JUDGMENT K.S. Jhaveri, J. 1. By way of this Appeal, the Appellant has challenged the judgment and order dated 19.05.2006 of the Income Tax Appellate Tribunal, Ahmedabad Bench in ITA No. 2729/Ahd./2000. 2. While admitting the matter on 11.05.2007, the following substantial question of law was framed by the Court for consideration:- "Whether on the facts and in the circumstances of the case, Income Tax Appellate Tribunal was right in law in confirming the addition of Rs. 6,95,310/- made by the Assessing Officer as suppression of sales?" 3. The facts giving rise to filing of this Appeal are as under:- The appellant a closely held company was engaged in the business of trading in cotton, dyes, chemicals etc. The appellant had filed its return of income tax for the Assessment Year 1997-98 on 26.11.1997 declaring total income of Rs. 53,547/- along with Tax Audit Report etc. During the course of assessment proceedings, it was found that the appellant was enjoying credit facility upto Rs. 20,00,000/- towards bills discounting. It was also found by the assessing officer that the bill discount register of the Bank showed that bills were drawn on Achal Textile Industries Pvt. Ltd. (hereinafter referred to in short as 'ATPL') being Bill No. 77 dated 13.03.1997 for Rs. 6,79,840/- and Bill No. 81 dated 20.03.1997 for Rs. 9,33,632/- showing sale of yarn to ATPL were discounted. On the other hand, the sales register maintained by the appellant showed sale of cotton to Ashoka Spintex (hereinafter referred to in short as "AS") vide sales Bill No. 77 and 81 dated 04.03.1997 for Rs. 4,58,902/- and Rs. 4,59,260/- totalling to Rs. 9,18,162/-. It is stated that the above discrepancy was explained by the appellant stating that since it was in need of funds, it raised so-called bills in the name of ATPL in order to avail bill discounting facility. The respondent rejected the above explanation and concluded that there was no necessity to raise funds through discounting of fake bills and such a practice was akin to inflation of stock given to bank for raising higher finance. Therefore, the respondent made an addition of Rs. 6,95,310/- as suppressed sales in respect of the difference between the sales of Rs. 16,13,472/- to AS and Rs. 9,18,162/- as sales to ATPL. Therefore, the respondent made an addition of Rs. 6,95,310/- as suppressed sales in respect of the difference between the sales of Rs. 16,13,472/- to AS and Rs. 9,18,162/- as sales to ATPL. Being aggrieved by the order of assessment, the appellant preferred an appeal before the CIT(A)-I, Ahmedabad who vide order dated 12.10.2000 deleted the impugned addition for the reasons stated in para 9 of the order. The CIT(A) has given a clear finding that the perusal of books of accounts of ATPL showed that they had purchased 3000 kg of yarn from ASL for Rs. 3,15,157/- on 20.08.1996 and there was no purchase of any yarn from the appellant; the funds availed by the appellant from the Bank were utilized for making payment to ATPL and Saurashtra Ginning in course of the business. Being aggrieved by the order of assessment, the Revenue preferred an Appeal before the Tribunal challenging the impugned addition deleted by CIT(A). The Appellate Tribunal reversed the order passed by CIT(A) on the ground that the partial acceptance of the money had been received by the appellant and credited in its books of accounts so that they could not be said to be accommodation bills; two bills bearing same serial number were issued to ATPL. Being aggrieved by the aforesaid order of the Appellate Tribunal, the above Appeal has been preferred by the appellant. 4. Learned Counsel for the appellant Mr. S.N. Divatia has contended that the Tribunal has committed an error in discarding the reasoning adopted by the CIT (Appeals) and has drawn the attention of this Court to Paragraph 9 of the order of the CIT (Appeals) which reads as under:- "9. I have carefully considered the facts of the case and gone through the records. I find the following- 1. The bill Nos. 77 and 81 dated 4.3.97 were for (Rs. 4,58,902/- and Rs. 4,59,260/-) totalling to Rs. 9,18,162/- showing sales of Cotton to ASL. 2. The bills No. 77 and 81 dated 4.3.97 and 20.3.97 were for Rs. 6,79,840/- and Rs. 9,33,632/- showing sale of YARN to ATIPL. 3. Sale to ASL as in (1) was recorded in books but that to ATIPL as in (2) was not recorded in books. 4. The appellant had no yarn as opening stock nor any purchase of yarn was made during the year. 5. 6,79,840/- and Rs. 9,33,632/- showing sale of YARN to ATIPL. 3. Sale to ASL as in (1) was recorded in books but that to ATIPL as in (2) was not recorded in books. 4. The appellant had no yarn as opening stock nor any purchase of yarn was made during the year. 5. The appellant had discounted the bills dated 13/3/97 and 20/3/97 in the name of ATIPL, a sister concern. 