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TMI Blog2010 (9) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... ing addition under Section 69C. Further, in view of the fact that the purchase account does not record correct position, it is for the officer to examine the correctness of the other accounts maintained by the assessee. Thus the Tribunal was not justified in allowing the appeals by holding that Section 69C is not applicable. In fact, in our view Section 69C applies to the facts of this case but what we feel is addition under Section 69C when it relates to purchases, the genuineness of which are not doubted should not lead to disallowance of expenditure on purchases - remand the matter to the AO for reconsideration. - IT Appeal Nos. 111, 475, 481, 511, 722, 1062, 1181, 1182, 1184, 1211, 1227 and 1235 of 2009 - - - Dated:- 29-9-2010 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases accounted are below the limit that attracts section 40(a)(iii) of the Income-tax Act entitling the assessee for cash purchases. However, on verifying the purchase documents it was noticed, that the suppliers have not issued any documents and all the purchases are made by the assessee with their own printed bought notes. The bought notes contain only name of the supplier and the place from where he hails but without any address of the supplier. In other words in none of the cases the supplier is identifiable or traceable because the bought notes do not contain the address of any of the suppliers. Further, the suppliers are not regular suppliers of the respondent-assessee but the Assessing Officer found that every supplier has supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause none of the bought notes contain full address of the supplier and going by the receipt of cash acknowledged by the supplier, the bought notes clearly establish that those purchases are actually cash purchases made by the assessee. In other words cash is paid against supply of goods on the date of purchase itself. Obviously assessee did not have cash balance in the books to account to make cash payments on the dates of making the purchase and paying for the same. Therefore, purchases are accounted as credit purchases in the books of account though the bought notes prove to the contrary. The question to be considered is whether Section 69C addition is called for. While the senior counsel appearing for the department contended that Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be considered is from what source assessee later accounted payments. If the assessee has already made payments at the time of purchases, the later payments accounted in the books obviously would not have taken place leaving unaccounted cash with the assessee. However, there is nothing to indicate even in the assessment order as to what happened to the cash later shown as paid but actually not paid by the assessee by reversing the credit entries shown in the purchase account. Assessing Officer himself recorded in the orders that assessee has accounted payments around ten months after accounting cash purchases as credit purchases. Since payments are already made at the time of purchase, assessee has obviously unaccounted cash with them, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions call for examination before making addition under Section 69C. Further, in view of the fact that the purchase account does not record correct position, it is for the officer to examine the correctness of the other accounts maintained by the assessee. We therefore, feel that the Tribunal was not justified in allowing the appeals by holding that Section 69C is not applicable. In fact, in our view Section 69C applies to the facts of this case but what we feel is addition under Section 69C when it relates to purchases, the genuineness of which are not doubted should not lead to disallowance of expenditure on purchases. We therefore, allow the appeals by setting aside the orders of the Tribunal and that of the CIT (Appeals) in both ..... X X X X Extracts X X X X X X X X Extracts X X X X
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