Court No. - 45 Case :- INCOME TAX APPEAL No. - 128 of 2015 Appellant :- Zazsons Export Limited Respondent :- Commissioner Of Income Tax Kanpur Counsel for Appellant :- R.P. Agarwal Counsel for Respondent :- C.S.C. It,Ashok Kumar Hon'ble Pankaj Mithal,J. Hon'ble Vinod Kumar Misra,J. Heard Sri R.P. Agarwal, learned counsel for assessee/appellant and Sri Piyush Agarwal, learned counsel for respondent. assessee has preferred this appeal against order of tribunal dated 26.2.2015. assessee is public limited company engaged in business of manufacture of finished leather shoe upper and shoes mainly for purpose of export. In manufacturing above items it uses raw hide specially raw goat hide. According to trade practice raw animal hide is purchased by it generally from petty dealers on credit and payment is made subsequently and as such these dealers are shown in books of accounts as trade creditors. In respect of assessment year, 2006-2007 assessee disclosed purchase of raw hide to extent of (outstanding amount) Rs. 9,03,09,714/- from small vendors. In respect of purchases worth Rs. 7,98,07,768/-, assessee was able to get it confirmed from small hide dealers and thus balance of Rs. 1,05,01,948/- remained unconfirmed. aforesaid amount was added in income of assessee by Assessing Officer in view of Section 68 of Income Tax, 1961 (hereinafter referred to as Act). On appeal addition of said amount was deleted by CIT (Appeals) but same has again been restored by tribunal by impugned order on ground that assessee has failed to establish credit purchases of raw hide for said amount and that in fact purchases were made on cash payment, which has not been accounted and as such it is liable to be added under Section 68 of Act. On this appeal being preferred, this Court on 8.7.2015 has formulated following two substantial question of law: "I. Whether on facts and in circumstance, ITAT is correct in law in restoring addition of Rs.1,05,01,948 made by Assessing Officer treating aggregate credit balances of suppliers of raw hides ( whose balance confirmation could not be produced by assessee), under Section 68 of Income Tax Act as unexplained cash credit and setting aside Order of CIT(A) dated 26.5.2010 by which above addition was deleted, although genuineness of entire purchases made from those suppliers and audited Accounts of assessee have been accepted by Assessing Officer ? II. Whether on facts and in circumstances, ITAT has proceeded on wild guess, conjectures and surmises, whereas there is no finding in assessment order or ITAT or to support observation made by ITAT on Page 5 of impugned Order which reads as "It is very much possible that payment was made in cash from undisclosed sources but such payment was not accounted for and creditors were shown", and as such impugned Order of ITAT is liable to be set aside ?" Both questions are inter-linked and we propose to deal them simultaneously. Section 68 of Act provides for addition of credit of books of accounts of assesee for which either no explanation is furnished or explanation furnished is not found to be satisfactory by Assessing Officer to be added in income of assessee for purposes of charging income tax over it. scope and ambit of Section 68 of Act has been explained by Supreme Court in case of Commissioner of Income Tax Vs. P. Mohan Kala (2007) 291 ITR 278 (SC). Apex Court lays down that what Section 68 suggests is: (i) that there has to be credit of amounts in books maintained by assessee; (ii) such credit has to be sum of money during previous year; (iii) either assessee offers no explanation about nature and source of such credits found in books or explanation offered by assessee is not satisfactory in opinion of Assessing Officer. It is only on fulfilment of above conditions that sum so credited in books of accounts of assessee may be charged to income tax as income of assessee for previous year. It also lays down that presumption of such credits shown in books of accounts of assessee are chargeable to tax is rebutable presumption and burden to rebut it is upon assessee and if he fails to rebut it then only it can be held that it was receipt in form of income. It is in light of above scheme of Section 68 of Act that we have to consider applicability of above provision to facts and circumstances of present case in respect of entries of purchases of raw hide from small vendors of credit in respect whereof proof of confirmation had not been submitted. tribunal on account of failure of assessee to furnish confirmation in respect of above amount, opined that it may be possible that payment was paid to such vendors in cash from undisclosed sources without accounting same and therefore, amount so paid has to be included or added in income of assessee. aforesaid finding of tribunal is based on no material and is simply on conjunctures and surmises. tribunal has ignored fact that purchases made by assessee were accepted by Assessing Officer and there was no dispute to trade practice that payment in respect of purchase of raw hide is made subsequently. Thus, aforesaid finding is primarily perverse finding. Division Bench of this Court in Commissioner of Income Tax Vs. Pancham Dass Jain (2006) 205 CTR All 444, was seized with similar matter in respect of assessee dealing in purchase of form implements. assessing officer had asked assessee to explain nature and source of various deposits appearing in books of accounts specially in name of two persons. assessee was not able to give any satisfactory reply with regard to nature and source of above two deposits and as such amount of said deposits was added to income of assessee under Section 68 of Act. C.I.T. (Appeals) held that aforesaid two persons used to manufacture agricultural implements and sell them to assessee on credit and that entries represented value of goods purchased from these two persons from time to time. Accordingly, addition was deleted. tribunal also accepted view taken by C.I.T. (Appeals). On appeal by revenue before High Court, Division Bench held that mere absence of proof regarding existence of two persons cannot be confused with question of genuineness of purchases and if purchase of goods has been accepted by department it would not be possible for it to turn around and say that debits appeared in accounts of these purchases were in from of cash deposits. Thus, purchases made by assessee from above two persons without properly disclosing their identity was not held to be covered by Section 68 of Act. facts of present case are similar and identical to that of Pancham Dass Jain (Supra) and credit purchases reflected in books of accounts of assessee of raw-hide from petty dealers even if not confirmed would not mean that it is concealed income or deemed income of assessee, which can be subjected to tax in view of Section 68 of Act. In addition to above it has come on record that in respect of earlier assessment year, 2005-2006 matter regarding such addition under Section 68 of Act in respect of credit purchases of raw-hide by assessee has travelled up-to tribunal and after there was difference between two members, matter was referred for opinion of third member, who accepted opinion of administrative member and opined that trade amount due to trade creditors in books of accounts of assessee cannot be added towards income of assessee under Section 68 of Act. aforesaid decision of tribunal in respect of previous year is said to be final and conclusive, as there is no material on record to show that any appeal was preferred against it rather Sri R.P. Agarwal states at bar that no appeal against same was ever filed. It has been settled by Hon'ble Supreme Court that assessment of tax for each assessment is separate and is not dependent upon previous one and that principle of res-judicata is not applicable for tax matter nonetheless in order to maintain consistency, view, which has been accepted in earlier order ought not to be disturbed unless there is any material to justify revenue to take different view of matter. In other words, it is not considered appropriate to allow revenue to change position, which it has taken in one such assessment year, in subsequent years. This is precisely what has been laid down by Supreme Court in Radhasomi Satsang Vs. Commissioner of Income Tax (1992) 193 ITR 321(SC). In view of reasoning as recorded above, we answer questions as formulated above in favour of assessee and against revenue. Accordingly, order of tribunal dated 26.2.2105 is set aside and appeal is allowed in so far as addition of Rs. Rs. 1,05,01,948/ under Section 68 of Act is concerned. Order Date :- 18.5.2017 A. Pt. Singh Zazsons Export Limited v. Commissioner of Income-tax, Kanpur