6. The appellant paid Rs. 6,63,799/- on 14/3/97 to ATIPL and Rs. 9,15,085/- on 21/3/97 to Saurashtra Ginning in the course of business. Thus the observation of the Assessing Officer on page 8 of the order is not correct that the appellant did not use the fund for business purposes. 7. The appellant has been regularly discounting bills for raising funds on genuine sales. 8. The Assessing Officer did not confirm from ATIPL whether it purchased any YARN on 13/3/97 and 20/3/97 from the appellant. This was of utmost importance because the issue of suppressed sales could have been clinched by the sole evidence if the purchase of YARN was not recorded in ATIPL's books. 9. From the perusal of books of ATIPL, I find that they had purchased 3000 kgs. of yarns from ASL for Rs. 3,15,157/- on 20.8.96 and that they had not purchased any YARN from the appellant. 10. I find that the G.P. in yarn and cotton was 2.11% and 2.74% in A.Y. 95-96, 5.00% and 4.19% in A.Y. 96-97. In A.Y. 97-98, there was sale of cotton only where G.P. is 2.70%. Thus, the G.P. has been found varying very wildly from year to year. 11. The books of account of the appellant are duly audited and full quantitative details are maintained. 12. No material has been brought on record by the Assessing Officer to prove any sale of yarn to ATIPL from 13.3.97 to 20.3.97. 13. At the most, these transaction can be called as infringing Banking Rules and fraud on them. 14. The addition made by the Assessing Officer is based on surmises and by simply rejecting the submissions and explanations made by the appellant that the bill Nos. 77 and 81 were raised to ATIPL, a sister concern, as accommodation bill only, discounting them with bank for obtaining funds. 9.1. 14. The addition made by the Assessing Officer is based on surmises and by simply rejecting the submissions and explanations made by the appellant that the bill Nos. 77 and 81 were raised to ATIPL, a sister concern, as accommodation bill only, discounting them with bank for obtaining funds. 9.1. In view of the above findings, I hold that the appellant had not made any sale of YARN to ATIPL on 13/3/97 and 20/3/97. As such, the addition of Rs. 6,95,310/- being difference of Rs. 16,13,472/- (alleged sale to ATIPL) and Rs. 9,18,163/- (genuine sale made to ASL), is deleted. There will be relief of Rs. 6,95,310/-." Learned Counsel for the appellant has relied on the decision of this Court in the case of Commissioner of Income-Tax v. Samir Synthetics Mills reported in [2010] 326 ITR 410 (Guj) wherein the Commissioner (Appeals) found that the assessee failed to explain the suppression of production of fabrics and also held that any addition that was to be made was not in respect of the sale consideration but only in respect of the profit. The Commissioner (Appeals) reduced the addition made by the Assessing Officer. The Tribunal concurred with the Commissioner (Appeals) as it found that there was no evidence on record to prove that the assessee had claimed all the expenses in the profit and loss account. In the above case, the Court while dismissing the Appeals held that in view of the concurrent findings of fact by the Commissioner (appeals) and the Tribunal that the reduced addition was just and equitable on account of paper found during the search, there was no merit in the Appeals. 5. Learned Counsel for the opponent Mr. Varun K. Patel has taken us to the reasoning adopted by the Tribunal and contended that in view of Section 69 of the Income Tax Act, this will amount to suppression and in that view of the matter, the Officer has not committed any error in assessing the income as a whole and contended that the issue is required to be answered in favour of the Department. 6. We have heard learned Advocates appearing for the respective parties. From the evidence on record, it surfaces that two Sales Bill No. 77 dated 13.03.1997 for Rs. 6,79,840/- and Bill No. 81 dated 20.03.1997 for Rs. 6. We have heard learned Advocates appearing for the respective parties. From the evidence on record, it surfaces that two Sales Bill No. 77 dated 13.03.1997 for Rs. 6,79,840/- and Bill No. 81 dated 20.03.1997 for Rs. 9,33,632/- showing sale of yarn and again two sales Bill No. 77 and 81 dated 04.03.1997 for Rs. 4,58,902/- and Rs. 4,59,260/- totalling to Rs. 9,18,162/- were raised showing sale of cotton. In paragraph 9 as referred herein above, the CIT (Appeals) has given cogent and convincing reasons to arrive at the conclusion that only the profit has to be taken into account. In the facts of the case, we answer the question in favour of the assessee and restore the decision of the CIT (Appeals).