M/s Sri Sai Ram Ice Factory, Kakinada V. The ITO, Ward-2, Kakinada

ITA 210/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56821 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 26-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: TH L PETER
• Assessee Lawyers: P P MURTHY
• Keywords: Opportunity of being heard
• Section: 40A(3); 143(3); 194C; 263

Judgement Text

ITA NO210/VIZ/2011 M/S. SRI SAI RAM ICE FACTORY, KA KINADA. 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 210 /VIZAG/ 20 11 ASSESSMENT YEAR : 2006 - 07 M/S. SRI SAI RAM I CE FACTORY KAKINADA VS. ITO WARD - 2 KAKINADA (APPELLANT) (RESPONDENT) PAN NO.ABAFS 4590E APPELLANT BY: SHRI P.P. MURTHY, ADVOCATE RESPONDENT BY: SHRI TH.L. PETER, CIT(DR) DATE OF HEAR I NG: 13.07.2011 DATE OF PRONOUNCEMENT: 05 .09.2011 ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT PASSED U/S 263 OF THE ACT (HEREINAFTER REFERRED TO AS AN ACT) SETTING ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO THE A.O. TO EX AMINE THE CASE AFRESH AFTER AFFORDING AN OPPORTUNITY TO THE ASSESSEE TO S UBSTANTIATE HIS CLAIMS FOR EACH OF THE ISSUES AND TO PASS A FRESH ASSESSMENT O RDER, HAVING OBSERVED THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF THE REVENUE ON ACCOUNT OF LACK OF ENQUIRY. 2. THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS O F APPEAL BUT THEY ALL RELATE TO THE VALIDITY OF THE ORDER PASSED U/S 263 OF THE ACT. 3. THE FACTS IN NARROW COMPASS AVAILABLE ON RECORD ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN FISH, BESI DES MANUFACTURING AND SALE OF ICE. THE ASSESSEE FILED RETURN OF INCOME ADMITT ING TOTAL INCOME AT ` 1,02,600/-. THE RETURN OF INCOME WAS SCRUTINIZED A ND ASSESSMENT ORDER WAS PASSED U/S 143(3) OF THE I.T. ACT ACCEPTING THE INC OME RETURNED. ITA NO210/VIZ/2011 M/S. SRI SAI RAM ICE FACTORY, KA KINADA. 2 4. ON SCRUTINY, THE CIT NOTICED THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ISSUED SHOW CAUSE NOTICE ON FOLLOWING GROUNDS: A. IT IS NOTICED THAT THE ASSESSEE CLAIMED TO HAVE PAI D TRANSPORT CHARGES OF ` 33,22,500/- (OUT OF ` 36,98,000/- DEBITED TO PROFIT & LOSS ACCOUNT) TO SEVEN DIFFERENT TRANSPORT CONTRA CTORS. ON A PERUSAL OF THE SAID ACCOUNT FURNISHED DURING THE SC RUTINY PROCEEDINGS, IT IS SEEN THAT IN RESPECT OF SOME OF THE VEHICLES, THE AGGREGATE PAYMENTS EXCEEDED ` 50,000/- DURING THE FINANCIAL YEAR, AND ALSO, EACH PAYMENT EXCEEDS ` 20,000/-. THUS, THE ASSESSEE HAS BECOME LIABLE TO DEDUCT TAX AT SOURCE U/S 194C(3)(I) OF THE ACT. SINCE THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE, THE ASSESSING OFFICER WAS UNDER THE OBLIGATION TO DISALLOW THE ENTIRE CLAIM O F SUCH EXPENDITURE U/S 40(A)(IA) OF THE ACT. B. THOUGH THESE PAYMENTS WERE MADE TO THE PARTNERS, TH E ASSESSING OFFICER DID NOT EXAMINE THE APPLICABILITY OF THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. C. THE ASSESSEE MADE HUGE FISH PURCHASES BY MAKING CAS H PAYMENTS TO VARIOUS PARTIES. THE GENUINENESS OF TH E PURCHASES WAS NOT VERIFIED BY THE ASSESSING OFFICER. D. THE ASSESSING OFFICER FAILED TO EXAMINE THE APPLICA BILITY OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT, IF THE PUR CHASES ARE FOUND TO BE GENUINE. 5. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESS EE HAS FILED THE WRITTEN SUBMISSIONS ALONG WITH THE ENCLOSURES IN OR DER TO ESTABLISH THAT THE ASSESSING OFFICER HAS PROPERLY EXAMINED ALL THE REL EVANT ISSUES ON WHICH CIT SOUGHT TO REVISE THE ORDER IN THE LIGHT OF EXPLANAT IONS FURNISHED BY THE ASSESSEES. THE CIT HAS EXAMINED THE DETAILED EXPLA NATIONS FURNISHED BY THE ASSESSEE BUT WAS NOT CONVINCED WITH IT AND HE SET A SIDE THE ASSESSMENT ORDER ON THE AFORESAID ISSUES AND DIRECTED THE A.O. TO FRAME FRESH ASSESSMENT AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEES, HAVING CONCLUDED THAT THE ASSESSMENT ORDER IS ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 6. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE US WITH THE SUBMISSION THAT DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER HAS ISSUED THE QUESTIONNAIRES WHICH WERE DU LY REPLIED BY THE ASSESSEE. THE REPLIES SUBMITTED BY THE ASSESSEE ALONG WITH TH E COMPLETE DETAILS WERE EXAMINED BY THE ASSESSING OFFICER BEFORE ACCEPTING THE CLAIM OF THE ITA NO210/VIZ/2011 M/S. SRI SAI RAM ICE FACTORY, KA KINADA. 3 ASSESSEES. THEREFORE, IT CANNOT BE SAID THAT A.O. HAS NOT APPLIED HIS MIND TO THE CONTROVERSIAL ISSUES. WITH REGARD TO THE PAYME NT OF TRANSPORT CHARGES OF ` 33,22,500/-, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE TO TH ESE PAYMENTS AS THERE WAS NO CONTRACTUAL AGREEMENT BETWEEN THE ASSESSEE AND T HE LORRY OWNERS. HE HAS ALSO PLACED A RELIANCE UPON THE CBDT CIRCULAR N O. 715 DATED 8.8.1995 AND THE ORDER OF THE TRIBUNAL IN THE CASE OF CITY TRANS PORT CORPORATION VS. ITO 13 SOT 479 BEFORE THE ASSESSING OFFICER DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. THE EXPLANATION FURNISHED BY THE ASSE SSEE WERE ACCEPTED BY THE A.O. AND NO DISALLOWANCE WAS MADE ON NON-DEDUCT ION OF TDS U/S 194C OF THE ACT. WITH REGARD TO THE PAYMENTS MADE TO PARTN ERS AND THE PURCHASES OF FISH IN CASH, THE ASSESSEE HAS ALSO FURNISHED THE E XPLANATIONS BEFORE THE ASSESSING OFFICER. A COPY OF THE EXPLANATIONS ARE AVAILABLE AT PAGE NO.37 TO 41 OF THE COMPILATION OF THE ASSESSEES. THE LD. CO UNSEL FOR THE ASSESSEE HAS ALSO PLACED A RELIANCE ON THE FOLLOWING JUDGEMENTS IN SUPPORT OF HIS CONTENTIONS: 1. CIT VS. UNITED RICE LAND LTD. 322 ITR 594 2. CHANDRAKANT THACKAR VS. ACIT 129 TTJ 1 3. MYTHRI TRANSPORT CORPORATION VS. ACIT 124 ITD 40 4. HINDUSTAN COCA COLA BEVERAGE (P) LTD VS. CIT 293 IT R 226(SC) 5. TEJA CONSTRUCTIONS VS. ACIT 129 TTJ 57 6. VIDISHA TRACTORS VS. ACIT 53 TTJ 432 7. CIT VS. MAX