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Citation Codes
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Case Number
Attorney(S)
  • Shri Rakesh Joshi Appellant by
  • Shri Girija Dayal, DR Respondent by
Judges
  • D. Karunakara Rao, A.M
  • Amit Shukla, J.M
Acts
  • provisions of section 80-IA(4) of the IT Act, 1961
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Cites
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Shri Rakesh Joshi Appellant by
  • Shri Girija Dayal, DR Respondent by
Judges
  • D. Karunakara Rao, A.M
  • Amit Shukla, J.M
Acts
  • provisions of section 80-IA(4) of the IT Act, 1961
See more information ...
Smart Summary

Structured Summary of the Tribunal Opinion

Factual and Procedural Background

The opinion concerns three appeals spanning two assessment years. The central tax-year disputes relate to the allowability of a deduction under section 80IA(4) of the Income Tax Act for an assessee who was a constituent of a joint venture (Supreme - MBL JV) and executed 60% of the contract. The assessee is engaged in developing, operating, maintaining and constructing infrastructure facilities. A search was conducted under section 132 and assessments were completed under section 143(3) read with section 153A, determining assessed income at Rs. 67.07 crores against returned income of Rs. 24.50 crores. One major addition disallowed by the Assessing Officer (AO) was the deduction under section 80IA(4).

The factual matrix: the assessee formed a joint venture named Supreme MBL JV (JV) with MBL Infrastructure Ltd. to bid for and undertake the Western Transport Corridor Tumkur–Haveri NH-4 Project (Package-3). The JV agreement (dated 26.08.2006) allocated 60% share to Supreme Infrastructure (SIIL / the assessee) and 40% to MBL. The contract with NHAI was entered into by the JV entity. The AO denied the section 80IA(4) deduction on the ground that the JV (not the assessee alone) signed the contract and that the assessee acted in the nature of a sub-contractor for the JV.

On appeal to the Commissioner (Appeals) [CIT(A)], the CIT(A) endorsed the AO's view and upheld denial of deduction. The matter then proceeded to the Tribunal, where the assessee relied on multiple authorities and submissions asserting entitlement to deduction because the assessee executed the major portion of the contract and “substance” should prevail over “form.”

Separately, in ITA No. 5447/M/2012 (AY 2009–2010), the Revenue challenged the deletion by the CIT(A) of an addition of Rs. 2,27,80,000 under section 68. The AO treated certain receipts from Achiever Trading Pvt. Ltd. as unexplained loans and, relying on a post-search inspector’s report, questioned the identity/genuineness of the creditor. The CIT(A) analyzed ledger extracts and found the amounts were repayments/adjustments of advances given earlier by the assessee to Achiever Trading Pvt. Ltd., and therefore directed deletion of the addition. The Revenue appealed to the Tribunal against that deletion.

Legal Issues Presented

  1. Whether a constituent of a joint venture (who executed the majority share of work and for practical purposes performed/implemented the contract awarded to the JV) can claim deduction under Section 80IA(4) of the Income Tax Act — i.e., whether “substance over form” permits the constituent to claim the deduction when the JV entity is the signatory but the constituent executed the work.
  2. Whether credits/receipts amounting to Rs. 2,27,80,000 appearing in the assessee's bank accounts from Achiever Trading Pvt. Ltd. are unexplained cash credits under section 68 (i.e., whether identity and genuineness of the creditor and the source of the amounts were not established), or whether they were explained by ledger entries showing these amounts as returns/adjustments of advances made earlier by the assessee.

Arguments of the Parties

Revenue / Assessing Officer's Arguments

  • On the 80IA(4) issue: AO held that the contract was entered into by the joint venture entity (Supreme - MBL JV) and not by the assessee as a standalone contracting party; the assessee acted as a sub-contractor to the JV and therefore was not entitled to claim deduction under section 80IA(4).
  • On the section 68 issue: AO considered receipts from Achiever Trading Pvt. Ltd. as loans and relied on an inspector’s report collected during post-search proceedings to conclude that Achiever Trading Pvt. Ltd. was not a genuine party; therefore the amounts were added back as unexplained credits under section 68 (total Rs. 2,27,80,000).
  • Before the Tribunal, the Departmental Representative (Ld DR) relied heavily on the AO’s order on the 80IA(4) issue and confirmed the AO’s position on identity/sources with respect to section 68.

