Appeal dismissed where sales, purchases and gross profit accepted; no addition under Section 68 for sundry creditors

DELHI HC upheld ITAT/CIT(A) findings and dismissed the appeal, holding no substantial question of law arose. Although the assessee failed to produce books, bills and supporting entries, the AO had accepted the disclosed sales, purchases and gross profits; ITAT correctly concluded that where trading results and corresponding purchases are accepted, no addition under section 68 for sundry creditors can be sustained. Since creditors related to purchases and no disallowance of corresponding purchases was made, the HC found the ITAT's approach correct and dismissed the appeal.

---

---

Issues Involved:
The issues involved in the judgment are the disallowance of sundry creditors under Section 68 of the Income Tax Act and the subsequent appeal process.

Disallowance of Sundry Creditors under Section 68:
The assessee's return for the Assessment Year 2001-02, declaring an income of &8377; 4,10,544/-, was processed under Section 143(1)(a) and selected for scrutiny. The Assessing Officer doubted the genuineness of sundry creditors of an amount of &8377; 1 lakh and above, as they were not income tax assesses and lacked PAN numbers. The Assessing Officer disallowed the sundry creditors and added the amount to the assessee's income under Section 68. The CIT(A) upheld this decision, but the ITAT allowed the assessee's appeal, noting that the trading results were not disturbed and the purchases from the creditors were not disallowed. The ITAT found that the sales, purchases, and gross profits disclosed by the assessee were accepted by the Assessing Officer, leading to the conclusion that no addition could be made under Section 68 as the trading results were accepted.

Appeal Process:
The ITAT's decision was challenged in this appeal. The Tribunal's observation that the sales, purchases, and gross profits as disclosed by the assessee were accepted by the Assessing Officer was upheld. The ITAT's approach was deemed correct as there was no case for disallowance of corresponding purchases, and it was acknowledged that the outstanding creditors related to purchases and the trading results were accepted by the AO. Consequently, the court found that no substantial question of law arose for consideration in this case and dismissed the appeal.

---