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Facts
The Revenue appealed against the CIT(A)'s order for AY 2022-23, concerning proceedings under section 143(3). The primary dispute involves the addition of Rs. 33.77 Crores for unexplained cash credits, which the Revenue claimed represented bogus sales to two parties.
Held
The Tribunal found that the AO failed to establish that the sales were not genuine, despite the assessee providing documentary evidence. The addition was considered arbitrary and potentially leading to double taxation. The Tribunal also noted that the assessee had complied with all tax obligations.
Key Issues
Whether the addition of Rs. 33.77 Crores on account of alleged bogus sales to two parties under section 68 is justified, and if the assessee had sufficiently proved the genuineness of the sales.
Sections Cited
143(3), 68, 115BBE, 206C
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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL
ORDER
PER SATBEER SINGH GODARA, JM
This Revenue’s appeal for assessment year 2022-23, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1073180440(1), dated 12.02.2025 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
Delay of 21 days in filing the Revenue’s instant appeal is condoned in larger interest of justice and in light of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC).
Coming to the Revenue’s sole substantive ground raised
herein, it emerges that its sole substantive grievance seeks to reverse the CIT(A)/NFAC’s lower appellate discussion holding the assessment findings adding the amount of Rs.33,77,88,969/- unexplained cash credits under section 68 r.w.s. 115BBE of the Act.
4. The Revenue vehemently argues that the Assessing Officer had rightly treated the assessee’s impugned sum as having failed to explain the genuineness of the impugned cash credits representing sales realized from the twin parties herein i.e. M/s. Popular Spirits LLP and M/s. Adharv Enterprises to the tune of Rs.25,74,66,388/- and Rs. 8,03,22,581/-; respectively. Learned departmental representative further takes us to para 8.1 at page 17 in the assessment discussion that the assessee had failed to file its evidence i.e. confirmation of account of the said parties, account statements, income tax returns etc. during scrutiny.
The assessee, on the other hand, draws strong support from the CIT(A)/NFAC’s impugned lower appellate discussion at pages 37 onwards that the assessee’s business activity of carrying out foods and beverages segment is in dispute and it had filed all the details of the foregoing twin entities as rightly considered in the lower appellate discussion, as follows:
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We have given our thoughtful consideration to the Revenue’s and the assessee’s respective vehement submissions. We wish to reiterate here that the assessee has prima facie proved its onus of having realized/received the corresponding sales involving M/s. Popular Spirits LLP and M/s. Adharv Enterprises in the lower appellate discussion. The fact also remains that possibility of some discrepancy in such a huge turnover and sales could not be altogether denied as well since the same had not been proved to the entire satisfaction of the Assessing Officer as well. Be that as it may, we are of the considered view in this backdrop that a further lumpsum addition of Rs.20 lakhs only in the assessee’s hands would cover all of its shortfalls with a rider that the same shall not be treated as a precedent. The learned CIT(A)/NFAC’s lower