Assessee's Arguments

  • On the 80IA(4) issue: The assessee contended that even though the JV entity signed the contract, the constituents actually executed the work — the assessee executed 60% of the contract — and thus is entitled to deduction under section 80IA(4). The assessee relied on several tribunal/court decisions supporting the proposition that where a constituent executes the contract awarded to a JV, the executing constituent may claim the deduction (principle of substance over form).
  • On the section 68 issue: The assessee asserted that the transactions with Achiever Trading Pvt. Ltd. were regular trading transactions and that the amounts treated by the AO were not loans but returns/adjustments of advances previously given by the assessee to Achiever Trading Pvt. Ltd. The assessee produced ledger extracts and bank evidence to show the advances and subsequent receipts, arguing that the source and genuineness were thus explained.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
ITO v. UAN Raju Construction (48 SOT 178) Proposition that a constituent of a JV is entitled to deduction when work awarded to the JV is actually executed by the constituents. The Tribunal examined and relied on this line of authority to support the view that the executing constituent may claim deduction under section 80IA(4) even if the JV entity was the contracting signatory.
Faxir Chand Gulati v. Uppal Agencies (P.) Ltd. [2008] 10 SCC 345 Interpretation and legal understanding of the nature of a joint venture. The CIT(A) extracted and relied on paras from this Supreme Court judgment in discussing the meaning of a joint venture; the Tribunal also noted the relevance of such interpretation when assessing whether substance or form governs entitlement.
Transstory (India) Ltd. v. ITO, 134 ITD 269 Authority cited by the assessee in support of entitlement to deduction for constituents executing JV contracts (supporting substance-over-form approach). Referred to by the assessee and considered among the authorities supporting the proposition that the executing constituent may be entitled to deduction.
ACUIT v. JSR Construction (P.) Ltd., 898 Bang/2009 Tribunal authority relied upon by assessee supporting entitlement where constituents execute a JV contract. Placed before the Tribunal by the assessee as supporting precedents; used in the Tribunal's broader assessment of authorities favoring substance-over-form.
Laxmi Civil Engg. P. Ltd. v. Addl. CIT (ITA Nos. 766.M/09; 254.PN/08; 431.PN/07 & 435.PN/07) Tribunal authority cited in support of assessee's contention (related to JV/section 80IA analysis). One of the decisions relied on by the assessee and considered by the Tribunal in weighing consistent lines of authority.
B.T. Patil and Sons Belgaum Constructions (P.) Ltd. v. ACIT, ITA No. 1408.PN/2003 (Pune Bench) Holds that substance prevails over form: where a joint venture effectively becomes the assessee's venture because the other venturer withdraws or transfers the work, the executing party is entitled to deduction under section 80IA(4). The Tribunal cited this decision as an example where the assessee remained eligible for deduction despite deviations from the original JV agreement, supporting the Tribunal's conclusion to focus on substance.
Ayush Ajay Constructions Ltd. (ITAT, Indore Bench) (mentioned) Used in support of the proposition that substance should be looked into for entitlement to deduction under section 80IA(4). Referenced within the B.T. Patil discussion as reinforcing the principle of substance over form; used to show consistent tribunal practice.
ABG Heavy Industries Ltd. (jurisdictional High Court) (mentioned) High Court authority referenced in the B.T. Patil decision context; treated as laying down a view relevant to JV/substance analysis. Mentioned as part of the chain of authority that influenced the tribunal view cited in B.T. Patil; the Tribunal noted these authorities in its consideration.
PNC Construction Co. Ltd. v. Dy. CIT, ITA No. 145.Agr/2012 (ITAT, Agra Bench) Decision wherein the Tribunal set aside the CIT(A)'s withdrawal of section 80IA(4) claim and restored the AO's order granting deduction to the assessee. The Tribunal relied on this decision (para 30 reproduced) to support the conclusion that denial by CIT(A) was incorrect and that deduction should be granted where facts show entitlement.

Court's Reasoning and Analysis

The Tribunal addressed the two main clusters of issues separately: (A) entitlement to deduction under section 80IA(4) where the JV contracted with NHAI but the assessee executed the bulk of the work; and (B) whether receipts from Achiever Trading Pvt. Ltd. were unexplained credits under section 68.

