The ITO, Ward-9(4), Surat V. Shri Yunus Haji Ibrahim Fazalwala, Surat

ITA 782/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9702 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 24-06-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 11-03-2011
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: J P SHAH
• Keywords: Bogus purchase; Opportunity of being heard
• Section: 143(3); 142(1); 2

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE-PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO.782/AHD/2011 / ASSESSMENT YEAR: 2003-2004 ITO, WARD - 9(4) SURAT. VS SHRI YUNUS HAJI IBRAHIM FAZALWALA PROP: M/S.LADLY PRINTS 11/318, PAIKEE SHOP NO.11 NOBLE TEXTILE MARKET VADA CHAUTA, SURAT. PAN : AABPF 0969 L ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SMT.SONIA KUMAR, SR.DR ASSESSEE BY : SHRI J.P. SHAH / DATE OF HEARING : 24/06/2015 / DATE OF PRONOUNCEMENT: 17/07/2015 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF REVENUE AGAINST THE ORDER OF THE CIT(A)-V, SURAT DATED 30.11.2010 P ASSED FOR THE ASSTT.YEAR 2003-04. 2. THOUGH THE REVENUE HAS TAKEN FOUR GROUNDS OF APP EAL, BUT ITS GRIEVANCE REVOLVES AROUND SINGLE ISSUE, WHEREBY, IT HAS CHALLENGED DELETION OF ADDITION OF RS.18,32,319/- 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN TRADING OF GREY CLOTH. HE HAS FILED ITS RETURN OF INCOME ON 21.10.2003 DECLARING A TOTAL INCOME AT RS.1,09,218/ -. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT, AND AN ASSESSMENT ITA NO.782/AHD/2011 2 ORDER UNDER SECTION 143(3) OF THE ACT WAS PASSED ON 10.3.2006. THE LEARNED AO HAS MADE ADDITION OF RS.18,32,319/- ON A CCOUNT OF BOGUS PURCHASES. IN THIS WAY, THE INCOME OF THE ASSESSE E WAS DETERMINED AT RS.19,55,340/-. 4. THE LEARNED FIRST APPELLATE AUTHORITY CONFIRMED THE ADDITION. THE ASSESSEE CARRIED THE MATTER IN TRIBUNAL VIDE ITA NO .2170/AHD/2006. THE APPEAL OF THE ASSESSEE HAS BEEN ALLOWED FOR STA TISTICAL PURPOSE. THE TRIBUNAL FOUND THAT SIMILAR ISSUE AROSE IN THE ASSTT.YEAR 2001-02, AND ITAT VIDE ORDER DATED 9.9.2005 PASSED IN ITA NO .2767/AHD/2004 HAS SET ASIDE THE ISSUE FOR RE-ADJUDICATION AT THE LEVEL OF AO. FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSTT.YEAR 2001-02 , THE ITAT HAS SET ASIDE THE ISSUE IN THE PRESENT YEAR TO THE FILE OF THE AO. THE TRIBUNAL HAS RELIED UPON THE OBSERVATIONS OF THE ITAT MADE I N THE ASSTT.YEAR 2001-02, AND DIRECTED THE AO TO RE-EXAMINE THE ISSU E IN THE LIGHT OF THE TRIBUNALS ORDER PASSED IN THE ASSTT.YEAR 2001-02. IT IS PERTINENT TO MENTION HERE THAT WE HAVE TO EXAMINE THE FACTS AND CIRCUMSTANCES WITH AN ANGLE WHETHER THE AO HAS EXAMINED THE FACTS AS P ER THE DIRECTIONS OF THE