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party and that cash was indeed returned by the firms of Shri Prajapati. In view of these reasons the assessee has stated that the allegation of the A. O. that the purchases must have been made from some other parties and cash payment must have been made out of unexplained sources was without any basis and contrary to the actual facts on record. The assessee has further stated that the goods were not chargeable to central excise and hence there was not question of gate pass. Octroi was not applicable to the assessee as the godown of the assessee was outside the octroi check post. The burden of delivery as per the business principle was that the price was inclusive of transportation charges and it also included loading and unloading charges. Therefore, proof of transportation was kept by the suppliers. It was also stated that the goods receive in the godown of the assessee had been properly recorded in the books of accounts which was clearly reflected in the day to day stock tally and that since the goods were not subject to excise duty and because the transportation between dealer to dealer, there was no incidence of sales tax and octroi duty, therefore there was no benefit to the assessee by taking bill from one party and goods from another party. The gross profit rate during the current year was also 2.05% on turnover of Rs.23.16 cores showing a gross profit of R.47.49 lacs as compared to the gross profit rate of 2.54% on turnover of Rs.15.69 cores showing gross profit of Rs.39.88 lacs. This shows that in absolute terms the gross profit shown during the year was much higher. The marginal decrease in gross profit rate was due to increase in turnover by almost 50% over the last year. This shows that the books of accounts were correct and there was no reason for the assessee to take accommodation bills.

4.4 It is further seen that in this case these goods are not chargeable to central Excise and hence there is no question ITO, W-1(1), Surat Vs Abhishek Ispat Pvt. Ltd.

of Gate pass. Octroi is not applicable to the case of the assessee as the godown of the assessee is outside the octroi check post. The burden of delivery as per the business principle is that the price is inclusive of transportation charges and it also includes loading and unloading charges. Therefore, the proof of transportation is kept by the supplier. As stated above the goods received in our godown have been properly recorded in the books of accounts which is already reflected in the day to day sock tally. Since these goods are not subject to Excise Duty and because the transaction between dealer to dealer there was no incidence of sales Tax and as stated above there was no incidence of octroi duty, therefore thee was no benefit to the assessee by taking bill from one party and goods from another party. The G. P. rate also during the current year is 2.05% on a turnover of Rs.23.46 crores showing a gross profit of R.47.49 lacs as compared to the G. P. rate of 2.54% on a turnover of Rs.15.69 crores showing a gross profit of Rs.39.88 Lacs. This shows that in absolute terms the gross profit shown during the year is much higher. The marginal decrease in G. P. rate is due to increase in turnover by almost 50% over the last year. Therefore, there seen to be no reason for the appellant to take accommodation bills. Goods have been purchased from Bhagyodaya Enterprises and Bhavna Trading Co. at multiple points of time. The assessee has already filed confirmations of the parties along with PAN and, therefore, identities of the party have been established. Copies of the bank show that the payment was made by the account payee cheques and therefore, the genuineness of transactions has also been established. A contra account confirmations received from the party have also been filed during the assessment proceedings. The assessee had given the quantitative details from time to time and perusal of the same clearly establishes that the said goods have been sold by the assessee and tax on the profit on a same is also promptly offered for tax as per the return of income under consideration. Further, in view of the decision of Hon'ble Punjab and Haryana High Court in the case of CIT Vs Leaders Valves (P) Ltd. 285 ITR 435, no addition can be made because on identical set of facts the Hon'ble Court held that " there was no basis for treating the purchases made by the assessee from seven scrap dealers as bogus as the consumption stood fully proved and the existence of ITO, W-1(1), Surat Vs Abhishek Ispat Pvt. Ltd.