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Section 68 of the Income-tax Act, 1961 - Cash credit (Purchase) - Assessment year 2008-09 - Assessee claimed having purchased material from three entities - Assessee paid amounts which were credited in bank accounts of vendors and thereafter these amounts were credited to another entity M who in turn withdrew same almost immediately - Assessing Officer rejected the books of account and disallowed amount with regard to purchase of material by assessee - While setting aside disallowance, Commissioner(Appeals) held that assessee had received material corresponding to purchases made from vendors - Tribunal noted that confirmation receipts of said supplies were signed by different persons while bank accounts were operated by other persons and upheld order of Assessing Officer - It was found that existence of vendors stood confirmed by Excise and Taxation Officer - Whether merely because M withdrew amount which was paid by assessee to its vendors would not lead to conclusion that transactions between assessee and vendors were fictitious - Held, yes - Whether there is nothing unusual in different persons operating bank accounts of a company and signing confirmation receipts of supply of goods - Held, yes - Whether, therefore, matter was to be readjudicated - Held, yes [Paras 10 and 12] [In favour of assessee/Matter remanded] FACTS â–  The Assessing Officer rejected the books of account and disallowed expenses with regard to purchase of material by assessee. The assessment was also made under section 68. â–  On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer rejecting the books of account but partially sustained the addition. The Commissioner (Appeals) held that the provisions of section 68 were not applicable to sundry creditors as the purchases from three parties were genuine. The orders of the Assessing Officer in this regard were set aside. â–  Both the assessee and the revenue filed appeal before the Tribunal. The Tribunal dismissed the assessee's appeal and allowed the appeal filed by the revenue. â–  On appeal: HELD â–  The assessee claimed having purchased the material from three entities, i.e., Rama…

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