TRIBUNAL ORDER OR NOT. THEREFORE, IT IS NECESS ARY TO TAKE NOTE OF THE TRIBUNALS DIRECTIONS IN THE FIRST ROUND. IT READS AS UNDER: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT A S IMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE ITAT, AHMEDABA D BENCH 'C' RELATING TO ASSESSMENT YEAR 2001-02 AND THE TRIBUNA L VIDE ITS ORDER DATED 9-9-2005 SET ASIDE THE ORDER OF THE CIT (APPEALS) AND RESTORED THE ISSUE TO THE FILE OF THE AO WITH CERTA IN DIRECTIONS AND GUIDE LINES. THE RELEVANT OBSERVATIONS OF THE TRIBU NAL ARE AS UNDER: ' WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US /WE FIND THAT THE ASSESSEE IN HIS WRITTEN SUBMISSIONS BEFORE THE AO HAS MENTIONED THAT THE ASSESSEE HAS MAINTAINED DAY TO DAY QUANTITATIVE REGISTER IN WHICH SUCH PURCHASE S RE RECORDED. HE HAS ALSO MENTIONED THAT SAME GOODS ARE SOLD BY THE ASSESSEE AND THEREFORE, IF THE PURCHASES ARE HELD TO BE BOGUS, HEW THE GOODS BE SOLD BY THE ASSESSEE. WE FIND ITA NO.782/AHD/2011 3 THAT THOUGH THE AO HAS REPRODUCED THE ABOVE SUBMISS IONS OF THE ASSESSEE IN THE ASSESSMENT ORDER, HOWEVER, H E HAS NOT GIVEN ANY COMMENT WHETHER THE ABOVE SUBMISSIONS OF THE ASSESSEE WERE FACTUALLY CORRECT OR NOT. HE HAS MADE THE ADDITION ON THE GROUND THAT THE ASSESSEE WAS UNABLE TO PRODUCE THE SELLER AND THAT THE CHEQUES WERE ENCASH ED BY SOMEBODY ELSE. IN OUR OPINION, THE ABOVE TWO FACTS RAISE SERIOUS DOUBT ABOUT THE GENUINENESS OF THE PURCHASE S BUT THE SAME CANNOT BE SAID TO BE CONCLUSIVE. IF THE S ELLER HAS GIVEN CHEQUE TO SOMEBODY ELSE FOR DISCHARGE OF THE IR LIABILITY AND THE OTHER PARTY HAS ENCASHED THE CHEQ UE, IT CANNOT BE SAID THAT THE PURCHASE BY THE ASSESSEE IS BOGUS. THEREFORE, IT IS VERY RELEVANT TO ASCERTAIN WHO ENC ASHED THE CHEQUE. IF THE CHEQUE IS ENCASHED BY SOMEBODY ELSE ON BEHALF OF THE SELLER, THEN, THE PURCHASES WOULD BE GENUINE. BUT IF THE CHEQUE IS ENCASHED BY OR ON BEHALF OF TH E ASSESSEE, THEN, OBVIOUSLY THE PURCHASES WOULD BE BO GUS. SIMILARLY THE ACTUAL RECEIPT OF GOODS IS VERY IMPOR TANT FOR DETERMINING THE GENUINENESS OF THE PURCHASES. IF H E ASSESSEE HAS MAINTAINED DAY TO DAY STOCK REGISTER O F GOODS AND THE GOODS IN SUCH REGISTER ARE RECORDED AND THE CORRECTNESS OR GENUINENESS OF THE STOCK REGISTER IS NOT DOUBTED, THEN, OBVIOUSLY IT WOULD BE IMPROPER TO DO UBT THE GENUINENESS OF THE PURCHASES ITSELF. IF THE GOODS A RE RECEIVED AND THE SELLER IS NOT FOUND AT THE ADDRESS GIVEN, THEN, AT THE MOST DOUBT CAN BE RAISED ABOUT THE RAT E AT WHICH GOODS WERE PURCHASED. HOWEVER, ALL THESE FACT S NEED VERIFICATION AT THE END OF THE AO. W, THEREFORE, SE T ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE MAT TER BACK TO THE FILE OF THE AO. WE DIRECT HIM TO RE-EXAMINE THE WHOLE ISSUE AFRESH AS PER OUR OBSERVATIONS ABOVE AND THER EAFTER RE-ADJUDICATE THE MATTER IN ACCORDANCE WITH LAW. NE EDLESS TO MENTION THAT THE AO WILL ALLOW ADEQUATE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE.' IT IS CLAIMED THAT THE FACTS OF THE PRESENT YEAR AR E SIMILAR TO THAT OF ASSESSMENT YEAR 2001-02. