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2019 (6) TMI 1423 - ITAT BANGALOREAddition of unproved creditors u/s 68 - HELD THAT:- AO has made this addition only for the reason that the assessee has failed to prove the genuineness of credits outstanding in the name of famers, since credit sales by farmers is not an existing trade practice. Even though, an opportunity was provided to the assessee during the appellate proceedings and remand proceedings to prove the credit balances, yet the assessee could not produce any documents or confirmation from the creditors. Since some of the creditors have responded to the notices issued by the AO during the remand proceedings, the ld.CIT(A) has granted relief to the extent of 7.12 lakhs meaning thereby, the assessee could not prove the genuineness of the remaining creditors. CIT(A) was justified in partially sustaining the addition made by the AO on this issue. Addition made on account of low gross profit - AO noticed that the assessee has shown a gross profit margin of 0.24% only - HELD THAT:- We notice that the ld. CIT(A) was very much reasonable in reducing the gross profit estimate to 1%. Before us no material was placed by the assessee which would compel us to interfere with the order passed by the ld. CIT(A) on this issue. Accordingly, we confirm the order passed by the ld. CIT(A) on this issue. Validity of reopening of assessment - as per assessee AO has not supplied the reasons recorded for re-opening of the assessment and the AO has not mentioned in the assessment order that the approval from the competent authority was obtained - HELD THAT:- Said legal issues are vague and nothing was brought on record to show that the reason for reopening was not proper and the AO did not obtain requisite approval. In the absence of any material to support the legal issues raised by the assessee we have no other option but to dismiss them. Disallowance u/s 40A(3) - CIT(A) deleted the addition - HELD THAT:- CIT(A) has followed the Circular No.220 dated 31-05-1977 issued by the CBDT wherein the scope of than existing Rule-6DD(j) of the IT Rules was discussed. The case laws relied on by the Ld. CIT(A) in page-16 of his order also relate to Rule-6DD(j) than existing. It is pertinent to note that then existing Rule-6DD(j) provided relief in respect of payments made under exceptional circumstances. The said rule has been deleted long back and the same is no longer applicable to the assessment year under consideration. Accordingly, we notice that the ld. CIT(A) has misdirected himself in placing reliance on the rule, which was not applicable to the year under consideration. Hence, the order passed by the led. CIT(A) on this issue gets vitiated for the above said reason. Accordingly, we are of the view, that this issue requires fresh examination at the end of the ld.CIT(A). Accordingly, we set aside the order passed by the ld.CIT(A) in respect of addition made u/s 40A(3) and restore the same to his file for fresh examination. Appeal of the revenue is treated as allowed for statistical purposes.
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