The AO  treated  the purchases as “Cash credits” under S.68 of the Act . 

Aggrieved, the appellant/assessee preferred an appeal before the CIT (A ) who allowed the appeal of the assessee partially .  Tribunal Confirmed the order of the AO .On appeal to High Court ,  The High Court dismissed the appeal vide impugned judgment and order dated 21.8.2008, as being devoid of merits. The High Court opined that the amount shown as credits was nothing but bogus entries and was justly added to the income of the appellant/assessee. The Court also noted other reasons to dismiss the appeal.  On appeal the Supreme Court held that though the assessee failed to prove the genuineness of the purchases during the assessment proceedings, he filed affidavits and statements of the dealers in penalty proceedings. That evidence fully supports the claim of the assessee. The CIT (A) accepted the explanation of the assessee and recorded a clear finding of fact that there was no concealment of income or furnishing of any inaccurate particulars of income by the assessee.. Consequently, the quantum addition will also have to be deleted .  The addition of Rs.2,26,000/  by the Officer under S. 68 of the 1961 Act, towards cash credit amount shown against the names of concerned unregistered dealers for the assessment year 1998-1999, is hereby set aside. The rest of the assessment order dated 30.11.2000 as modified by the CIT(A) vide order dated 9.1.2003, shall remain undisturbed.  (CA no 6110 of 2009 dt 24 -04 2020  ( AY .1998 -99 )