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TMI Blog2020 (11) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... ce from the rice mill to the assessee. So assessee has not been able to show with the support of evidence that it has purchased the rice from M/s. Standard Rice Mills. However, it is significant to note that sales has been accepted by the AO/ department. Without purchases, there cannot be sales. Possibility of the assessee purchasing/trading of rice from other sources and procuring bills from the accommodation entry provider cannot be ruled out. Therefore, entire alleged bogus purchase made from M/s. Satadal Rice Mill cannot be added in the hands of the assessee - estimation of profit from the sale of rice could be justified. In the rice trading G.P of 3 to 5 % is there during the AY under consideration. Therefore, GP addition of 4% woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to ₹ 83,39,310/- should not be disallowed as unexplained cash credit. According to the AO, the onus to substantiate the sundry creditor was on the assessee. The AO also noted these facts i) closing balance as on 31.03.2012 was of ₹ 58,27,846/-, ii) closing balance as on 31.03.2013 was ₹ 83,39,310/-, iii) closing balance as on 31.03.2014 was of ₹ 83,39, 310/- and iv) closing balance as on 31.03.2015 was ₹ 78,24,810/-. The AO also notes after perusal of the ledger accounts of the assessee during FY 2012-13 that assessee had only paid ₹ 5,00,000/- in cash and in F.Y 2013-14 no payment was made to the said creditor. And in FY 2014-15 the assessee only made payment of ₹ 5,14,500/- in cash. So ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor M/s Satadal Rice Mills. Moreover according to him, the credit reflected in the books of the assessee is nothing , but trade credit, which cannot be added u/s. 68 of the Act. According to the ld. AR, the AO has accepted the trading result, however, he has erroneously disbelieved the expenditure/purchases of ₹ 25,11,464/-, which cannot happen because without purchase no sale can take place. According to the ld.AR, if the purchases are disbelieved, then the assessee s books of account ought to have been rejected by the AO and then income of the assessee should have been estimated. So according to ld.AR without following the procedure of making the Best Judgment assessment, the AO ought not to have made the entire addition based o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of ₹ 5,14,500/-, which fact has been noted by the AO. I note that this is not the case where books of account maintained by the assessee has been rejected and the profit has been estimated. However, I note that assessee has failed to produce documentary evidences in the form of lorry receipts, way bill receipts, octroi receipts etc. The assessee has failed to substantiate the movement of rice from the rice mill to the assessee. So assessee has not been able to show with the support of evidence that it has purchased the rice from M/s. Standard Rice Mills. However, it is significant to note that sales has been accepted by the AO/ department. Without purchases, there cannot be sales. Under such circumstances the possibility o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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