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2015 (9) TMI 391 - HC - Income TaxRejection to books of accounts - addition to income - AO disallowed the expenses with regard to the purchase of the material by the appellant - assessment also made under Section 68 - Held that:- A notice under Section 131 of the Act had been served upon M/s Rama Enterprises. We are informed that PAN numbers were called for and have now been produced. The vendors appear to have paid tax. The effect thereof would have to be considered. It would now be possible to ascertain in a more satisfactory manner the genuineness of the entries in the assessee’s books of account as well as the genuineness of the transactions. While setting-aside the disallowance of the deductions on account of the purchases, the CIT (Appeals) undertook a detailed analysis of the production figures for the previous assessment years and for the assessment year in question. Having done so, it arrived at the GP ratio and inferred that the appellant had received the material corresponding to the purchases made from the vendors. It was found for instance that the existence of the vendors stood confirmed by the Excise & Taxation Officer. The assessee would rely upon the PAN numbers which were now produced during the course of these appeals. The excise record was also analysed by the CIT(Appeals). The CIT(Appeals) undertook a detailed analysis in coming to this conclusion. However, some of the crucial aspects have not been considered by the Tribunal. The Tribunal for instance held that the detailed enquiry made by the Assessing Officer by issuing summons under Section 131 of the Act to the vendors and also the enquiry made from the bank authorities establishes that the purchases were not genuine. The order does not indicate any reasons in support of this finding and in any event various aspects which have been dealt with by the CIT(Appeals) have not been taken into consideration while arriving at this finding. Further, the effect of the finding that the payments by the assessee to its vendors and of M/s Maa Durga Trading Company having withdrawn the same is not dealt with satisfactorily. Merely because M/s Maa Durga Trading Company withdrew the amount which was paid by the assessee to its vendors would not lead to the conclusion that the transactions between the assessee and the vendors were fictitious. Similarly, the Tribunal noted that the confirmation receipts of the said supplies were signed by different persons while the bank accounts were operated by other persons. This fact has been held against the assessee. This finding would be perverse. There is nothing unusual in different persons operating the bank accounts of a company and signing the confirmation receipts of the supply of goods. As mentioned earlier, Section 68 of the Act has not been considered at all. Had the only question in this appeal involved the interpretation of section 68, we would have dealt with the issue ourselves. However, that is not the only question in these proceedings. Thus the impugned order is set-aside and the matter is remanded to the Income Tax Appellate Tribunal for fresh decision - Decided in favour of assessee for statistical purposes.
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