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Issues:
Appeal against CIT(A) order deleting addition of sundry trade creditors. Analysis: The main issue in this case is the appeal by the Revenue against the CIT(A) order deleting the addition of Rs. 1,35,977 made by the AO concerning sundry trade creditors. The Revenue contended that the sundry creditors' statements did not reconcile with the sundry credits, emphasizing the importance of monetary transactions and the need for proper record-keeping by creditors. The Department argued that the onus was on the assessee to explain discrepancies in the accounts. On the other hand, the respondent-assessee argued that the sundry creditors were small weavers who did not maintain regular books of accounts, and their statements were based on memory. The assessee maintained complete books of account reflecting true balances and had paid all creditors through account payee cheques. The Tribunal observed that the assessee, a dealer in silk cloth, purchased goods on credit from weavers and paid them through crossed payee cheques. During assessment proceedings, some weavers confirmed transactions with the assessee based on memory, as they did not maintain regular books of accounts. Discrepancies in balances were noted in six cases. The CIT(A) acknowledged that payments to creditors were made only through account payee cheques and that outstanding balances were settled in the subsequent year. The Tribunal found that the AO relied on statements of weavers without considering the evidence available in the form of account books, bank records, and bills with the assessee. The AO failed to subject the weavers to cross-examination and ignored the credibility issues of statements made based on memory. The Tribunal endorsed the CIT(A)'s view, concluding that the Revenue's appeal lacked merit, and dismissed the appeal accordingly.
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