Addition for undisclosed purchases based on diary of supplier deleted as no addition was made for unaccounted sales in the hand of supplier surveyed
ABCAUS Case Law Citation:
ABCAUS 2440 (2018) 07 ITAT
The instant appeal was filed by the assessee against the order passed by the CIT(A) in confirming the addition made towards unaccounted sales allegedly to have been made to assessee company.
A survey operation was conducted in the premises of a supplier company during which some unaccounted sales made to the assessee was noted. In the course of assessment proceedings, assessee was asked to explain how the purchases made from the supplier company have been paid and treated.
The director of the assessee company denied the transactions with the supplier company and submitted that the assessee had always paid by way of cheques and there were no cash transactions and mere mention of assessee name, the sales did not belong to assessee-company as there were many other firms operating in the city.
However, A.O observed that the diary indicated the name od the assessee and it belonged to Assessee only. Also, the name of the person which was written against the name of the assessee was associated with assessee-company.
Mere denial by assessee without explanation was not accepted by AO. In view of the entries found in the diary of the supplier company the amount of purchases stated to be from the assessee was considered as unexplained expenditure towards purchase and added to the income of the assessee.
The CIT(A) confirmed the order of AO stating that assessee had not furnished any evidence that it was not transacted with the said supplier company.
The Tribunal observed that as per the assessment order in the case of the supplier who was surveyed, no addition had been made towards unaccounted sales. Also the Revenue could not produce the said diaries due to it had been handed over to the supplier.
The Tribunal opined that the very basis of the addition had not been substantiated. It was also noted that the assessee had regular transactions with the said supplier company and those transactions were covered by TCS provisions but there was no TDS on these transactions.
Therefore, the addition was deleted.
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