TMI Blog2014 (12) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... file Income Tax Return u/s 139(1) of the Act - the AO has not brought on record that any receipt of cash has been there in lieu of cheque payment made to the creditors - the assessee have discharged his onus, there is no infirmity in the order of CIT(A), who has rightly deleted the addition – Decided against revenue. - I.T.A. No. 338 (Asr)/2010, C.O. No. 28 (Asr)/2010 - - - Dated:- 24-11-2014 - Sh. A. D. Jain And Sh. B. P. Jain,JJ. For the Appellant : Sh. Tarsem Lal, DR For the Respondent by: S/Sh. S.K. Bansal Tarun Bansal, Advocates ORDER Per Bench 1. This appeal of the Revenue arises from the order of the learned CIT(A), Jammu, dated 10.05.2010 for the assessment year 2007-08. 2. The Revenue has raised the following grounds of appeal: (i) Whether the facts and circumstances of the case, the learned CIT(A) was justified in law and on facts in deleting the addition of ₹ 1,02,82,924/- made by the A.O. on account of creditors without appreciating the facts of the case and material brought on record by the A.O. (ii) Whether on the facts and circumstances of the case the learned CIT(A) was justified in law and on facts, in deleting the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etters, in the name of some Bilal Ahmad Rather, and Hafiz Ullah Lankaro, it was seen that the letters had exactly the same language. Similarly, the language of letters by Shoaib Ahmad and Touseef Tajamul was exactly the same. Keeping in view these inconsistencies and to test check the genuineness of these creditors, the assessee was required to produce one of the creditors i.e. Sh. Shafat A. Wani in whose name a sum of ₹ 13.19 lakhs was outstanding. The A.O. recorded the statement of Mr. Shafat A. Wani on oath on 08.09.2009 in the presence of Sh. M.D. Wani, Accounts Manager of assessee firm. Shri Shafat Ah. Wani stated that he was engaged in the purchase and sale of carpets but was not an income tax payer, nor he had PAN and he also did not maintain books of account. The A.O. observed that if Sh. Shafat A. Wani did not maintain any books of account, the possibility of existence of the stated ledger in the books of Shri. Shafat A. Wani submitted by the assessee was out of question. The A.O., after observing the other facts that Sh. Shafat A. Wani had sale transaction with assessee-firm only and with no other party, which was improbable and that he was not aware of his turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has contacted the concerned creditors to watch the notices sent by the A.O. and have been advised to respond promptly. But vide order-sheet entry dated 24.08.2009, the A.O. intimated the assessee that the letters of the sundry creditors remained unserved and therefore, the onus lies on the assessee to establish the genuineness of the creditors and the assessee was asked to furnish confirmations with name, address, and PAN on the copy of account. The assessee on 31.08.2009, submitted the confirmation along with copy of account of 14 creditors except in the case of 2 creditors only confirmation was submitted but not the copy of account. The A.O. opted to inquire with regard to only one creditors out of 14 creditors, namely, Sh. S.A. Wani, having a balance of ₹ 13,19,065/- as on 31.03.2007, who had confirmed having sold the carpets to the assessee. The A.O. pointed out the defects in the statements of Mr. S.A. Wani and declared him bogus without giving any opportunity to cross-examine or without putting any material before the assessee to rebut and took and U-turn by saying that Mr. S.A. Wani was one of the 14 creditors to whom the confirmatory letters issued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enuine in the preceding year and in the following year as well, have not been treated as bogus in the impugned year, the said creditors cannot be held to be bogus and that too without making any inquiry with respect to the 13 creditors as argued herein above by applying an extrapolation theory. The learned counsel for the assessee relied upon the decisions of various courts of law, which are reproduced as under: (i) CIT Vs. Leaders Valves (P) Ltd. , (2006) 285 ITR 435 (P H) (ii) J.R. Solvent Industries (P) Ltd. Vs. ACIT , (1999) 63 TTJ (Chd.)(TM) 165. (iii) Nikunj Eximp Enterprises (P) Ltd. Vs. CIT , (2012) 209 Taxmann 458 (Bom.) (iv) ITO Vs. Permanand , (2007) 107 TTJ (JD) 395 (v) CIT Vs. Sinuja Foods Limited , 16 DTR 278 (Raj. H.C.) (vi) Sargam Cinemar Vs. CIT , (2010) 328 ITR 513 (SC) 7. Accordingly, the learned counsel for the assessee supported the order of learned CIT(A) and prayed to confirm his order and dismiss the appeal of the Revenue. 8. We have heard the rival contentions and perused the facts of the case. There is no doubt to the fact that the assessee has declared a better G.P. rate at 6.07% as compared to 3.24% in the preceding year and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the A.O. cannot be appreciated as argued by learned DR and accordingly the decision of Hon ble Kerela High Court in the case of A.R. Chockalingam Chettiar Sons (supra) cannot be made applicable in the present circumstances and facts of the case. As regards the payments made through account payee cheques, the learned DR relied upon the decision of Hon ble Supreme Court in the case of P. Mohanakala (supra), the said decision of the Hon ble Supreme Court cannot be made applicable in the present circumstances and facts of the case since the assessee has been objecting and had submitted before both the authorities below and before us that the purchases were genuine. The A.O. has not brought on record that any receipt of cash has been there in lieu of cheque payment made to the creditors. Accordingly, the decision of Hon ble Supreme Court in the case of P. Mohanakala (supra) cannot be made applicable in the present circumstances and facts of the case. In the circumstances and facts of the present case and the decisions relied upon by the learned counsel for the assessee and the assessee having discharged his onus, we find no infirmity in the order of learned CIT(A), who has ri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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