Genuineness of cheque payments required bank verification and confrontation of third-party statements before sustaining tax additions.

Additions relating to crane hire charges, depreciation on machinery, and an amount payable to a supplier were not sustained where the genuineness of cheque-based payments had not been properly tested. The payees' bank accounts were relevant to verify the transactions, and a third-party statement relied on for adverse inference was not confronted to the assessee. The matter was therefore set aside for fresh examination by the Assessing Officer, with direction to make necessary enquiries and afford due opportunity to the assessee.

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Issues: Whether the additions made in respect of crane hire charges, depreciation on machinery, and amount payable to a supplier were sustainable without examining the payees' bank accounts and confronting the third-party statement to the assessee.

Analysis: The disputed payments were stated to have been made by cheque, and therefore the corresponding bank accounts of the payees were relevant to test the genuineness of the transactions. The adverse inference had been drawn on the basis of enquiries and a third-party statement, but the statement of the supplier had not been confronted to the assessee. The enquiries were therefore treated as incomplete for deciding the genuineness of the claims.

Conclusion: The additions were not finally sustained and were set aside for fresh examination by the Assessing Officer after making necessary enquiries and granting due opportunity to the assessee.

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