A. Section 80IA(4) Deduction — Reasoning

  1. The Tribunal reviewed the JV agreement and the factual finding that the assessee (SIIL) executed 60% of the contract awarded to the JV (Supreme - MBL JV).
  2. It considered the AO’s conclusion that the assessee was merely a sub-contractor because the JV entity signed the agreement with NHAI, and it noted the CIT(A)'s agreement with the AO on that point.
  3. The Tribunal examined authorities brought by the assessee (including Tribunal decisions and the Supreme Court's interpretation of the nature of a joint venture in Faxir Chand Gulati) and focused on the legal proposition consistently advanced: where a constituent of a JV executes the contract, the substantive executor of the contract is relevant for claiming deduction — i.e., substance prevails over form.
  4. The Tribunal highlighted decisions (specifically B.T. Patil and PNC Construction Co. Ltd., among others) that held an executing constituent can be entitled to deduction even if the formal contracting party was the JV, particularly where the executing constituent effectively carried out the venture or where the JV partner had transferred or was unable to perform.
  5. Applying those principles to the factual matrix — the assessee executed the contract, NHAI had no objection to the assessee executing the contract, and the substance of the arrangement showed the assessee as the main executor — the Tribunal concluded that the CIT(A)'s view was not reasonable and reversed it.
  6. Resultantly, the Tribunal allowed both of the assessee's appeals concerning the section 80IA(4) denial, relying on the principle that substance of performance and execution of the contract determines entitlement to the deduction in the circumstances presented.

B. Section 68 Addition (Rs. 2,27,80,000) — Reasoning

  1. The Tribunal examined the AO’s view that receipts were loans from Achiever Trading Pvt. Ltd. and that Achiever was not a genuine party, an assessment bolstered by an inspector's report obtained post-search.
  2. The CIT(A) had analyzed ledger extracts and a tabulation submitted by the assessee showing advance payments made by the assessee to Achiever Trading Pvt. Ltd. on specific dates and subsequent receipts indicating repayment/adjustment of those advances.
  3. The Tribunal reviewed the ledger synopsis reproduced in paras 11–13 of the impugned order and accepted the CIT(A)’s factual conclusion that the amounts received by the assessee were traceable to the advances earlier made by the assessee to Achiever Trading Pvt. Ltd.; payments were evidenced by cheques and reflected in the supplier’s ledger.
  4. Given that the source of the credits was explained by the ledger and bank transactions and that the AO had accepted parts of transactions as genuine, the Tribunal found no basis to impugn the identity or genuineness of Achiever Trading Pvt. Ltd. merely on the basis of the inspector’s report.
  5. Consequently, the Tribunal concluded that the AO had not properly appreciated the documentary evidence and that the conditions of section 68 were satisfied (identity and source explained). It upheld the CIT(A)’s deletion of the addition and dismissed the Revenue's appeal.

Holding and Implications

Holding: For the section 80IA(4) issue: The Tribunal reversed the CIT(A)'s decision and allowed the assessee's appeals — concluding that the assessee (a constituent who executed 60% of the contract) is entitled to deduction under section 80IA(4) in the circumstances presented (substance of execution prevailed over formal signing by the JV entity).

For the section 68 issue (ITA No. 5447/M/2012): The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s deletion of the addition of Rs. 2,27,80,000, finding that the receipts from Achiever Trading Pvt. Ltd. were explained by prior advances made by the assessee and that the identity and genuineness of the counterparty were not disproved.

Implications:

  • Direct effect: The assessee's appeals on the section 80IA(4) denial were allowed, entitling the assessee to claim the deduction in respect of income earned from the contract executed by it on behalf of the JV. The Revenue's challenge to the section 68 deletion was dismissed, so the addition of Rs. 2,27,80,000 stands deleted and is not chargeable as unexplained credit.
  • Legal principle applied: The Tribunal applied the principle that “substance” can prevail over “form” in determining entitlement to deductions under section 80IA(4) where the constituent executed the contract, and it relied on consistent tribunal and other judicial decisions to reach that conclusion.
  • Broader precedent: The opinion applies existing lines of authority but does not purport to create a novel legal principle beyond those authorities; the decision is grounded in the specific facts and cited authorities, and no wider new precedent was announced by the Tribunal in the text of the opinion.
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    Supreme Infrastructure India Ltd. v. Cit

    D. Karunakara Rao, A.M:— There are 3 appeals under consideration involving two assessment years. Out of three appeals, there are cross appeals for the AY 2009-2010. In assessee's appeals, grounds are identical for both the years and the issue relates to allowability of deduction u/s. 80IA(4) of the Act to the assessee, who is a constituent of joint venture only for the purpose of getting a contract and when the assessee and when the assessee executed the contract to the extent of 60%.

