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Facts
The assessee's case was reopened under Section 147 based on information that it routed unaccounted funds totaling Rs. 4,75,87,377/- through shell entities. The AO made an addition of Rs. 15,00,000/- as unexplained cash credit under Section 68, received as trade advance from M/s Shree Shyam Sales & Trading Corporation, which was later refunded.
Held
The Tribunal affirmed the CIT(A)'s order, holding that the trade advance, which was received through banking channels for a business transaction and subsequently refunded due to cancellation of the order, could not be treated as unexplained cash credit under Section 68. The Tribunal noted that the assessee had discharged its onus by providing evidence and that Section 68 is not applicable to subsequently refunded trade advances.
Key Issues
Whether a trade advance, received and subsequently refunded through proper banking channels, can be treated as unexplained cash credit under Section 68 of the Income Tax Act.
Sections Cited
139, 143(1), 143(3), 147, 148, 142(1), 68, 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM:
All these appeals have been preferred by the revenue against the order passed by the Ld. CIT(A) u/s 147 dated 30.08.2024. In all the above appeals, issues are common, hence, taken up together for disposal by taking a lead case.
The assessee has filed cross-objection bearing no. 9 to 11/Kol/2025 and only supported the order passed by the Ld. CIT(A).
Brief facts of the case of the assessee as it appears from the order that the assessee filed its return of income u/s 139 of the Act on 28.09.2015 declaring total income at Rs.32,56,600/-. The return was processed u/s 143(1) of the Act accepting the returned income by the assessee. Thereafter scrutiny was completed u/s 143(3) of the Act on 31.03.2016 at Rs.32,56,600/-. In the instant case, a credible information was received by the AO on 19.06.2018 from the DDIT(Inv), Unit-4(2), Kolkata vide letter no. DDIT(Inv)/U-4(2)/KoI/Darsh coke/2018-19/1833 dated 19.06.2018 in respect of the assessee company. As per the information received, the assessee had received Rs. 2,30,87,377/- from M/s Balaji Trading Co, Rs. 2,30,00,000/- from M/s Patwari Marketing Company and Rs.15,00,000/- from M/s Shree Shyam Sales & Trading Corporation during the year under consideration and on the basis of the statement of the directors of these entities and the analysis of bank statement of M/s Balaji Trading Co , M/s Patwari Marketing Company and M/s Shree Shyam Sales & Trading Corporation it was alleged that the assessee M/s Sri Balaji Mineral Private Limited routed its unaccounted fund of 4,75,87,377/- (2,30,87,377 + 2,30,00,000 + 15,00,000) through a web of shell entities, which remains unexplained, during the year under consideration. Therefore, as per the above discussion and enquiries made by the AO there is reason to to 97/Kol/2025 C.O. Nos. 9 to 11/Kol/2025 Assessment Years: 2015-16, 2016-17 to 2017-18 Shri Balaji Minerals Pvt. Ltd. believe that income to the extent of Rs 4,75,87,377/- has escaped assessment for the year under consideration within the meaning of Sec 147 of the Act. On the basis of the information, the case of the assessee was reopened by the AO u/s 147 of the Act by issuing notice u/s 148 of the Act on 24.03.2021 and the same was duly served on assessee after obtaining necessary satisfaction of the PCIT(Central),Kolkata-2. In response to the said notice, the assessee furnished its return on 10.04.2021 declaring total income same as earlier i.e., Rs.32,56,600/-. Further, for the request of the assessee, the reasons for reopening the instant case were duly conveyed to the assessee by the AO vide letter dated 26 11.2021 The objection raised by the assessee has also been duly disposed of by the AO before passing this assessment order. Subsequently, a notice u/s 142(1) was issued and served on the assessee with necessary questionaries. In response to the same, the assessee had filed its submission and the same was perused by the AO. Later, the AO had passed the asst. order u/s 147 of the Act on 11.03.2022 by determining the total income of the assessee at Rs.47,56,600/-. On perusal of the assessment order, it is observed that the AO had made only addition viz. Unexplained cash credit u/s 68 of the Act of Rs.15,00,000/- received from one party namely M/s Shree Shyam Sales & Trading Corporation in the form of unexplained trade advance received.
Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been allowed.
Being aggrieved and dissatisfied the revenue has preferred an appeal before us.
The Ld. D.R challenges the impugned order thereby submitting that the Ld. CIT(A) erred in deleting the addition of Rs. 15 lacs as unexplained cash credit u/s 68 of the Act. The Ld. D.R further submits that on the facts and circumstances of the case the amount of Rs. 15 lacs as unexplained cash credit income by receiving credit from paper/ shell entities in guise of accommodation entries are in the nature of case related to accommodation entries falling within exceptional clause (h) of the para no. 3.1.