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA), WE SET ASIDE THE ORDER OF THE CIT(APPEALS)AND RESTORE THE ISSUE TO THE FILE OF TH E AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN THE LIGHT O F THE DECISION OF HE TRIBUNAL REFERRED TO ABOVE. THE AO IS ALSO DIREC TED TO GIVE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN PURSUANCE OF THE TRIBUNALS ORDER THE LEARNED AO HAD ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT, WHICH WAS D ULY SERVED UPON THE ASSESSEE ON 10.7.2009. THE LEARNED AO CALLED FOR THE DETAILS FROM THE ITA NO.782/AHD/2011 4 BANK WITH REGARD TO THE CHEQUES ISSUED BY THE ASSES SEE FOR PAYMENT OF PURCHASES MADE BY HIM. THE LEARNED AO HAS COMPILED ALL THOSE DETAILS IN TABULAR FORM AND REPRODUCED IN PARA NO.4 OF THE ASSESSMENT ORDER. ACCORDING TO THE AO, THE ASSESSEE HAS MADE PURCHASE S BY CROSS/BEARER CHEQUE, AND SOME OF THE CHEQUES ARE ENDORSED TO OTH ER PARTIES. HE HARBOURED A PLEA THAT SELLERS HAVE NOT ENCASHED OR DEPOSITED THE AFORESAID AMOUNTS IN THEIR ACCOUNTS. THEREFORE, HE DIRECTED THE ASSESSEE TO EXPLAIN AS TO WHY 25% OF THE TOTAL EXPENSES INCURRED BY HIM FOR PURCHASES SHOULD NOT BE DISALLOWED. IN RES PONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE HAS FILED A REPLY WHICH HAS BEEN REPRODUCED BY THE AO IN PARA NO.5. THIS REPLY READS AS UNDER: 'THE SERIAL NO.42, 43, 52, 53, 54, 63, 64, 65, 72, 80, 81, 84, 86, 91, 95, 96, 100,102, 110, 112, 120, 125, 126, 127, 130, 132 AND 138 ARE BY MISTAKE WRITTEN TWICE WHICH PLEASE NOTE. NOW, FOR THE SERIAL NO. 30, 31, 49, 50, 60, 61, 71, 75, 76, 78, 90, 93, 97, 113, 114, 121, 122 AND 139, YOU HAVE MENTIO NED IN COLUMN ENDORSED TO 'CASH' WHICH IS NOT CORRECT. THE CORRECT FACT MENTIONED IN THE BANK STATEMENT IS 'ICLG' MEANS 'IN WARD CLEARING'. THE XEROX COPY OF MY BANK STATEMENT MENT IONING 'ICLG' ENCLOSE WITH HIGHLIGHTING THE DATE, DESCRIPT ION. INS. NO. DEBIT AMOUNT ETC. MY BANK ACCOUNT IS WITH CENTRAL B ANK OF INDIA, KANPITH, M. G. ROAD, SURAT. CURRENT A/C. CAGEN 1228 1 ENCLOSED FOR YOUR VERIFICATION. YOUR SERIAL NO. 146 AND 147 SHOW THAT I HAVE WITHDRAWN CASH FROM THE BANK ACCOUNT FOR MY BUSINES S EXPENSES. WHILE SR. NO. 5, RS.50,140/- AND NO. 6, RS.52,451/- CASH PAYMENT MADE TOWARDS PURCHASES TOTALING TO RS.1,02,591/-, O UT OF WHICH TO THE EXTENT OF 20% OF SUCH AMOUNT OF RS.20,518/- CAN BE DISALLOWED.' 