    2. Briefly stated relevant facts of the case are that the assessee is engaged in the business of developing, operating, maintaining & constructing infrastructure facilities. There was a search action on the assessee u/s. 132 of the Act. Assessment was completed u/s. 143(3) r.w.s 153A of the Act and the assessed income was determined at Rs. 67.07 Crs. against the return income of Rs. 24.50 Crs. Among various additions, denial of deduction u/s. 80IA is one conclusion, which is the subject matter of dispute before us. Assessee formed a joint venture named Supreme MBL JV along with MBL infrastructure limited. The joint venture agreement dated 26.8.2006 The joint venture was entered into for the purpose of preparing and submitting the tender for the work of Western Transport Corridor Tumkur - Haveri NH-4 Project Package-3, Rehabillitation & Upgrading of Chitradurga Section of NH-4 (Km. 189 - Km. 207). An agreement entered with NHAI in this regard after obtaining the contract by the joint venture (JV). As per the agreement of the JV, the partners show participating share in the contract as given in Article-4 of the JV agreement (page 1 of the paper book) is the pre-determined. Assessee's share is 60% (Supreme Infrastructure (India) Ltd.) and 40% is to be executed by MBL Infrastructure Ltd., other constituents of the JV, who is not assessed to tax in Bombay. AO denied the benefit of deduction u/s. 80IB(4) on the reasoning that the signatory with the NHAI is the joint venture company and not the assessee, the constituent of the JV. On examining the agreement entered into the compliance of the agreement mentioned in 80IA(4)(1)(b), dated 3.3.2007 drawn between the NHAI, joint venture company and Supreme - MBL JV. AO concluded by mentioning that the assessee acted as a sub-contractor on behalf of Supreme - MBL JV. The relevant para from the assessment order reads as under:

    “Thus, SIIL has acted as sub-contractor on behalf of Supreme - MBL JV. Hence, the assessee is not entitled to claim of deduction as per the provisions of section 80-IA(4) of the IT Act, 1961 as the assessee has acted in the nature of sub-contractor.”

    3. During the proceedings before the first appellate proceedings, assessee made various submissions and relied on the decision of the Tribunal in the case of ITO v. UAN Raju Construction (48 SOT 178) for the proposition that the assessee, being a constituent of JV, is entitled to deduction when the work was actually awarded by the JV but it was also executed by the constituents of the JV. Para 8.1 to 9.2 of the impugned order are relevant in this regard. The CIT(A) has extracted the paras from the said order of the Tribunal which discussed elaborately the meaning of the Joint Venture relying on the judgment of the Hon'ble Supreme Court in the case of Faxir Chand Gulati v. Uppal Agencies (P.) Ltd. [2008] 10 SCC 345. It was mentioned that as per the interpretation of the joint venture, arrangement is unique and understanding of the constituents in JV is important to decide the issue. He accordingly summed up by stating that the assessee is the main executor of the product. Assessee claimed the deduction in respect of the income earned by him out of the contract entered into by the JV with NHAI. In these circumstances, assessee is found entitled to deduction u/s. 80IA(4) of the Act. Para 9.5 of the CIT(A)'s order is relevant for conclusions of the CIT(A) which reads as under:

    “9.5 I have considered the issue. I have also gone through the assessment order and the appellant's submissions. In this case, the agreement with the NHAI was entered by the Joint Venture entity namely Supreme MBL JV which is a separate taxable entity. The appellant and the joint venture entity are two separate taxable entities. The taxable entity which entered into agreement with the NHAI is alone entitled for deduction u/s. 80IA(4) of the IT Act. I fully agree with the views of the AO. In view of this, AO's order is upheld.”

    4. During the proceedings before us, Ld DR heavily relied on the order of the AO on the issue of claim of deduction u/s. 80IA(4) of the Act.

    5. On the other hand, Ld Counsel for the assessee filed copies of the decisions cited and the same read as under:

    1. Transstory (India) Ltd. v. ITO 134 ITD 269 2. ACUIT v. JSR Construction (P.) Ltd. 898.Bang/2009 3. ITO v. UAN Raju Construction 48 SOT 178 4. Laxmi Civil Engg. P. Ltd. v. Addl. CIT ITA Nos. 766.M/09; 254.PN/08; 431.PN/07 & 435.PN/07

    6. Ld Counsel for the assessee also brought to our notice the decision of the Pune Bench of the Tribunal in the case of B.T Patil and Sons Belgaum Constructions (P.) Ltd. v. ACIT vide ITA No. 1408.PN/2003, wherein the assessee is held eligible for deduction u/s. 80IA(4) of the Act in respect of the profits relatable to the share allotted to the other joint venture partner (Swapnali Constructions). The said partner transferred the work to the assessee for his inability to undertake the works.