The Ld. A.R supports the impugned order thereby submitting that the appeal is not maintainable as it is below the monetary limit filed by the revenue and further to 97/Kol/2025 C.O. Nos. 9 to 11/Kol/2025 Assessment Years: 2015-16, 2016-17 to 2017-18 Shri Balaji Minerals Pvt. Ltd. submits that the Ld. CIT(A) has not only discussed the case of the assessee rather discussed judicial pronouncement so there is no infirmity in the impugned order.
We have perused the order of the Ld. CIT(A) and find that the assessee engaged in the business of trading in cola and coke, freight transport of road and railway. It is normally in the nature to receive advance from parties against their purchase order and to pay advance or procurement of goods as per agreed terms. It further appears to us that the assessee has received Rs. 15 lacs from Shri Shyam Sales and Trading corporation on 27.10.2014 as trade advance during FY 2014-15 for supply of hard coke and return the same on 10.05.2015 just after four months’ time. The details are given herein below:
We further find that the assessee company furnished copy of bank statement, copy of form of account, sales bills, purchase order of Shree Shyam Sales and Trading Corporation in support of the case of the assessee. We have gone through the order to 97/Kol/2025 C.O. Nos. 9 to 11/Kol/2025 Assessment Years: 2015-16, 2016-17 to 2017-18 Shri Balaji Minerals Pvt. Ltd. passed by the Ld. CIT(A) and find that the Ld. CIT(A) has elaborately discussed the case of the assessee and also discussed the document filed by the assessee and thereafter given his conclusion which is herein below:
2.1. I have gone through the assessment order as well as the submission of the assessee. On perusal of the submission of the assessee including ledger copies, relevant purchase orders (POs), relevant bank statements and other documents, it is observed that during the year under consideration, under consideration the assessee had received trade advance ofs.15,00,000/- from M/s Shree Shyam Sales &. Trading Corporation (SSSTC) on 27.10.2014 for supply of hard coke through proper banking channels. Since, the said orders were cancelled, the said advance was refunded back to M/s. SSSTC on 10.03.2015. Further, it is observed that assessee is regularly trading with M/s SSSTC and has also made sales during the year to said M/s SSSTC against which no adverse view has been taken by department. It is observed that the assessee in support of the said transaction, had furnished the necessary details and documents viz, the confirmations from the said entity i.e., M/s SSSTC along with documents discussed above. Hence, the assessee has discharged its onus to explain the authenticity of the transaction. It is also observed that the assessee had contended that the receipt of trade advance in normal course of business cannot be treated as cash credit as per section 68 of the Act. Further, it is a settled law that section 68 of the Act is not applicable on the trade advance received from the party which was subsequently refunded back. The AO has made addition of Rs. 15,00,000/- pertaining to M/s SSSTC u/s 68 merely relying on report of investigation wing that assessee is the beneficiary of the sum received as trade advance. It is relevant to mention that the assessee had received trade advance in normal course of business through proper banking channels and refunded the same through proper banking channels as the said order did not materialize. Hence, it cannot be said to be the beneficiary of the sum received by it during the year. It is also noticed that the AO had made said additions on the ground that there was no reply received from the end of M/s SSSTC against the notices u/s 133(6) of the Act. However, as per different judgements, it was pronounced that to make a third party to reply against notice u/s 133(6) of the Act, is beyond control of the assessee. Hence, making additions of trade advances paid which was subsequently refunded back by the assessee on the ground of non-response from the end of the third parties is not accepted.”
We further find that the Ld. CIT(A) has also discussed the several judicial pronouncements in its order which is need not be required to reiterate the same.
Going over the order passed by the Ld. CIT(A), we do not find any infirmity in the impugned order, accordingly, the order passed by the Ld. CIT(A) in all the above appeals are hereby affirmed. The appeals of the revenue are dismissed. Since, the appeals of the revenue have already been dismissed hence it is needless to adjudicate the cross-objection filed by the assessee as cross-objection filed by the assessee are in order to support the order of the CIT(A) and we have upheld the order of CIT(A). to 97/Kol/2025 C.O. Nos. 9 to 11/Kol/2025 Assessment Years: 2015-16, 2016-17 to 2017-18 Shri Balaji Minerals Pvt. Ltd. In the result, all the appeals of the revenue are dismissed and the cross-objections of the assessee are also dismissed being infructuous.
Order is pronounced in the open court on 2nd July, 2025
Sd/- Sd/- (Rajesh Kumar/राजेश कुमार) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 2nd July, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- ACIT, Central Circle-4(1), Kolkata 2. Respondent – Shri Balaji Minerals Pvt. Ltd., Aarjavv Building, 3rd Floor, Unit 3A, 54A, Sarat Bose Road, Kolkata – 700025 3. Ld. CIT(A)- 27, Kolkata 4. Ld. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)