Sundry creditor additions turn on verification of confirmations, with unsupported difference sustained and other additions deleted.

Additions relating to sundry creditors were examined on the basis of supporting evidence and verification of confirmations. The difference of Rs. 60,529 was sustained because it was unsupported by corroborative material and the assessee's explanation was not accepted. The additions of Rs. 90,79,528 and Rs. 29,60,099 were deleted because confirmation letters had been filed, the authorities did not carry out effective verification despite available particulars, the balances were reflected as opening balances in the next year, and the trading results were not disturbed. Interest under sections 234B and 234C was consequential.

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Issues: Whether the additions made in respect of sundry creditors, comprising the difference in balances and the balances of creditors whose confirmations were not adequately verified, were sustainable.

Analysis: The difference of Rs. 60,529 was not supported by corroborative evidence and the explanation offered by the assessee was not accepted. As regards the additions of Rs. 90,79,528 and Rs. 29,60,099, the record showed that confirmation letters had been filed, but the authorities did not undertake effective verification despite having the necessary particulars. The closing balances also stood reflected as opening balances in the subsequent year, and the trading results were not disturbed.

Conclusion: The addition of Rs. 60,529 was sustained, while the additions of Rs. 90,79,528 and Rs. 29,60,099 were deleted. The appeal was therefore partly allowed in favour of the assessee. Ground relating to interest under sections 234B and 234C was consequential.

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