    Para 14 of the said order of the Tribunal is relevant in this regard which reads as under:

    “14. In this background, the assessee could certainly claim the deductions under the provision of Section 801A. One has to see the substance and not the Form Essentially, though it was a Joint Venture, it was converted into assessee's venture. The Other Venturer withdrew and the entire work was executed by the assessee though in the name of Joint Venture. The Joint Venture is nothing but the venture of the assessee company and the other person not being a party after withdrawing the question of Joint Venture does not arise. The Venture was fully carried out by the assessee and it was entirely executed by the assessee company. Taking the substance of the transaction, the assessee are entitled to all the profits in respect of the contract executed by them, hence the assessee would certainly be entitled to deduction under the provisions of 80IA as they have fulfilled all the other conditions. This view gets strength from decision in the case of ITAT, Indore Bench, in case of Ayush Ajay Constructions Ltd. (supra). Thus, while giving effect to the opinion of Third Member uls. 255(4) of the Act, we take view in conformity with order of jurisdictional High Court in case of ABG Heavy Industries Ltd. (supra) available at this time though contrary to the opinion expressed by the Third Member. So in view of above discussion, following the ratio of jurisdictional High Court in case of ABG Heavy Industries Ltd. (supra), the Assessing Officer is directed to allow deduction u/s. 801A(4) of the Act to the assessee with regard to the projects in question for both the years. The matter is disposed off accordingly.”

    7. In the above case, the assessee is found eligible even after considering the deviations from the original agreement. Here the “substance” is found more important than the “form”. The contents of the agreement is not important but the joint venture partner, who executed the work in reality is held relatable for deduction.

    8. Assessee also relied on another decision of the ITAT, Agra Bench in the case of PNC Construction Co. Ltd. v. Dy. CIT vide ITA No. 145.Agr/2012 (AY: 2005-2006 dated 15.2.2013). Para 30 of the said order of the Tribunal is relevant in this regard which reads as under:

    “30. In the light of the above discussions, we find that the CIT(A) has wrongly withdrawn the claim of the assessee under section 80IA(4) of the Act. Therefore, we set aside the order of the CIT(A) ad restore that of the AO and grant deduction u/s. 80IA(4) as claimed by the assessee. This ground of appeal of the assessee is allowed.”

    9. From the above, it is evident that the deduction u/s. 80IB(4) is available either to the JV, who is the actual signatory to the agreement or to the constituents of the JV without having separate agreement and thus, the final executor of the contract is relevant for availing benefit u/s. 80IB(4) of the Act. The implied principle in matters of granting deduction under these provisions revolves around the concept i.e, “substance” is more important than the “form” and thus, failure to draw a seprate agreement with NHAI does not disqualify the assessee from claiming the deduction. This view is supported by the decisions cited above. This is an undisputed fact that the SIIL executed the contract on behalf of Supreme - MBL JV. As such, the NHAI does not have objections against the assessee executing the contract. Considering these conclusions, we are of the opinion that the decision taken by the CIT(A) is not reasonable and therefore, the same is reversed. In the result, both the appeals of the assessee are allowed.

    ITA NO: 5447.M/2012 (AY 2009-2010) (By Revenue)

    10. This appeal filed by the Revenue on 30.8.2012 is against the order of the CIT(A)-39, Mumbai dated 22.6.2012 for the assessment year 2009-2010.

    11. The only issue agitated by the Revenue in this appeal relates to the deletion of addition of Rs. 2,27,80,000/- u/s. 68 of the IT Act, 1961. Relevant facts on this issue are that the assessee has running account with Achiever Trading Pvt. Ltd. and had trading transactions during the year. In addition to the same, AO noticed that the assessee's books of account shows the transfer of certain amounts on 6.6.2008, 31.10.2008 and 15.12.2008 The bank account of the assessee reflects the same. AO is of the mistaken opinion that the said accounts constitute loans received by the assessee from Achiever Trading Pvt. Ltd. AO came to the conclusion that Achiever Trading Pvt. Ltd. is not a genuine party and for this he relied on the report of the Inspector's report dated 19.2.2010 collected during the post search proceedings. Mentioning that the assessee failed to prove the identity as well as the genuineness of the creditor, AO invoked the provisions of section 68 and made the addition of Rs. 2,27,80,000/-. Matter travelled to the first appellate authority.