6. ACCORDING TO THE LEARNED AO, THE ASSESSEE FAILED TO ESTABLISH CO- RELATION BETWEEN PURCHASES MADE BY HIM VIS--VIS TH E EXACT PAYMENT MADE TO HIS SELLER. THE LEARNED AO DID NOT DISPUTE WITH REGARD TO THE SALES MADE BY THE ASSESSEE. ALSO DID NOT DISPUTE W ITH REGARD TO THE TOTAL STOCK AVAILABLE WITH HIM. THE ONLY DISPUTE I S THE RATE AT WHICH THE ASSESSEE HAS PURCHASED THE RAW-MATERIAL. ACCORDING TO THE AO, SINCE THE ASSESSEE FAILED TO RECONCILE THE EXACT PURCHASE PRICE VIS--VIS THE ITA NO.782/AHD/2011 5 GOODS PURCHASED BY HIM FROM A PARTICULAR VENDOR, TH EREFORE, HE DISALLOWED 25% OF THE TOTAL PURCHASES AND MADE AN A DDITION OF RS.18,32,319/-. 7. ON APPEAL, THE LD. FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION. 8. THE FINDING RECORDED BY THE LEARNED FIRST APPELL ATE AUTHORITY DOES NOT TOUCH ANY OF THE REASONING GIVEN BY THE AO. TH E FINDINGS READ AS UNDER: I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUB MISSION OF THE APPELLANT AS ENUMERATED ABOVE. I DO NOT AGREE W ITH THE A.O.'S ACTION AS FAR AS THE ABOVE ADDITION IS CONCERNED DU E TO THE FOLLOWING REASONS: I. THE MANDATORY REQUIREMENT FOR PAYMENT OF EXPENDI TURE BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAY EE BANK DRAFT IN SEC.40A(3) OF THE I.T.ACT HAS COME W.E.F 1 3.7.2006 WHEREAS THE APPELLANT'S CASE PERTAINS TO A.Y.2003-0 4. II. THE A.O. HAS NOT FOUND ANY DEFECT IN THE BOOKS OF ACCOUNT INCLUDING THE DAY TO DAY STOCK REGISTER MAINTAINED BY THE APPELLANT. IT MEANS PURCHASES AND SALES ARE GENUINE . III. THE A.O. HAD NOT FOUND ANY INSTANCE WHERE THE CHEQUES ISSUED BY THE APPELLANT HAS BEEN ENCASHED ON BEHALF OF THE APPELLANT, FOR COMING TO THE CONCLUSION THAT PURCHASES ARE BOGUS ( AS PER OBSERVATION OF ITAT ). IV. IN THE ASSESSEE'S OWN CASE FOR A.Y.2001-2002 AN D OTHER RELATED CASE I.E. SMT. A. HAJI IBRAHIM FAZALWALA FO R A.Y.2001-02 NO ADDITION WAS MADE ON THE SAME ISSUE ( PAYMENT OF EXPENDITURE BY CHEQUES) ALTHOUGH SIMILAR FACTS & CI RCUMSTANCES WERE THERE . THIS WAS DONE BY THE A.O. FOLLOWING SI MILAR DIRECTIONS GIVEN BY HON'BLE ITAT, AHMEDABAD. 9. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT THE ASSESSEE FAILED TO FULFILL THE DIRECTIONS GIVEN BY THE ITAT. THEREFORE, THE AO HAS RIGHTLY MADE ADDITION. ON TH E OTHER HAND, THE LD.COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD CO PY OF THE ITA NO.782/AHD/2011 6 ASSESSMENT ORDER PASSED IN THE ASSTT.YEAR 2001-02. THIS ORDER HAS BEEN PASSED BY THE AO WHILE GIVING EFFECT TO THE TR IBUNALS ORDER DATED 9.9.2005. THE AO HAS VERIFIED THE PURCHASES, AND T HEREAFTER HELD THAT THE ASSESSEE HAS ESTABLISHED