of assessee]."

11.

Similarly, the case of the assessee find support from the decision of co-ordinate Bench in case of Narendra Nath Paul Vs. ITO in wherein it has been held as under:-

“Reliance is also placed on the decision of the Hon'ble jurisdictional Tribunal in the case of Narendra Nath Paul vs. ITO (ITA No.2284/Kol/2014), wherein it was held as under: copy enclosed at pages 179-181 of the P/B. I have considered the rival submissions and also perused the relevant material available on record. It is observed that the advances in question were stated to be received by the assessee from his dealers and two of such dealers had also appeared before the Assessing Officer and confirmed of having given such advances to the assessee. Moreover, the said advances were adjusted against the sale subsequently made by the assessee to the concerned M.R. Dealers and such sale was duly accounted for by the assessee in his books of account regularly maintained. It appears that these vital facts, however, have been lost sight off by the authorities below and they have mainly decided the issue going by the aspect of preponderance of probabilities. No doubt the preponderance of probabilities can be taken into consideration for deciding the issue if itis found that what is apparent is not real. However, if the facts of the present case are considered in the light of the evidence brought on record by the assessee, it was a case of advances received by the assessee in cash from his dealers and the same having been adjusted against the sale subsequently made to the said dealers, there was no reason to apply the theory of preponderance of probabilities, especially when there was nothing brought on record to doubt the explanation offered by the assessee. There was also no inquiry made by the Assessing Officer with the concerned dealers to establish that what was stated by the assessee is not correct. On the other hand, at least two dealers were produced by the assessee for verification before the Assessing Officer and they admitted of having been given the cash advances to the assessee. Having regard to all these facts of this case, I am of the view that all the advances except the advance of Rs.1,20,000/-received by the assessee on 30.03.2009 having been

13.

On the additional evidences, we note that all the details were available before the ld. CIT (A) which were filed by the assessee in compliance to direction of ld. CIT (A). Therefore, the same cannot be considered as additional evidences. Therefore, issue raised by the Revenue is devoid of any merit and accordingly, dismissed.

14.

In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open court on 11.11.2025.

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