Addition unsustainable as department failed to prove that sundry creditors are bogus

ACIT Vs Al Nasir Agro Foods (ITAT Delhi)

ITAT Delhi held that addition of sundry creditors u/s 68/69C of the Income Tax Act unsustainable as department failed to prove that the sundry creditors are bogus.

Facts- The assessee has shown sundry creditors towards purchase of raw meat of Rs.4,95,25,264/- as on 31.03.2012.

AO asked the assessee to submit evidence/proof of the raw meat purchased, transportation bills, ledger account of purchase and of creditors alongwith list of sundry creditors etc. Further, the assessee has provided list of around 400 sundry creditors having name and amount written on three pages only without any proof/evidence/bills of purchase. But the assessee even after repeated opportunity could not produce address of these creditors so that notices u/s 133(6)/summons could be issued to confirm the genuineness of creditors. The assessee also did not produce PAN of the creditors to confirm their identity. In absence of PANs even creditworthiness of creditors could not be verified.

The assessee accepted that payments were made in cash from “Raw meat control A/c”. ARs contention that cash payment to the parties for purchasing raw meat is exempt under rule 6DD(e)(ii) of Income-tax Rules, 1962 was not found to be tenable by the AO.

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