CO-RELATION BETWEEN TH E PURCHASES MADE BY HIM VIS--VIS THE PAYMENTS MADE TO THE VENDORS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ACCOUNT S OF THE ASSESSEE ARE DULY AUDITED. THE DATE-WISE STOCK REGISTER WAS MAINTAINED, AND REPORT IS AVAILABLE AT PAGE NOS.19 TO 36 OF THE PAP ER BOOK. HE ALSO CONTENDED THAT THE AO DID NOT DISPUTE WITH REGARD T O THE QUANTITATIVE DETAILS. HE ACCEPTED THE SALES MADE BY THE ASSESSE E. IF THAT BE SO, THEN, IT WOULD INDICATE THAT THE ASSESSEE MUST HAVE MADE PURCHASES, OTHERWISE, IT WILL NOT BE POSSIBLE FOR THE ASSESSEE TO MAKE SALES. THEREFORE, THE LEARNED AO OUGHT TO HAVE NOT MADE AN Y ADDITION. 10. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORDS CAREFULLY. THE FACTS ARE NOT AS SIMPLE AS PROPOUNDED BY THE LEARNED SENIOR COUNSEL. HAD IT BEEN SO, THEN, THER E WOULD NOT HAVE ANY DISPUTE. THE QUESTION IS NOT OF THE QUANTITATIVE D ETAILS, BECAUSE, THE AO IS ALSO RECOGNIZING THE PURCHASES MADE BY THE ASSES SEE. THAT IS THE REASON HE HAS DISALLOWED 25% OF THE PURCHASE PRICE. OTHERWISE, HE WOULD HAVE DISALLOWED 100% OF THE CLAIM MADE BY THE ASSESSEE. THE QUESTION IS THAT THE ASSESSEE HAS PRODUCED PURCHASE BILLS FROM A CONCERN, NAMELY, A, BUT PROCURED THE GOODS FROM A NOTHER CONCERN, NAMELY, B. HOW TO VERIFY THE GENUINENESS OF THE PAYMENTS AND THE GOODS PROCURED BY HIM ? THE TRIBUNAL WHILE SETTING ASIDE THE ISSUE TO THE FILE OF THE AO HAS CATEGORICALLY OBSERVED THAT THE ASSESSEE WAS UNABLE TO PRODUCE THE SELLER AND CHEQUES WERE ENCAS HED BY SOMEBODY ELSE. IN THE OPINION OF THE TRIBUNAL, THIS FACT RA ISES SERIOUS DOUBT ABOUT THE GENUINENESS OF THE PURCHASES MADE BY THE ASSESS EE. THE TRIBUNAL OBSERVED THAT IF THE SELLER HAS GIVEN CHEQUE TO THE SOMEBODY ELSE FOR DISCHARGE OF THEIR LIABILITY AND OTHER PARTY HAS EN CASHED THE CHEQUE, THEN IT CANNOT BE SAID THAT THE PURCHASES BY THE AS SESSEE IS BOGUS. BUT ITA NO.782/AHD/2011 7 IF THE CHEQUE IS ENCASHED BY OR ON BEHALF OF THE AS SESSEE, THEN, OBVIOUSLY, THE PURCHASES WOULD BE BOGUS. THE TRIBU NAL ALSO OBSERVED THAT IF THE GOODS ARE RECEIVED AND THE SELLER IS NO T FOUND AT THE ADDRESS GIVEN, THEN, AT THE MOST A DOUBT WOULD ARISE ABOUT THE RATE AT WHICH THE GOODS WERE PURCHASED. NOW, IT WAS FOR THE ASSESSEE TO COMPILE THE DETAILS IN TABULAR FORM EXHIBITING THE NAME OF THE PARTIES FROM WHOM THE PURCHASES WERE MADE, THE AMOUNT PAID AND THE CH EQUE NUMBER. HOW THAT AMOUNT ULTIMATELY CREDITED TO THAT PARTY I S TO BE ESTABLISHED BY THE ASSESSEE. FOR EXAMPLE SAKE, THE FIRST NARRA TION MADE BY THE AO IN PARA NO.4 OF HIS ORDER IS ANAMIKA FABRICS. A PA YMENT OF RS.45,470/- VIDE CHEQUE NO.563305 DATED 2.12.2002 WAS MADE. A CCORDING TO THE