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2016 (9) TMI 1582 - AT - Income TaxUnexplained cash credit - addition u/s 68 - identity and genuineness of the sundry creditors was not established - HELD THAT:- From the facts of the case, it is not disputed that the sundry creditors pertain to purchases of scrap. Normally, the trading of scrap takes place in the unorganized business sector and unregulated market from where the assessee has to depend on procuring its raw materials. Generally the margin of profit in the nature of business of the assessee is minimal as less as one per cent or even lesser. There is also no finding by the Revenue that the assessee had not purchased scrap but the only doubt was with respect to the genuiness of two sundry creditors who had supplied raw materials to the assessee. Documents which is part of the record and not before the Tribunal at the time of earlier hearing proves the fact that the identity of these sundry creditors are genuine. Since the above referred documents were lost sight off by the Tribunal on the earlier occasion, mistake had crept into the Order of the Tribunal which is apparent on record because of non-consideration of certain facts - assessee had paid by cheque to the sundry creditors, may be not directly by indirectly which is not prohibited by the Act - there is also no other finding by the Revenue on these aspects. When the identity of the sundry creditors is proved and when the quantity of purchase of raw materials is not in dispute, then the transaction cannot be treated as bogus. Therefore AO is not justified in invoking the provisions of section 68 of the Act with regard to both these sundry creditors. Direct AO to delete the addition made by invoking the provisions of section 68 of the Act with regard to both these sundry creditors. Thus, the issue is decided in favour of the assessee. Disallowance u/s 40A(3) - assessee has paid the aforesaid amount towards purchases without disclosing the names of the party from whom the purchase were made - AO made disallowance disallowed 20% - HELD THAT:-CIT-A confirmed the order of the learned Assessing Officer because before him also no material with cogent evidence was furnished to support the claim that cash purchases were less than the statutory limit. On this issue also no materials were furnished before us to establish that the provisions of section 40A(3) of the Act cannot be invoked in the case of the assessee.- Decided in favour of revenue. Interest under section 234B & 234C is consequential.
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