INDIA LTD. 295 ITR 282 (SC) 8. CIT VS. TRIVENIPRASAD PANNALAL 228 ITR 680 9. CIT VS. ASHOK IRON & STEEL ROLLING MILLS 320 ITR 10 1 7. THE LD. D.R. BESIDES PLACING A RELIANCE UPON THE ORDER OF THE CIT HAS INVITED OUR ATTENTION TO THE FACTS THAT THE ASSESSE E HAS PAID THE TRANSPORT CHARGES OF ` 33,22,500/- TO DIFFERENT TRANSPORTERS FOR CARRIAGE OF HIS CONSIGNMENTS AT DIFFERENT POINT OF TIME AND MOST OF THE TIME, THE INDIVIDUAL PAYMENTS EXCEEDED THE LIMIT OF ` 20,000/-. THEREFORE, ACCORDING TO THE PROVISIONS OF SECTION 194C, THE ASSESSEE WAS REQUIR ED TO DEDUCT THE TDS AND IF HE FAILED TO DO SO, THE PAYMENTS MADE WOULD NOT BE ALLOWED TO BE DEDUCTED AS PER SUB-SECTION (3) OF SECTION 194C OF THE ACT. IN SUPPORT OF HIS ITA NO210/VIZ/2011 M/S. SRI SAI RAM ICE FACTORY, KA KINADA. 4 CONTENTION, HE HAS INVITED OUR ATTENTION TO THE DET AILS OF PAYMENTS MADE BY THE ASSESSEE TO VARIOUS TRANSPORTERS APPEARING AT P G.NO.43 TO 51 IN WHICH THE VARIOUS PAYMENTS ON A PARTICULAR DAY MADE TO DIFFER ENT CONTRACTORS EXCEEDED THE LIMIT OF ` 20,000/-. FOR EXAMPLE ON 2 ND APRIL, 2005, THE PAYMENT OF ` 33,000/- WAS MADE TO SHRI GANGA BHAVANI FOR MATERIA L TRANSPORT TO CALICUT. SIMILARLY, ANOTHER PAYMENT OF ` 33,000/- WAS MADE TO SHRI S. VENKATA RAO ON 3 RD APRIL, 2005 FOR MATERIAL TRANSPORTATION TO THIROOR . LIKEWISE ON DIFFERENT DATES, PAYMENTS MORE THAN ` 30,000/- WERE PAID TO DIFFERENT TRANSPORTERS FOR TRANSPORTATION OF THE MATERIAL. THEREFORE, THESE P AYMENTS ARE IN STRICT VIOLATION TO PROVISIONS OF SECTION 194C CLAUSE (3) OF THE ACT AND ARE NOT ALLOWABLE AS DEDUCTION ON NON-DEDUCTION OF TDS. NO THING IS AVAILABLE IN THE ASSESSMENT ORDER AS TO HOW THESE PAYMENTS WERE EXAM INED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS . 8. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SIMPLY RELIED UPON THE CBDT CIRCULAR NO.715 DATED 8.8.1995 AND TH E ORDER OF THE TRIBUNAL IN THE CASE OF CITY TRANSPORT CORPORATION VS. ITO 1 3 SOT 479. NOWHERE IN THIS CIRCULAR OR THE TRIBUNALS ORDER IT HAS BEEN S TATED THAT NO TDS IS REQUIRED TO BE DEDUCTED U/S 194C OF THE ACT EVEN IF THE PAYM ENTS EXCEED THE PRESCRIBED LIMITS ARE MADE TO A PARTICULAR CONTRACT OR ON A PARTICULAR DAY. MORE OVER THROUGH THIS CIRCULAR, IT HAS BEEN MADE C LEAR THAT THE CONTRACT MAY BE ORAL OR IN WRITING. NOWHERE IT HAS BEEN MENTION ED THAT PROVISIONS OF SECTION 194C WOULD ONLY BE INVOKED WHERE ALL THE TR IPS OF THE LORRIES WERE MADE CONTINUOUSLY UNDER A CONTRACT. A CONTRACT MAY BE ORAL FOR TRANSPORTATION OF MATERIAL TO A PARTICULAR DESTINAT ION AND AGAINST THAT CONTRACT IF A PAYMENT IS MADE MORE THAN ` 20,000/-, THE PROVISIONS OF SECTION 194C ARE TO BE APPLIED AND ASSESSEE IS REQUIRED TO DEDUC T THE TDS AND IN CASE HE FAILS TO DO SO, THE DEDUCTION OF THE PAYMENT WOULD NOT BE ALLOWED U/S 40(A)(IA) OF THE ACT. SINCE THE ASSESSING OFFICER HAS ACTED CONTRARY TO THE PROVISIONS OF LAW AND ACCEPTED THE CLAIM OF THE ASS ESSEES, HIS ORDER IS CERTAINLY ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. NO DOUBT THE ORDER OF THE A.O. CANNOT BE REVISED U/S 263 OF THE ACT IF THE ASSESSING OFFICER HAS APPLIED HIS MIND TO THE FACTS OF THE CA SE. BUT IN CASE IF THE ITA NO210/VIZ/2011 M/S. SRI SAI RAM ICE FACTORY, KA KINADA. 