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TMI Blog2021 (10) TMI 1239X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as unexplained cash credit as the identity, genuineness and creditworthiness have been established. Bogus purchases - The purchases made from M/s Khushal Trading Corporation cannot be held as non genuine merely because ledger account copy of assessee for couple of years could not be furnished due to certain exigencies. In any case of the matter, once the selling dealer confirms the sales made to the assessee and when such sales have been reflected in its accounts and returns filed, both, before the Income-tax department as well as Sales-tax department and there is no adverse information from the Sales-tax department, the purchases made from M/s Khushal Trading Corporation cannot be doubted, merely on the basis of presumption and sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . After perusing the details furnished by the assessee, the assessing officer observed that some of the creditors remained outstanding even after lapse of two years. Further, he alleged, the veracity of all the creditors in the current year could not be proved in absence of confirmations. Therefore, he held that the creditors are non genuine. However, he ultimately disallowed 30% on estimate basis out of the total increase in creditors shown between the preceding assessment year and the impugned assessment year, which worked out to ₹ 10,06,770/-. Assessee contested the aforesaid disallowance before the first appellate authority. Though, learned Commissioner of Income Tax (Appeals) deleted the adhoc disallowance made by the assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not furnished, learned Commissioner (Appeals) issued a notice under section 251(1)(a) of the Act for enhancing assessee s income and ultimately held the purchases of ₹ 22,50,000/- and ₹ 20,25,000/- aggregating to ₹ 42,75,000/- from M/s Khushal Trading Corporation as unsubstantiated purchases and disallowed under section 37 of the Act. Simultaneously, she treated the amount of₹ 42,75,000/- as unexplained cash credits under section 68 of the Act. 4. Learned authorized representative of the assessee submitted, in course of appellate proceedings, the assessee had furnished all the details relating to the purchases made from M/s Khushal Trading Corporation. In this context, he drew my attention to the account confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es could not be established, disallowance made was justified. 6. I have considered rival submissions and perused materials on record. Admittedly, the assessing officer has not raised any doubt regarding the purchases effected from M/s Khushal Trading Corporation. He has only made adhoc disallowance out of the sundry creditors considering the fact that certain creditors were continuing for about two years. However, at the appellate stage learned Commissioner (Appeals) had enquired into the details of sundry creditors and has picked up two purchases from M/s Khushal Trading Corporation for further enquiry and made the disallowance. As could be seen from the facts on record, in response to the notice issued under section 133(6) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as unexplained cash credit as the identity, genuineness and creditworthiness have been established. 7. Having held so, the next issue which arises is whether the purchases made from M/s Khushal Trading Corporation can be held to be non genuine. Pertinently, no allegation has been made by Sales-tax department regarding the genuineness of M/s Khushal Trading Corporation. Rather, M/s Khushal Trading Corporation appears to be a registered dealer under the Sales-tax department, Government of Maharashtra as it is filing its VAT returns. Further, the existence of M/s Khushal Trading Corporation is also established from the fact that in response to notice issued under section 133(6), it has furnished various information/evidences ackn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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