2015 (11) TMI 1311

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....ng the appeal, this Court framed the following questions of law for consideration: "(i) Did the Tribunal fall into error in directing a sum of Rs. 11,84,846/- to be deleted on account of consignment purchases made by the assessee? (ii) Did the Tribunal err in appreciation of the circumstances leading to the deletion of Rs. 1,22,52,846/- made by the AO on account of the finding that the identity, credit worthiness and genuineness of the transactions with the assessee's creditors had not been duly established?" 2. The Assessee is engaged in the business of supply of milk and milk products. The Assessee also trades in the said products on consignment basis, acting as a commission agent for supply of such items directly by the vendors ....

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....see that the consignment purchases were Rs. 3,38,37,354/-. The consignment purchases were taken at Rs. 3,49,90,459/-. Notices were issued to thirteen (13) consignment vendors under Section 133(6) of the Act. Of the 13 notices issued, 6 were returned unserved by the postal authorities. The Assessee produced four of the consignment vendors whose statements were recorded by the AO under Section 131 of the Act. The AO concluded that the alleged consignment purchases and sales were actually the own trading of goods of the Assessee which had been introduced in the books of accounts. Accordingly the AO rejected the books of accounts as maintained by the Assessee. Calculating the restaurant profit on the transactions at 3.96 per cent of the sales, ....

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....on 11th December, 2006. It was noted by the CIT (A) that the AO did not rebut the additional evidence tendered by the Assessee. The CIT(A) observed that it was clear from the report of the AO that the consignment vendors whose statements were recorded admitted to having supplied milk and milk products to different parties on consignment basis on which the Assessee received commission. The said income by way of commission had been duly disclosed in the Assessee's Profit and Loss Account (P&L Account). The only discrepancy was in respect of the supply to Apollo Hospital, However, the CIT (A) held that the said single instance did not call for complete rejection of the Assessee's books of accounts. The CIT(A) gave a further opportunity to the ....

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....he said addition. 8. As regards the addition of Rs. 1,22,52,846/- on the ground of bogus creditors, the CIT(A) was satisfied that one Khurshid S/o Fazal, who had been summoned was a wrong person and he had denied having a dealing with the Assessee. This was supported by a letter dated 9th March, 2006 of the Chartered Accountant. It was also urged before the CIT (A) that no serious attempt was made to summon vendors who lived in remote areas of UP and Haryana. The CIT (A) then asked the AO to conduct another inquiry and send a report. This report showed that the transactions were conducted with fourteen of the creditors in cash. The creditors had confirmed the supplies as well as credit balances. Only one of the creditors did not respond to....