5 ASSESSING OFFICER HAS ACTED CONTRARY TO THE PROVISI ONS OF LAW, THE ORDER OF THE A.O. CAN CERTAINLY BE REVISED BY THE CIT U/S 263 OF THE ACT. 9. WITH REGARD TO THE PAYMENTS MADE TO PARTNERS, TH E LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT OUT OF THE TOTAL TRANSP ORT CHARGES, PART OF TRANSPORT CHARGES ARE PAID TO PARTNERS FOR ENGAGING THEIR VEHICLES AND THIS FACT IS DULY REFLECTED IN FORM NO.3CD ANNEXED TO FO RM NO.3CB AS PER PROVISIONS OF SECTION 44AB OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE GENUINENESS OF TRANSPORT CHARGES A RE VERIFIED BY THE ASSESSING OFFICER. THEREFORE, THE FINDINGS OF THE A.O. IN THIS REGARD CANNOT BE SET ASIDE BY THE CIT. THE LD. DR ON THE OTHER HAND HAS SUBMITTED THAT WITH REGARD TO THE PAYMENT TO PARTNERS ON ACCOUNT OF TRA NSPORT CHARGES, THE A.O. HAS NOT RAISED ANY QUERIES NOR ANY EXPLANATIONS WER E FURNISHED BEFORE THE A.O. WHATEVER EXPLANATIONS ARE GIVEN NOW, THEY WER E SUBMITTED TO THE CIT IN RESPONSE TO HIS SHOW CAUSE NOTICE. 10. WITH REGARD TO THE GENUINENESS OF FISH PURCHASE S, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT HE HAS FURNISHED AL L DETAILS BEFORE THE A.O. WITH THE SUBMISSION THAT THE FISHES WERE PURCHASED IN CASH FROM THE FISHERMEN IN AUCTIONS. THEREFORE, THE PAYMENTS IN CASH GETS THE PROTECTION OF RULE 6DD(E) OF THE INCOME TAX RULES. IN OPPUGNI TION, THE LD. D.R. HAS INVITED OUR ATTENTION TO THE DETAILS OF PURCHASES A PPEARING AT PG.NO.97 TO 156 WITH THE SUBMISSION THAT THE ASSESSEE HAS MADE THE FISH PURCHASE OF SUBSTANTIAL AMOUNT FROM DIFFERENT PERSONS AND NOTHI NG IS AVAILABLE ON RECORD THAT THESE PERSONS ARE THE FISHERMEN OR THE TRADERS . SOME OF THE TIME THE PURCHASES OF SUBSTANTIAL AMOUNT WAS MADE ON CREDIT WHICH IS NOT POSSIBLE IN CASE OF PURCHASE FROM FISHERMEN. THEREFORE, THE A. O. HAS NOT EXAMINED THESE ISSUES PROPERLY AND HAS ACCEPTED THE CLAIM WI THOUT VERIFYING THE PROPER APPLICABILITY OF PROVISIONS OF RULE 6DD(E) OF THE I .T. RULES. 11. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A PERUSAL OF RECORD, WE FIND THAT THE ASSESSIN G OFFICER HAS ISSUED A QUESTIONNAIRE WITH REGARD TO THE PAYMENT OF TRANSPO RT CHARGES AND THE FISH PURCHASES WHICH WERE DULY REPLIED BY THE ASSESSEES. THE TRANSPORT CHARGES ITA NO210/VIZ/2011 M/S. SRI SAI RAM ICE FACTORY, KA KINADA. 