AO, THIS CHEQUE WAS ENDORSED TO FAIZAN TEXTURISING UNIT. NOW IT IS FOR THE ASSESSEE TO DEMONSTRATE THAT M/S.ANAMIKA FABRIC S HAS RECEIVED THE PAYMENT BY CREDITING THE ACCOUNT OF FAIZAN TEXTURIS ING UNIT. THE LINK BETWEEN THE ANAMIKA FABRICS AND FAIZAN TEXTUISING U NIT IS MISSING AS TO WHETHER FAIZAN TEXTURISING UNIT HAS SUPPLIED THE GOODS TO THE ASSESSEE ON BEHALF OF THE ANAMIKA FABRICS OR M/S.AN AMIKA FABRICS DIRECTED THE ASSESSEE TO ENDORSE THE CHEQUE TO FAIZ AN TEXTURIING UNIT. IT IS ALSO NOT ASCERTAINABLE, WHETHER THE FAIZAN TE XTURING UNIT IS A REPRESENTATIVE OF THE ASSESSEE. THE LEARNED AO HAS MADE REFERENCE TO THIS ASPECT ALSO IN PARA NO.6 OF THE ASSESSMENT ORD ER. HIS OBSERVATIONS ARE WORTH TO NOTE, WHICH READS AS UNDER: 6. ON GOING THROUGH THE REPLY OF THE ASSESSE E, THE MODUS OPERANDI OF THE ASSESSEE IS CLEAR AND IS ELABORATED AS FOLLOWS: THE ASSESSEE HAS ISSUED CROSS CHEQUES INSTEAD OF AC COUNT PAYEE CHEQUES. SOME OF THE CHEQUES ARE ENDORSED BY SELLER TO OTHER PARTIES. SOME OF THE CHEQUES APPEAR TO HAVE B EEN ROUTED THROUGH OTHER PROPRIETARY CONCERN OF THE ASSESSEE; FOR INSTANCE, CHEQUE ISSUED IN FAVOUR OF M/S. A. K. TEXTILE IS WI THDRAWN BY THE PROPRIETOR OF A. K. TEXTILE NAMED 'AAISHA', VIDE CH EQUE NUMBER 446893 DATED 03/06/2002, DRAWN ON CENTRAL BANK OF S URAT. IN THE SAME PATTERN, OTHER CHEQUE, DATED 04.06.2002, C HEQUE NO.446894, IN THE NAME OF A. K. TEXTILE IN WHICH PR OPRIETOR'S NAME IS SHOWN AS MR. FEROZ. HERE, IT IS DISBELIEVED THAT PROPRIETOR ITA NO.782/AHD/2011 8 HAD UTILISED HIS ACCOUNT THROUGH A. K. TEXTILE. THE SAME PATTERN IS REPEATED, THE ASSESSEE HAD WITHDRAWN AN AMOUNT OF R S.50,027/-, VIDE CHEQUE NO. 446892 ISSUED IN FAVOUR OF ANUKUL T EXTILE AND THE SAME IS WITHDRAWN BY HIM ON THE SAME DATED, VIDE TO KEN NO. 3549. IT IS PERTINENT TO MENTION THAT THE ABOVE CHEQUES A RE IN SERIAL NUMBERS I.E. 446892, 446893, 446894. AS HABI TUAL THE SAME THEORY IS REPEATED AND THE CHEQUE NO. 446895 I SSUED IN THE NAME OF TEX TRADE WAS WITHDRAWN BY THE ASSESSEE, BY TOKEN NO. 3436, AN AMOUNT OF RS.51,755/- AND CHEQUE NO.446869 WAS ISSUED IN FAVOUR OF SELF. HOWEVER, ON THE DEEP SCRU TINY, IT WAS FOUND THAT THE SAME AMOUNT OF RS.20,000/- WAS CREDI TED IN THE NAME OF M/S. PALAK FASHION IN THE BOOKS OF THE ASSE SSEE. TO STRENGTHEN THE ABOVE FINDINGS, LETTERS WERE ISSU ED TO VARIOUS BANKS TO PRODUCE THE INFORMATION REGARDING ENCASHMENT/ DEPOSITS. OUT OF THEM, TWO BANKS NAMED BANK OF INDI A AND CITY UNION BANK LTD. HAVE SPECIFICALLY INFORMED THAT NO SUCH PERSON IS HAVING AN ACCOUNT IN THEIR BANK. THE MAJORITY OF BA NKS NAMED ARE AS FOLLOWS. THE ROYAL CO-OP. BANK, THE VITRAG CO-OP. BANK, THE VIKAS