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2005 (5) TMI 239 - ITAT ALLAHABADIncome From Undisclosed Sources - unpaid liabilities (due to the Karigars) - Purchase not entered in the account books - non-production of the Karigars - trade of Banarsi sarees - 'cash credit' - HELD THAT:- The purchases recorded in this manner have been accepted in toto, without any kind of controversy whatsoever. After the purchases of sarees supported by the 'Purjas' have been accepted, any further verification about the Karigars in whose favour such 'Purjas' have been issued is really not necessary; the reason being that it is the Karigar who come to the saree dealers and offers his stock for being dealt with by the saree dealers. The dealers also have no occasion to feel concerned about the names and addresses of such Karigars as purchases from them are made on "credit" and that too after due approval of the same through inspection and otherwise. In other words, it is only the verification of sarees that are brought for sale by the Karigars at the shop of the saree dealers which is relevant and not the Karigar themselves. It is for this reason that even the CBDT felt that, after the sales (made out of purchases from Karigars) are found to be verifiable, it is not necessary that there should be an insistence for producing the Karigars. The instructions like this, although, may not be capable of being treated as having binding effect, nonetheless they lay down necessary guidelines for completion of assessment in a particular line of trade. This logic is applicable with all its force in the present case. Necessity to have the addresses of the Karigars may arise only for the purposes of making enquiries from the Karigars, so far as the assessment of the saree dealers is concerned. If such a verification is not required to be made, in view of the regular system of accounting followed by the assessee as per the practice prevalent in this trade, we fail to understand as to why non-furnishing of addresses should be made an issue by the AO for making addition and that too on selective basis. This is more so in a case like this where the purchases and sales have been duly accepted. This leads to a conclusion that 'Purjas' themselves as also contents thereof have got great evidentiary value. If payment against the 'Purja' recorded in the books of account, then the liability in relation to such 'Purja has to be treated as genuine unless of course some material is brought on record that the assessee has actually made payment against the same which is not recorded. In the present case, no such material having been brought on record, it could not be said that the liability is bogus. Even at the cost of repetition, we state that bogus liability pre-supposes two things, firstly, there is a liability incurred and secondly, such liability has been discharged without being recorded in the books of account. As no such material is available on record, the liability in question cannot be said to be bogus so as to attract any addition on this score. It also appears to us that the AO has treated the liability to be of 'cash credit' in nature and that is why he felt anxious to have the identities of the creditors established. In this respect, first of all, we hold that credits 'in the sundry creditors (Udhar Khareed) Khata' are referable to the purchases of sarees made on credit basis. As the purchases have been held to be genuine and accepted as such, the credits that remained outstanding in such account cannot be treated to have remained unexplained. The balance appearing in this account, which included the disputed addition also, is the sum total of purchases that remained unpaid at the end of the year. As the genuineness of such purchases has not been disputed, rather, the same has been accepted, the credits stand fully explained and no adverse inference is called for, either on facts or in law. Thus, on a consideration of totality of facts and circumstances of the case, as have been discussed above, we hold that the liability aggregating Rs. 1,05,800 as has been shown against 15 Purjas/Karigars could not be treated as bogus liability. The learned CIT(A) has rightly deleted the addition and no interference in the same is called for. While upholding his finding, we dismiss the grounds of appeal raised by the Revenue. In the result, the appeal directed by the Revenue is dismissed.
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