6 WERE PAID TO THE EXTENT OF ` 33,22,500/- AND FROM THE DETAILS IT IS NOTICED THA T ALMOST ON ALL OCCASIONS, THE PAYMENTS OF TRANSPORT CHARGES EXCEEDED ` 30,000/- MADE TO ONE PERSON ON A PARTICULAR DAY. F ROM THE DETAILS OF PAYMENT, IT CANNOT BE INFERRED THAT PAYMENT BELOW T HE PRESCRIBED LIMIT WERE MADE TO DIFFERENT PERSONS IN ONE DAY AND ITS TOTAL EXCEEDED THE PRESCRIBED LIMIT. SINCE THE PAYMENTS EXCEEDING THE LIMIT WERE MADE TO ONE PERSON ON A PARTICULAR DAY, IT ATTRACTS THE PROVISIONS OF SECTI ON 194C OF THE ACT. ADMITTEDLY, THE PAYMENTS WERE MADE TO THE LORRY OWN ERS FOR TRANSPORTING THE MATERIAL TO DIFFERENT PLACES. AS PER PROVISIONS OF SECTION 194C, IF THE PAYMENTS EXCEEDING ` 20,000/- IS MADE TO A TRANSPORTER FOR CARRIAGE OF GOODS, THE ASSESSEE IS REQUIRED TO DEDUCT THE TDS O N PAYMENT TO TRANSPORTERS. IF HE FAILS TO DO SO, THE ENTIRE PAY MENT WOULD BE DISALLOWED U/S 40(A)(IA) OF THE ACT. WE DO NOT FIND ANYWHERE EITH ER IN THE ASSESSMENT ORDER OR FROM ANY OTHER DOCUMENTS THAT THE ASSESSING OFFI CER HAS APPLIED HIS MIND TO THE LEGAL PROVISIONS. IN REPLY FILED BEFORE THE ASSESSING OFFICER, THE A.O. HAS PLACED RELIANCE UPON THE CIRCULAR NO.715 DATED 8.8.1995 AND THE ORDER OF THE TRIBUNAL IN THE CASE OF CITY TRANSPORT CORPORAT ION VS. ITO (SUPRA) BUT NOWHERE IN THE CIRCULAR OR THE ORDER OF THE TRIBUNA L, IT HAS BEEN MENTIONED THAT ON SUCH TYPE OF PAYMENTS, TDS IS NOT REQUIRED TO BE DEDUCTED. MOREOVER, THROUGH CIRCULAR IT HAS BEEN CLARIFIED TH AT THE CONTRACT MAY BE ORAL OR IN WRITING. THEREFORE, IN THE LIGHT OF CIRCULAR S IF THE ORAL CONTRACT IS MADE WITH THE CONTRACTOR FOR THE CARRIAGE OF GOODS, THE ASSESSEE IS REQUIRED TO DEDUCT THE TDS AS PER PROVISIONS OF SECTION 194C OF THE ACT. 12. WE HAVE ALSO CAREFULLY EXAMINED THE JUDGEMENTS REFERRED TO BY THE ASSESSEES BUT IN NONE OF THE JUDGEMENTS, IT HAS BEE N HELD THAT IN SUCH TYPE OF PAYMENTS, TDS IS NOT REQUIRED TO BE DEDUCTED. M OREOVER, WE ARE NOT DEALING WITH THE ISSUE ON MERIT. THE ISSUE IN DISP UTE IS WHETHER IN SUCH CIRCUMSTANCES, REVISION U/S 263 IS POSSIBLE OR NOT. FROM THE DETAILS OF TRANSPORT CHARGES AVAILABLE BEFORE US, IT IS QUITE EVIDENT THAT MOST OF THE INDIVIDUAL PAYMENTS ARE MORE THAN ` 20,000/- AND IT WERE MADE ON A PARTICULAR DAY TO A PARTICULAR PERSON. THEREFORE, WE ARE OF THE VIEW THAT ASSESSING OFFICER HAS NOT EXAMINED THIS ISSUE IN TH E LIGHT OF LEGAL PROVISIONS WHICH MADE THE ASSESSMENT ORDER ERRONEOUS AND PREJU DICIAL TO THE INTEREST OF ITA NO210/VIZ/2011 M/S. SRI SAI RAM ICE FACTORY, KA KINADA. 7 THE REVENUE. HAVING AGREED WITH THE ORDER OF THE C IT ON THIS ISSUE, WE HOLD THAT CIT HAS RIGHTLY HELD THE ASSESSMENT ORDER TO B E ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND WE C ONFIRM HIS ORDER. 