TMI Blog1993 (8) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowance made by the Assessing Officer. Therefore, the appellant has preferred this appeal against that order of the CIT(A)-V, Bombay. 2. We have heard the learned counsels for the assessee S/Shri S.E. Dastur and P.J. Pardiwala and the learned Departmental Representatives, Shri Y.S. Rawat and Shri N.C. Nair. Their arguments are taken into consideration. 3. The appellant is carrying on business in textile. The appellant-company filed the return of income for the assessment year 1985-86 showing an income of Rs. 2,824. The return of income was accepted under section 143(1) of the Income-tax Act, 1961. Subsequently, the Assessing Officer issued a notice under section 143(2)(b) of the Act with the approval of the IAC and reopened the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Shree Sitargun Dyeing and Printing Mills (P.) Ltd. and the sale of the textile goods was adjusted against the loan taken by the appellant-company earlier. The Assessing Officer as well as the CIT(A) considered that there was no evidence to show for transport, and taking possession of textile goods from those twelve parties of Bhiwandi. There also no proof to show that the textile goods purchased by M/s. Shree Sitaram Dyeing and Printing Mills (P.) Ltd were given possession of. 5. The another fact, according to the Assessing Officer as well as the CIT(A) assumed importance, was that the crossed cheques were issued to the traders at Bhiwandi but not on "account payee" cheques. All those cheques were encashed in the Bank accounts in Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selling the goods and received amounts by cheques. Therefore, those traders might be established traders at Bhiwandi. They might not be casual traders as submitted on behalf of the appellant. He also inferred that it was not possible to believe that all the twelve traders may have left the Bhiwandi within a period of three years and might have shifted to some other places. He held that there was no evidence to show of taking possession of the textile goods by the appellant and the transportation of the same to the Bombay. Not even one trader put a cheque in his account at Bhiwandi where adequate facilities of banking are available. Therefore, he held that the Assessing Officer was justified in drawing an adverse inference and holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to Shri Dastur, non-finding them at Bhiwandi and their whereabout, cannot be attributed to the appellant. He submitted that the Assessing Officer should have taken further step to issue warrants against them to secure their presence and to confirm whether the purchases of textile goods were made from them by the appellant or not. As the Assessing Officer did not issue the warrants against those small traders, according to Mr. Dastur, he failed to make further investigation. For that purpose also, the appellant should not be held responsible. 10. His another argument is that the appellant had taken the loan from M/s. Shree Sitaram Dyeing and printing Mills (P.) Ltd., earlier than the purchase and sale of textile goods. The appellant pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court, in that case, held that it is the duty of the Income-tax Officer to enforce the attendance of the witness if his evidence is material, in exercise of his powers under section 37(i) of the Income-tax Act, read with Order XVI, Rule 10, of the Civil Procedure Code. Shri Dastur argued that non-service of the summons on the traders at Bhiwandi in spite of furnishing the names and addresses to the Assessing Officer cannot be attributed to the appellant to draw an adverse inference. Hence, he contended that the adverse inference drawn by the Assessing Officer and accepted by the CIT(A) against the assessee is not correct. 13. The Departmental Representatives submitted that the purchases were made in the end of the month of March 1985 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned anything in respect of those entries. Further, in our opinion, the purchase of the goods in the month of March 1985 does not make any difference. The appellant might not have carried on any business activities prior to March 1985, but that does not mean that the appellant was not entitled to carry on the business activity in the month of March 1985. The appellant cannot be compelled to carry on the business activity throughout the year. There are no good reasons to disbelieve the sales made by the appellant to M/s. Shree Sitaram Dyeing and Printing Mills (P.) Ltd. No sales were likely to be effected if there were no purchases. A sale can be made if the goods are available with the seller. From all these facts on record, a reasonable and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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