CO-OP. BANK AND THE MEMON CO-OP. BANKS HAVE SUSPENDED BY RESERVE BA NK OF INDIA; THEREFORE, THE DETAILS OF BANK ENCASHMENT/ D EPOSITS COULD NOT BE OBTAINED TILL DATE. FURTHER, IT IS NOTICED THAT THE ASSESSEE HAS MAINTA INED QUANTITY REGISTER; HOWEVER, HE COULD NOT PRODUCE THE BILLS O F PURCHASES. THEREFORE, THE QUANTITY OF PURCHASE CANNOT BE ASCER TAINED. MOREOVER, THE ASSESSEE STATED IN HIS REPLY, VIDE LE TTER DATED 23/12/2009, THAT 'I AM NOT ABLE TO PRODUCE ALL THE BILLS BECAUSE HEA VY FLOOD WAS AT OUR SHOP AND ALMOST ALL THE RECORDS WERE DES TROYED.' HOWEVER, THE ASSESSEE HAS NEITHER PRODUCED ANY COPY OF INSURANCE CLAIM OR FIR REGISTERED IN RESPECT OF THE DESTRUCTION OF GOODS NOR PROVIDED COPY OF ANY CLAIM MADE BEFORE TH E LOCAL AUTHORITY FOR LOSS OF GOODS AND BOOKS DESTROYED IN FLOOD. 11. THUS, THE ASSESSEE MISERABLY FAILED IN THIS YEA R TO ESTABLISH A RECONCILIATION BETWEEN THE PAYMENTS MADE BY HIM TOW ARDS PURCHASES ITA NO.782/AHD/2011 9 VIS--VIS THE ULTIMATE RECIPIENT OF THE AMOUNTS BEI NG HIS VENDOR. AS FAR AS THE ASSTT.YEAR 2001-02 IS CONCERNED, WE FIND THA T IN THAT YEAR PURCHASES WERE MADE FROM FOUR PARTIES. THE ASSESSE E HAS DEMONSTRATED THAT THE PAYMENTS HAVE BEEN RECEIVED B Y TWO PARTIES. THE LD. AO HAS ACCEPTED IT AS A FACT. THUS, THE AS SESSEE HAS PROVED ON RECORD THAT WHO WAS THE ULTIMATE RECIPIENT OF THE M ONEY THAT ENTITY WAS FOUND TO BE VENDOR OF THE ASSESSEE. THERE COULD NO T BE ANY DOUBT ABOUT THE PURCHASES. DUE TO THESE REASONS, THE AO DID NOT MAKE ANY ADDITION. THE LEARNED FIRST APPELLATE AUTHORITY HA S NOT EXAMINED THE FACTS WITH THIS ANGLE, NO REASONING IS DISCERNIBLE IN THE FINDINGS EXTRACTED SUPRA. THE CIT(A) HAS OBSERVED THAT THE AO HAS NOT FOUND ANY INSTANCE WHETHER THE CHEQUE ISSUED BY THE ASSES SEE HAS BEEN ENCASHED ON BEHALF OF THE ASSESSEE. IT WAS FOR THE ASSESSEE TO ESTABLISH HOW THE PAYMENT WAS MADE TO THE ULTIMATE SELLER OF THE GOODS. THE ASSESSEE FAILED TO ESTABLISH THIS FACT. THE LEARNED AO HAS MADE REFERENCE TO THE CASE OF M/S.A.K.TEXTILE, WHER E THE PAYMENTS WERE WITHDRAWN BY THE PROPRIETOR NAMED AAISHA. T HESE AMOUNTS HAVE BEEN DOUBTED BY THE AO. IT WAS FOR THE ASSESS EE TO EXPLAIN AS TO HOW THE PAYMENTS ARE GENUINE AND THEY WERE MADE TO THE SUPPLIER. NO SUCH ASSERTIONS ARE DISCERNIBLE FROM THE REPLY OF T HE ASSESSEE EXTRACTED SUPRA. THEREFORE, IN OUR OPINION, THE LEARNED CIT( A) HAS ERRED IN DELETING THE ADDITION. WE SET ASIDE ORDER OF THE L EARNED CIT(A), AND RESTORE THAT OF AO. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 17 TH JULY, 2015 AT AHMEDABAD. SD/- SD/- (G.D. AGRAWAL) VICE-PRESIDENT (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 17/07/2015