    12. During the proceedings before the first appellate authority, assessee demonstrated the genuineness of Achiever Trading Pvt. Ltd. and mentioned that it is a regular business transaction with the Achiever Trading Pvt. Ltd., in matters of purchases. He also substantiated the fact that the amounts received are not the loans but these are the returns of the unutilized trade advances returned by the Achiever Trading Pvt. Ltd. In that case, the advances given by the assessee to Achiever Trading Pvt. Ltd. is the source for the said amount of Rs. 2,27,80,000/-. CIT(A) discussed the same in para 11 and 12 of the impugned order. In fact, he has analyzed the ledger extracts of Achiever Trading Pvt. Ltd. for the relevant period and satisfied himself that the advances were actually given by the assessee which is the source of the amount appearing in the bank account of the assessee, SIAL.

    13. During the proceedings before us, Ld DR confirming that the identity of the achiever, the sources for the deposits in the bank accounts of the assessee and other conditions of provisions of section 68 are explained.

    14. On the other hand, Ld Counsel for the assessee heavily relied on the contents of para 11 to 13 of the impugned order.

    15. We have heard both the parties and perused the orders of the Revenue Authorities in general and para 11 to 13 of the CIT(A)'s order in particular. On perusal of the said paras 11 to 13 of the CIT(A)'s order, we find para 12 and 13 are relevant here which read as under:

    “12. The appellant submitted that from the above Ledger extract it is clear that on 06/06/2008 appellant had given advance of Rs. 1,00,00,000/- against which he had been repaid Rs. 57,80,000/- and balance adjusted against purchases. The appellant stated that similarly against advance payment on 26/9/08 of Rs. 95,00,000/- & on 16/10/2008 of Rs. 70,00,000/- it had received back Rs. 70,00,000 on 31/10/2008 Rs. 1,00,00,000/- on 15/12/2008. Therefore, the appellant submitted that at no point of time it had received any loan from the said party. The bank transaction was summarized by the appellant as under:

    Date Particular Payment (Dr.) Receipt (Cr.) Balance Dr./(cr) 06/06/2008 Payment 1,00,00,000 0 1,00,00,000 20/06/2008 Receipt 57,80,000 42,20,000 26/9/2008 Payment 95,00,000 1,37,20,000 16/10/2008 Payment 70,00,000 2,07,20,000 31/10/2008 Receipt 70,00,000 1,37,20,000 15/12/2008 Receipt 1,00,00,000 37,20,000

    12.1 The appellant submitted that from the above chart it was very clear that at no point of time the appellant had taken any loan and whatever amount received from the party was against advance given. The appellant stated the contention of the A.O that all the purchases from the party was treated as bogus was also not correct. The appellant submitted that AO has treated purchases only of Rs. 2,60,79,598.80 as bogus as against total purchases of Rs. 4,48,46,960.80. This was because wherever the AO did not find supporting document against the purchases only to that extent it was treated as bogus and not the whole amount. Therefore, the appellant stated that it is not the case that all the transaction with the appellant was treated as bogus and the action of the A.O cannot be upheld. The appellant stated that when the A.O has accepted part of the transaction as genuine transaction, it means existence & genuinity of the party cannot be denied. Therefore the appellant requested to delete the addition made u/s. 68 of the I.T Act.

    13.1 have considered the issue. I have gone through the submissions of the appellant. It is seen that the appellant has issued cheques to Achievers Trading P. Ltd. and these amounts were available as deposits with Achievers Trading P. Ltd. Subsequently the appellant has received the monies through account payee cheques. So the source for the money received from Achievers Trading P. Ltd. is the money advanced by the appellant to Achievers Trading P. Ltd. So the sources for these credits are explained and hence these credits cannot be assessed u/s. 68 of the IT Act. The A.O is directed to delete the addition.”

    16. Considering the above, it is evident that the AO has not properly appreciated the facts relevant to the transaction. Achiever Trading Pvt. Ltd. is the supplier to the assessee and they have commercial transactions. As part of the assessee, assessee gives advances to the said supplier of material. The amounts appearing in the bank accounts of the assessee as per the Achiever Trading Pvt. Ltd. as a source in the said advances given by the assessee, the same is not reviews by the Revenue. In these circumstances, we are of the opinion that it is not proper to doubt the identity and genuineness of the transactions. Therefore, we find no infirmity from the findings given by the CIT(A) in para 12 and 13 of his order and the same does not call any interference. Accordingly, the ground raised by the Revenue is dismissed.

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

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    Comments

    Supreme Infrastructure India Ltd. v. Cit
    (Apr 9, 2014)