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2015 (11) TMI 172 - AT - Income TaxAddition u/s 68 - Assessing Officer made additions by invoking the provisions of Section 69C - Held that:- From the perusal of assessment order, it is clear that Assessing Officer has allowed purchases to the tune of ₹ 1,15,84,527/-, which were paid to various parties from whom assessee made purchases during the year. After the payment of ₹ 1,15,84,527/- outstanding balance remained to be paid on 31st March, 2007, which means that Assessing Officer has treated all these parties as genuine suppliers to whom some payments have been made during the year. If in any case, Assessing Officer had come to a conclusion that certain supplier is a bogus party, then the complete purchases made from such bogus suppliers should have been disallowed by him. In the present case, Assessing Officer has allowed the purchases to the extent they have been paid and disallowed the purchases to the extent which have not been paid. Assessing Officer ought to have appreciated the fact that assessee has submitted the ledger account of all the 11 parties for the relevant assessment year as well as for the next financial year during which balance payment of the outstanding liabilities were made through bank. Here, we can take example of one of the parties amongst the list of 11 parties in the name of M/s. Landmark Engineering from whom assessee made purchases during the year. Outstanding liability in the name of this party on 31.03.2007 stood at ₹ 53,19,523/- and this outstanding amount repaid in full by the assessee during the financial year 2007-08. As submitted by ld. A.R. that in case of other parties also the outstanding liability standing under the head ‘sundry creditors’ on 31.03.2007 have been paid in the following years by account payee cheques. Books of account have not been fully rejected, none of the parties has previously been proved as bogus, part of payments made towards the purchases have already been allowed by the Assessing Officer and no specific working has been made by the Assessing Officer to treat a particular purchase from a supplier as bogus purchase and further the outstanding purchases at the end of the year have been subsequently paid by banking channel and nothing contrary to this fact of payment by banking channel has been brought on record before us. In this situation, it is not justified on the part of Assessing Officer to treat the sundry creditors outstanding at the end of the year as unexplained and accordingly, the addition sustained by the CIT(A) is deleted and the appeal of assessee is allowed. - Decided in favour of assessee.
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