The case of assessee was selected for scrutiny proceedings vide <\/em>notice issued under section 143(2) of the Act by \u2018AO\u2019 for assessment year 1998-1999. In assessment order passed by \u2018AO\u2019 one of the addition contested before the apex court, was pertaining to unexplained cash credits under section 68 of the Act of\u00a0\u00a0 Rs. 226,000 which pertained to purchase of marbles from unregistered dealers.\u00a0 This addition made in the assessment order passed by \u2018AO\u2019 was sustained successively and concurrently by CIT(A), ITAT\u00a0 and high court under section 68\u00a0\u00a0\u00a0 of the Act, where they confirmed the \u2018AO\u2019\u00a0 view that said creditors are bogus and\u00a0 are not genuine creditors. Although assessee raised a jurisdictional question that after books are rejected to estimate the profit, very same books cannot be relied\u00a0\u00a0\u00a0\u00a0\u00a0 to invoke section 68 of the Act qua stated purchase creditors, the same was rejected by High court. It viewed these credits were nothing but\u00a0 bogus entries and same are rightly added to the income of\u00a0 the\u00a0 assessee. In\u00a0 its\u00a0 appeal before the apex court assessee raised that jurisdictional contention again which is noted extensively in the order of apex court. However said jurisdictional contention on possible applicability of section 68 where books are rejected is not adjudicated\u00a0\u00a0\u00a0\u00a0\u00a0 in the order of apex court. Before apex court one interlocutory application was filed by assessee pointing to the CIT(A) order in penalty appeal proceedings under section 271(1)(c) of the Act vis-a-vis very same addition of alleged unexplained credits (which is contested on merits before apex court).In this order of CIT(A) deleting the penalty under section 271(1)(c) on very same additions under section 68 of the Act. The reason whichweighed with CIT(A) leading to deletion of<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n penalty under section 271(1)(c) was assessee produced affidavits of 13 unregistered dealers out of whom 12 were examined by the officer. In the examination in their statements no infirmity was found.. The dealers stood by the assertion made by \u00a0the assessee about the purchases on credit from them; and which explanation has been accepted by the CIT(A) in paragraphs 17 and 19 of the penalty appeal order dated 13.1.2011.<\/p>\n \u00a0<\/p>\n Can addition made under section 68 of the Act in quantum assessment proceedings be sustained in wake of subsequent CIT(A) order deleting the penalty under section 271(1)(c) of the Act, on very same additions, after holding that assessee has proved genuineness of its purchase creditors (on basis of affidavits filed and their positive statements recorded) and which acceptance of genuineness\u00a0\u00a0\u00a0 of said purchase creditors in said penalty proceedings under section 271(1)(c) of\u00a0 the Act has attained finality?<\/p>\n \u00a0<\/p>\n The court noted that \u201c\u2026 it has now come on record that the appellant\/assessee in penalty proceedings offered explanation and caused to produce affidavits and record statements of the concerned unregistered dealers and establish their credentials. That explanation has been accepted by the CIT(A) <\/em>vide order dated 13.1.2011.\u201d<\/em><\/p>\n \u00a0<\/em><\/p>\n Allowing assessee\u2019s appeal the court held that, the factual basis on\u00a0 which\u00a0 the Officer formed his opinion in the assessment order dated 30.11.2000 (for assessment year 1998-1999), in regard to addition of Rs.2,26,000, stands dispelled by the affidavits and statements of the concerned unregistered dealers in penalty proceedings. It was further noted that, this evidence fully supports the claim of\u00a0\u00a0 the appellant\/assessee. It observed that, \u201cThe appellate authority vide order dated 13.1.2011, had not only accepted the explanation offered by the appellant\/assessee but also recorded a clear finding of fact that there was no concealment of income\u00a0\u00a0\u00a0\u00a0 or furnishing of any inaccurate particulars of income by the appellant\/assessee for the assessment year 19981999. That now being the indisputable position, it must necessarily follow that the addition of amount of Rs.2,26,000 cannot be justified, much less, maintained.\u201d <\/em>Finally it was concluded by the court that, \u201c\u2026accordingly, this appeal ought to succeed on this count alone and it would be unnecessary for\u00a0\u00a0\u00a0\u00a0 us to dilate on other questions\/contentions urged by the parties as referred to in the earlier part of this judgment. 17. Accordingly, this appeal is allowed. The addition\u00a0\u00a0\u00a0 of Rs.2,26,000\/(Rupees two lakhs twenty-six thousand only) by the Officer under Section 68 of the 1961 Act, towards cash credit amount shown against the names\u00a0\u00a0\u00a0\u00a0 of concerned unregistered dealers for the assessment year 19981999, is hereby set aside.\u201d <\/em>(AY. 1998-99) (CA No. 6110 of 2009 dt. 24-04-2020)<\/p>\n Editorial <\/em><\/strong>: This decision is a peculiar decision where positive adjudication on facts in penalty proceedings has helped the assessee in deletion of the addition\u00a0\u00a0\u00a0\u00a0\u00a0 in quantum order.<\/p>\n \u201cWhat is true of the individual will be tomorrow true of the whole nation if individuals will but refuse to lose heart and hope.\u201d<\/em><\/p>\n – Mahatma Gandhi<\/p>\n","protected":false},"excerpt":{"rendered":" S.144: Best Judgment Assessment – Bogus purchases \u2013 Unregistered dealers \u2013Addition of alleged bogus purchase creditors after rejection of books of account – assessee brought on record, where CIT(A) in penalty appeal proceedings affidavits of 13 unregistered dealers out of whom 12 were examined by the Officer, accepted the explanation of assesssee that said creditors are genuine and accordingly deleted the penalty under section 271(1)(c) of the Act. That The dealers stood by the assertion made by the assessee about the purchases on credit from them-Held Factual basis on addition was made in quantum proceedings stands dispelled by the affidavits and statements of the concerned unregistered dealers in penalty proceedings- Addition cannot be justified, much less, sustained (Other contentions raised by assesse not adjudicated)- Addition is held to be not justified . [ S.68 , 271(1) (c ) ]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-13423","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3uv","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13423","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=13423"}],"version-history":[{"count":2,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13423\/revisions"}],"predecessor-version":[{"id":17592,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13423\/revisions\/17592"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=13423"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=13423"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=13423"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Issue<\/h3>\n
Views<\/h3>\n
Held<\/h3>\n