2010 (8) TMI 982 - AT - Income Tax

Summary

Issues involved:
The judgment involves issues related to additions made under section 41[1][a] without proper verification of facts, confirmation of purchases made from a specific party, and the treatment of sundry creditors in the balance sheet.

Addition u/s 41[1][a]:
The assessee contested the addition of Rs. 10,93,245/- under section 41[1][a] for three parties, arguing that the liability was not settled due to defective goods and was premature to deem it non-existent. The Commissioner rejected the claim due to lack of corroborative evidence. The Tribunal found that since transactions were ongoing and evidence of payments in subsequent years was not available during assessment, the liability could not be considered ceased. Additional evidence was admitted for further examination by the AO to determine the genuineness of the liability.

Addition for Purchases from M/s Padmavati Syndicate:
The AO added Rs. 6,57,126/- for purchases from M/s Padmavati Syndicate as the party's existence was not established. The Tribunal upheld this addition citing a precedent from the Delhi High Court, rejecting the argument that only the GP percentage should be added.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes, admitting additional evidence for the first issue and rejecting the argument regarding the purchases from M/s Padmavati Syndicate based on legal precedent.