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2022 (12) TMI 1261 - AT - Income TaxAddition u/s 68 - unexplained loan - unexplained cash credit - liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties - HELD THAT:- We find that during the remand proceedings, the details such copy PAN, ledger account and confirmation and other detail such as bank statement, audited books were made available before the AO. However, the AO without considering and pointing any deficiency in the above primary document held that the assessee failed to prove the identity of the creditor, explain the genuineness of transaction and establish the credit worthiness of the creditor. Be that as it may be, the undisputed fact that the loan were received through banking channel and loan has been repaid by the assessee in the subsequent year through banking channel. Also undisputed that the assessee has also paid interest on such loan after deducting eligible tax at source as per the provision of section 194A - Therefore, in our considered view once the amount of loan received through banking channel and repayment of the same along with interest also made through banking channel then the genuineness cannot be doubted. We hereby held that the assessee discharged the onus cast under section 68 of the Act. Hence, we do not find any reason to interfere in the finding of the learned CIT(A). Thus, the ground of appeal of the Revenue on merit is hereby dismissed. Unexplained purchases - AO in absence of necessary details and supporting evidences disallowed 50% of purchases - CIT-A sustained part addition of Rs. 1 lakh only - HELD THAT:- Undeniably, the sales cannot be effected without the purchases. In other words the transactions of purchase and sale are contemporary to each other. In the event, if the purchases are doubted then the corresponding sale cannot be assumed to correct which is arising against the purchases. Gross profit ratio and the net profit ratio of the assessee was improved in comparison to the earlier years. In other words, the revenue in the earlier years was pleased to accept the profitability of the assessee declared by it in the income tax return. Likewise the facts of the year in dispute as well as of the earlier assessment years are identical and no major difference has been pointed out by the AO. Thus, if we disallow the purchases by the amount i.e. 50% of total purchases which will eventually result better profitability but the same will not be acceptable as the gross profit ratio and GP ratio will increase manifold despite the fact that there was no change in the facts and circumstances for the year under consideration as well as in the earlier year. Assessee has furnished the details of the suppliers and extract 7/12 form of the farmers from whom the purchases of the materials were made. Thus to our mind, the AO before pointing out any defect in the address of supplier furnished by the assessee should have issued at least notices on sample basis in order to verify the veracity of the transactions. But we note that no such power has been exercise by the AO during the remand proceeding. In view of the above and after considering the facts in totality, we do not find any infirmity in the order of the learned CIT(A). Accordingly, we uphold the same. Hence the ground of appeal of the revenue is hereby dismissed.
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