SPECTRA MOTORS LIMITED,MUMBAI V. ACIT CIRCLE 13(2)(1), MUMBAI

ITA 2/MUM/2024

AI Insights

The case involves Spectra Motors Limited, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, confirming the addition of Rs.15,01,57,610 to the assessee's income for the Assessment Year 2017-18. The addition was initially made by the AO under section 68 of the Income Tax Act, treating the proceeds from the sale of old cars as unexplained cash credits. The Tribunal examined the details provided by the assessee, including the exchange scheme of old cars for new ones, and found that the sales were properly documented and the identities of the sellers were verifiable through RTO registrations. The Tribunal concluded that the AO's addition was unjustified as the sales were accepted and only the lack of PAN details was questioned.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472747 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHOR DHULE; DR
• Assessee Lawyers: HARIDAS BHAT
• Keywords: Unexplained cash credit
• Section: 68; 20

Judgement Text

" | आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 2/Mum/2024 Assessment Year: 2017-18 Spectra Motors Limited 424, Shivam Chambers S.V. Road, Goregaon (West) Mumbai - 400062 [PAN: AAACS6825N] Vs ACIT, Circle – 13(2)(1), Mumbai अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Haridas Bhat, C.A. Revenue by : Shri Kishor Dhule, CIT D/R सुनवाई की तारीख/Date of Hearing : 25/02/2025 घोषणा की तारीख /Date of Pronouncement: 28/02/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 03/11/2023 by NFAC, Delhi [hereinafter ‘the ld. CIT(A)’], pertaining to AY 2017-18. 2. The solitary grievance of the assessee is that the ld. CIT(A) erred in confirming the addition of Rs.15,01,57,610/- on account of sale of old cars and also treating the same as unexplained cash credit u/s 68 of the Act. 3. Having heard the rival submissions, we have carefully perused the orders of the authorities below. Briefly stated, the facts of the case are that the assessee is a partner in M/s. Monarch Plastics and is also engaged in the purchase and sales of new as well as old cars. While scrutinising the return of income, the AO noticed that the assessee has cash of Rs. 3,53,23,000/- in SBN notes which were deposited in the bank I.T.A. No. 2/Mum/2024 2 account of the assessee. The assessee was asked to furnish details of total sales, cash sales for last two years. The assessee furnished requisite details which are exhibited at pages 17 to 20 of the assessment order. The assessee also furnished the names of the customers to whom old cars were sold. The assessee explained that it has closed down its business in FY 2017-18 for which no details were furnished. On perusal of the details, the AO sought clarification from the assessee with regard to the true value cars relating to sale of old cars. The assessee was asked to furnish the names of those customers against whom no PAN, address, details are made available and was further showcaused why the sales should not be added to its income. In its reply, the assessee stated that all the vehicles sold by it were purchases under the exchange scheme and the payment of the same were effected by giving credit to the customers in the sale prices of the new vehicles. It was explained that the vehicles were physically received by it along with the ownership documents and while selling the same, ownership documents have been handed over to the buyers along with the vehicles and, therefore, there is change of hands and physical movement of goods. 3.1. The contention of the assessee did not find favour with the AO who was of the opinion that the amount of cash received from customers for which no details such as PAN, address, Aadhaar card or any such vital documents which proves the identity of the buyers, are submitted and went to add the income of the assessee u/s 68 of the Act and made the impugned addition. 3.2. Assessee carried the matter before the ld. CIT(A) but without any success. I.T.A. No. 2/Mum/2024 3 4. We have given a thoughtful consideration to the findings of the lower authorities. There is no dispute that the assessee was selling old cars which were purchased by exchange of old cars with new vehicles and the difference was paid by the customers. In other words, the credit entries are not loan credits for which the assessee has to explain the creditworthiness of the creditors. We are of the considered view that once the AO has accepted the sales, taking a part of it for making addition u/s 68 of the Act is uncalled for. The AO himself has accepted that the assessee has furnished complete details of exchange of vehicles. Merely because PAN details were not furnished, would not make them unexplained especially when the identity of the sellers of the old vehicles have been established as the vehicles have been registered with the RTO. The genuineness of the creditors cannot be doubted as the impugned sales have been accepted by the AO and insofar as creditworthiness of the creditors are concerned, the AO cannot expect the assessee to prove the creditworthiness of the purchasers of the vehicles. 5. Considering the facts of the case in totality, we do not find any merit in the impugned addition. The AO is directed to delete the same. 6. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 28th February, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 28/02/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs I.T.A. No. 2/Mum/2024 4 आदेश की \u0015ितिलिप अ\u001aेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001c / The Appellant 2. \u0015\u001dथ\u001c / The Respondent 3. संबंिधत आयकर आयु\" / Concerned Pr. CIT 4. आयकर आयु\" ) अपील ( / The CIT(A)- 5. िवभागीय \u0015ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "