The burden is on the assessee to prove the genuineness of transactions and provide evidence to support the claimed purchases, and the provisions of Section 68 of the Income-tax Act, 1961, can be invoked when the genuineness of transactions cannot be proved.

Y.R. Meena, J.-This appeal is directed against the order dated July 19, 2000. The appeal has been admitted in

terms of the following questions: “1. Whether the Appellate Tribunal can make out a new case under Section 68 of the Act treating credit balance in the account of the appellant and making additions accordingly without there being any ground in the appeal?

2. Whether the Appellate Tribunal was justified in holding purchase as bogus on the basis of incomplete enquiry report in which the addresses of the purchasers were found to be correct and only because they were not available due to their nomadic characteristic no further efforts were made by the enquiry officer to trace the sellers and enquire about the fact of purchase?

3. Whether the order of addition passed by respondent No. 3 is vitiated because the principles of natural justice were not followed ?“

2. Therelevant assessment year is 1982-83. In the return the assessee declared a total income of Rs. 1,35,653. The assessee-firm is a manufacture of woollen carpets and has its own weaving factory at Jaipur maintaining looms outside Jaipur especially in Tonk District. In the earlier years the assessee showed gross profit at 17.7 per cent. for the assessment year 1979-80, 10 per cent. for the assessment year 1980-81, 9.2 per cent. for the assessment year 1981-82 and in the year under consideration, the assessee has shown 9.04 per cent. gross profit. During the course of assessment, the Assessing Officer noticed that the assessee has shown purchase of wool from various parties, but the payment has not been made and the amount payable to them has been shown as credit in their favour in the books of account. The names of those parties from whom the wool was purchased, rate of purchased wool and total amount expended have been shown in para. 6 of the original order.

3. The Assessing Officer was of the view that the purchases are not genuine and he added Rs. 2,75,000 in the assessment order dated March 6, 1986. The assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) vide order dated December 6, 1987, set aside the assessment order dated March 6, 1986, with a direction to give opportunity to the assessee to explain the genuineness of the transactions entered into with the parties referred to in para. 6 of the original assessment order. Thereafter again an enquiry was made from the assessee and the assessee was directed to produce those parties or to give the details of those parties, from whom the wool was purchased. Summons were issued to those parties on the given address. One or two parties appeared and considering their submissions, the addition was reduced to Rs. 2,25,000. Again the assessee went in appeal before the Commissioner of Income-tax (Appeals).

4. TheCommissioner of Income-tax (Appeals) again set aside the assessment order on February 14, 1990, with a direction to make further necessary enquiries.

5. TheAssessing Officer in compliance of the direction of the Commissioner of Income-tax (Appeals) deputed the Inspector of Income-tax. The Inspector of Income-tax went and contacted some parties. As per his report, some parties had expired and whereabouts of most of the parties were not available as they belong to Khatic community and Khatics are nomadics. Again opportunity was given to the assessee to produce those parties, and to prove the genuineness of the purchase made from those parties, as referred to in para. 6 of the original assessment order. Many opportunities were given, but the assessee could not produce those parties neither any other evidence was adduced to prove the purchases from those parties.

6. Considering the report of the Inspector ot Income-tax and submissions of some parties, who are available, from whom wool was purchased, third time addition have been reduced to Rs. 1,12,500. In the third round before the Commissioner of Income-tax (Appeals), the Commission