13. SO FAR AS THE PAYMENT MADE TO THE PARTNERS FOR TRANSPORTATION CHARGES, NO ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER. IN FORM 3 CD, IT IS AVAILABLE THAT ASSESSEE HAS MADE THE PAYMENT OF ` 23,68,700/- AS TRANSPORTATION CHARGES TO THE PARTNERS BUT SUBSEQUE NTLY IT WAS FURTHER STATED THAT THESE PAYMENTS WOULD NOT FALL UNDER THE PROVIS IONS OF SECTION 40A(2)(B) OF THE ACT. IN SUCH A SITUATION, THE ASSESSING OFF ICER IS REQUIRED TO EXAMINE THE FACT WHETHER THE PAYMENTS MADE TO THE PARTNERS WERE AT THE MARKET RATE AND WHETHER THE TDS WAS DEDUCTED ON THESE PAYMENTS OR NOT. ALL THESE ISSUES ARE REQUIRED TO BE EXAMINED BY THE ASSESSING OFFICER WHILE ACCEPTING THE CLAIM OF THE ASSESSEES. BUT NOTHING HAS BEEN D ONE BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THEREFORE, ON THIS ISSUE ALSO WE AGREE WITH THE FINDING OF THE CIT THAT THE ASSESSMENT ORDER ON THIS ACCOUNT IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE. WE ACCORDINGLY CONFIRM THE SAME. 14. WITH REGARD TO THE FISH PURCHASES, IT IS NOTICE D FROM THE DETAILS OF PURCHASES THAT ASSESSEE HAS MADE THE PURCHASES OF ` 5,09,56,066/-. MOST OF THE PURCHASES WERE MADE IN CASH AND EACH AND EVERY PURCHASE ON A PARTICULAR DAY EXCEED THE PRESCRIBED LIMIT. THE DE TAILS OF PURCHASES ARE AVAILABLE ON PG.NO.97 TO 156 OF THE COMPILATION OF THE ASSESSEES AND FROM ITS CAREFUL PERUSAL, WE FIND THAT THE ASSESSEE HAS MADE THE PURCHASES OF SUBSTANTIAL AMOUNT FROM A PARTICULAR PERSON ON DIFF ERENT DATES IN CASH AND THE PAYMENT EXCEEDED THE PRESCRIBED LIMIT. SOMETIM ES, THE PURCHASES WERE ALSO MADE ON CREDIT BASIS BUT NOTHING IS AVAILABLE FROM RECORD WHETHER THESE PURCHASES WERE MADE FROM THE FISHERMEN OR THE TRADE RS. IN REPLY TO THE QUERY, IT WAS SIMPLY STATED THAT THE PURCHASES WERE MADE FROM THE FISHERMEN BUT FROM THE CAREFUL PERUSAL OF THE DETAILS IT IS N OT CLEAR WHETHER THESE PURCHASES WERE MADE FROM THE FISHERMEN. THE PURCHA SES CANNOT BE MADE ON CREDIT BASIS FOR A SUBSTANTIAL AMOUNT FROM THE F ISHERMEN. ALL THESE FACTS REQUIRE A PROPER VERIFICATION BY THE A.O. AS PER P ROVISIONS OF SECTION 6DD(E) ITA NO210/VIZ/2011 M/S. SRI SAI RAM ICE FACTORY, KA KINADA. 8 OF THE I.T. RULES, THE PURCHASES MADE IN CASH FROM THE FISHERMEN CANNOT BE DISALLOWED AS PER PROVISIONS OF SECTION 40A(3) OF T HE ACT BUT THE ONUS IS ALWAYS UPON THE ASSESSEE TO ESTABLISH THAT THESE PU RCHASES WERE MADE FROM THE FISHERMEN. SINCE ALL THESE ASPECTS WERE NOT EX AMINED BY THE ASSESSING OFFICER EITHER THROUGH QUERIES OR IN ENQUIRY, THE C IT IS RIGHT IN HOLDING THAT FOR WANT OF PROPER ENQUIRY, THE ASSESSMENT ORDER IS ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, WE FIND OU RSELVES IN AGREEMENT WITH THE ORDER OF THE CIT AND WE CONFIRM THE SAME. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. P RONOUNCED IN THE OPEN COURT ON 05.09.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 05 TH SEPTEMBER, 2011 COPY TO 1 BODA RAMAM & CO., CHARTERED ACCOUNTANTS, D.NO.2 - 18024, MADHAVNAGAR, KAKINADA-533 003, EAST GODAVARI DISTRICT, A.P. 2 ITO WARD - 2, KAKINADA 3 THE CI T, RAJAHMUNDRY 4 THE CIT (A) , RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM