Dismissing the appeal of the revenue the Tribunal  held that, assessee produced Gate Entry Register, stock register and production records which supported assessee’s explanation that whatever material was purchased from three companies were entered into statutory registers and material had been used in production process. AO failed to establish any relation of assessee with seller. Purchases were supported by Form D-3 issued by VAT Department of State Government, bills and gate pass and production register and all purchases were made through banking channel. Without purchases, no production or sales could have done by assessee and production was supported by RG-1 Register and details supplied to Excise Department. Purchaser was witness of department and he did not turn up for cross-examination on behalf of assessee, therefore, his statement was not admissible in evidence against assessee. Parties existed at address given by assessee but enquiry letters were issued after about 5 years of end of assessment year, thus same should not be considered adverse in nature against assessee. AO did not make any efforts to locate seller parties for their appearance to examine issue. (AY. 2006-07, 2007-08, 2008-09)