OVERSEAS BEVERAGES PRIVATE LIMITED,GOA vs. ACIT CENTRAL CIRCLE 1, COIMBATORE

3.5 The amount of Rs.4.62 Crores as stated to be received from M/s Mahasakthi Mills Ltd. was assessed in substantive manner in the hands of that entity. Since the funds so advanced by them were utilized by the assessee company, the said amount was added into the hands of the assessee company also on protective basis. However, the protective addition has already been deleted by Ld. CIT(A) and the same is not the subject matter of dispute before us. 3.6 Aggrieved by the action of Ld. AO, the assessee preferred further appeal before first appellate authority. Appellate Proceedings 4. During appellate proceedings, the assessee submitted that balance outstanding against the three parties arose on account of sales made to them in earlier years. The sales made to them was already offered to tax in earlier years and therefore, taxing the same again would amount to double taxation which is impermissible. The assessee also assailed applicability of provisions of Sec.69A to the aforesaid receipts on the ground that these provisions could be invoked only in case the assessee was found to be the owner of money, bullion etc. which is not recorded in the books of accounts. This is the primary condition for invoking the provisions of Sec.69A. When cash was sourced out of recorded sales, these provisions could not be applied. The assessee submitted that no such findings have been rendered by Ld. AO. The assessee also stated that it had sufficient cash balance as on 14-11-2016 which was verified during the course of assessment proceedings. Another pertinent fact brought to the notice that bad debt recovery of Rs.1 Crores was already offered to tax by way of credit to Profit & Loss Account and therefore, the same could not be taxed again u/s 69A. However, Ld. CIT(A) held that the bad debts recovery was an attempt by the assessee to show its unaccounted money as ‘business income’. The assessee failed to establish the link between the deposits and bad debts recovery stated to be made by the assessee. Accordingly, the impugned addition was confirmed against which the assessee is in further appeal before us. Our findings and Adjudication 5. From the facts, it emerges that the assessee has made sales to the three entities in earlier years. The sales made to these entities were offered to tax in those years. Since the amount from the three entities was not forthcoming, the balance outstanding against these entities was written-off by the assessee during FY 2014-15. In this year, the assessee has made recovery from them. Upon perusal of Profit & Loss Account, it could be seen that the assessee has credited ‘bad debts recovered’ for Rs.1 Crores as income and offered the same to tax as ‘business income’. The action of the assessee is in accordance with law since any recovery of bad debts would be ‘business income’ for the assessee. It is undisputed fact that the assessee has already offered a sum of Rs.1 Crores as ‘business income’. Taxing the same again u/s 69A would amount to double taxation which is impermissible. The Ld. AR has also placed on record copy of cash book for whole of the year (Page Nos.12-13 of the paper book) as well as summary of sundry debtors as on 31-03-2014 (Page No.14). The ledger extracts of three entities have also been placed on record on Page Nos.15 to 63 of the paper book. Upon perusal of the same, it could be seen that the assessee has recovered cash from one of the debtors and credited the same in its cash book. The Ld. AR has submitted that field enquiries have happened after huge time gap and no adverse view could be taken against the same on the basis of outcome of the same. The same, in our considered onion, is a plausible explanation and therefore, it has to be accepted. Therefore, considering the facts of the case, the impugned addition of Rs.1 Crores as sustained in the impugned order is liable to be deleted. We order so. No other ground has been urged in the appeal.