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TMI Blog2012 (8) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... g material had shown substantial sundry creditors for purchases in respect of 16 parties, out of which purchases had been made during the year from 7 parties, most of which remained outstanding at the end of the year. The details have been given in para 4 of the assessment order. The A.O., therefore, with a view to verify the genuineness of the purchases, issued notices u/s.133(6) to these 16 parties which returned back unserved. The A.O., therefore, issued show cause notice to the assessee as to why the additions should not be made in respect of purchases and outstanding credit balances in respect of these parties. The assessee thereafter filed confirmations from the parties. The A.O. however noted that the confirmations did not contain th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sundry Creditors 1 Siddhivinayak Corporation 2051744 2004953 2 Naman Enterprises 1269911 1269911 3 Shakti Trading Co. 128894 980384 4 Sandesh Sales Coprn. 368508 666977 5 Navdeep Trading Co. 2455711 2307571 6 Padmavati Corporation 1117212 1117212 7 Om Corporation 1615935 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is in appeal before the Tribunal. 4. Before us, the learned AR for the assessee submitted that the assessee was trading in building material and also had its own transport business. Both the businesses were interconnected. The assessee had made total purchases of `.1.90 crores and sales made were to the tune of `.2.09 crores. It was pointed out that the A.O. had accepted the sales as genuine. He had also allowed the diesel expenses used in transportation of goods in full. Therefore, disallowance of purchases was not justified. It was also pointed out that the assessee had declared GP rate of 8.79% as compared to 6.99% in the immediate preceding years and 7.97% in the subsequent year. In case, the disallowance made by the A.O. i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT vs. M. K. Brothers (163 ITR 249) in which it has been held that the purchases could not be added as income, even if the sellers were held to be bogus unless there was evidence to show that the transaction was bogus. He also pointed out that there was also double addition by making the addition on account of creditors also u/s.41(1) in respect of the same purchases. 4.1 The learned DR, on the other hand, strongly supported the orders of the authorities below. It was argued that burden was on the assessee to prove the purchases which had not been done even after the A.O. pointed out to the assessee that the parties were not found at the addresses given. The assessee had filed confirmation without any PAN numbers and on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t whereabouts of the sellers after more than two years from the date of transactions. The assessee had made purchases which were supported by bills and payments had been made in the subsequent years. The assessee had also made sales corresponding to the purchases which have been accepted. The gross profit rate declared by the assessee was comparable to the gross profit in the immediate preceding year as well as in the subsequent year, whereas the G.P. rate after addition made by the A.O. came to highly abnormal @ 51.87%. It has also been submitted that the various details submitted had not been examined by the CIT(A) and the addition had been confirmed in routine manner. The assessee has raised specific grounds stating that the copy of bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the present addresses of the sellers, the authorities could have made enquiries from the bank as the payment have been made to the sellers by cheque which are reflected in the bank statements placed on record which has not been examined. Besides, we also note that the A.O. has not only added the entire purchases but also the outstanding balances appearing in the creditors list in respect of the same purchases which apparently in double addition. In our view, the matter requires fresh examination at the level of the CIT(A) who had not examined the various details given before him and has passed the order in a routine manner. We, therefore, set aside the order of the CIT(A) and restore the matter back to him for passing a fresh order after ..... X X X X Extracts X X X X X X X X Extracts X X X X
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