COMMISSIONER OF INCOME TAX Vs. RITU ANURAG AGGARWAL

JUDGEMENT

(1.) The assessee filed his return for the Assessment Year 2001 -02, declaring an income of Rs. 4,10,544. This rearm was processed under Sec. 143(1)(a) and the case was -selected for scrutiny thereafter. Notice under Sec. 143(2) was issued to the assessee. The Assessing Officer doubted the veracity and genuineness of sundry creditors of an amount of Rs. 1 lakh and above, as shown by the assessee in its books of accounts. He found that those parties/sundry creditors were neither the income tax assessee nor having PAN numbers. According to the Assessing Officer, the genuineness of the secured creditors was in doubt. The Assessee also failed to produce the books of accounts, entries sales and purchase bills in support of his case. In these circumstances, the Assessing Officer disallowed the sundry creditors and added the amount in the income of the assessee under Sec. 68 of the Income Tax Act. The appeal filed by the assessee before the CIT(A) against the aforesaid order, was also dismissed. However, on further appeal before the ITAT, the assessee had succeeded, inasmuch as his appeal was allowed by the ITAT vide its order dated 13 -4 -2007. The order of ITAT has been challenged in this appeal. It would be worthwhile to mention that the aforesaid creditors shown in the books of accounts, are the sundry creditors, from whom as per the assessee, he had made purchases. They are thus the creditors. The Tribunal found that even if it is accepted that the books were rejected, significantly the Assessing Officer had not disallowed the purchases from those creditors nor the trading results have been disturbed. In this behalf, learned counsel for the assessee also drew our attention to the orders of the Assessing Officer, as per which the assessee had shown the total turnover of Rs. 1,03,44,054, on which gross profit rates declared was 68.94% as compared to sales of Rs. 21,18,994 in the previous year. The Assessing Officer accepted the aforesaid figures and categorically observed as under:

(2.) This finding of Assessing Officer remained undisturbed before the CIT(A) as well and has been accepted by the ITAT. Proceeding on this basis, the ITAT observed that the sales, purchases as well as gross profits as disclosed by the assessee have been accepted by the Assessing Officer.

(3.) Once this is accepted, we are of the opinion that the approach of the ITAT was correct inasmuch as the Assessing Officer did not consider this aspect while making additions of the sundry creditors under Sec. 68 of the Income Tax Act. As there was no case for disallowance for corresponding purchases, no addition could be made under Sec. 68 inasmuch as it is not in dispute that the creditors' outstanding related to purchases and the trading results were accepted by the Assessing Officer. We are, therefore, of the opinion that no substantial question of law arises for consideration in this case. The appeal is accordingly dismissed.