TaxTMI 
TaxTMI 
2015 (7) TMI 731
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.... this way, the income of the assessee was determined at Rs. 19,55,340/-. 4. The learned First Appellate Authority confirmed the addition. The assessee carried the matter in Tribunal vide ITA No.2170/Ahd/2006. The appeal of the assessee has been allowed for statistical purpose. The Tribunal found that similar issue arose in the Asstt.Year 2001-02, and ITAT vide order dated 9.9.2005 passed in ITA No.2767/Ahd/2004 has set aside the issue for re-adjudication at the level of AO. Following the order of the Tribunal in the asstt.Year 2001-02, the ITAT has set aside the issue in the present year to the file of the AO. The Tribunal has relied upon the observations of the ITAT made in the Asstt.Year 2001-02, and directed the AO to re-examine the issue in the light of the Tribunal's order passed in the Asstt.Year 2001-02. It is pertinent to mention here that we have to examine the facts and circumstances with an angle whether the AO has examined the facts as per the directions of the Tribunal order or not. Therefore, it is necessary to take note of the Tribunal's directions in the first round. It reads as under: "4. We have heard the rival submissions and have also perused the materials....
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....f the AO. W, therefore, set aside the orders of the authorities below and restore the matter back to the file of the AO. We direct him to re-examine the whole issue afresh as per our observations above and thereafter re-adjudicate the matter in accordance with law. Needless to mention that the AO will allow adequate opportunity of being heard to the assessee." It is claimed that the facts of the present year are similar to that of assessment year 2001-02. Respectfully following the order of the Tribunal (supra), we set aside the order of the CIT(Appeals)and restore the issue to the file of the AO with a direction to decide the issue afresh in the light of the decision of he Tribunal referred to above. The AO is also directed to give an opportunity of being heard to the assessee." 5. In pursuance of the Tribunal's order the learned AO had issued notice under section 142(1) of the Act, which was duly served upon the assessee on 10.7.2009. The learned AO called for the details from the bank with regard to the cheques issued by the assessee for payment of purchases made by him. The learned AO has compiled all those details in tabular form and reproduced in para no.4 of the assess....
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.... findings read as under: "I have considered the assessment order and the submission of the appellant as enumerated above. I do not agree with the A.O.'s action as far as the above addition is concerned due to the following reasons: i. The mandatory requirement for payment of expenditure by an account payee cheque drawn on a bank or account payee bank draft in Sec.40A(3) of the I.T.Act has come w.e.f 13.7.2006 whereas the appellant's case pertains to A.Y.2003-04. ii. The A.O. has not found any defect in the books of account including the day to day stock register maintained by the appellant. It means purchases and sales are genuine. iii. The A.O. had not found any instance where the cheques issued by the appellant has been encashed on behalf of the appellant, for coming to the conclusion that purchases are bogus ( as per observation of ITAT ). iv. In the assessee's own case for A.Y.2001-2002 and other related case i.e. Smt. A. Haji Ibrahim Fazalwala for A.Y.2001-02 no addition was made on the same issue ( payment of expenditure by cheques) although similar facts & circumstances were there . This was done by the A.O. following similar directions given by Ho....
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....ssessee is bogus. But if the cheque is encashed by or on behalf of the assessee, then, obviously, the purchases would be bogus. The Tribunal also observed that if the goods are received and the seller is not found at the address given, then, at the most a doubt would arise about the rate at which the goods were purchased. Now, it was for the assessee to compile the details in tabular form exhibiting the name of the parties from whom the purchases were made, the amount paid and the cheque number. How that amount ultimately credited to that party is to be established by the assessee. For example sake, the first narration made by the AO in para no.4 of his order is Anamika Fabrics. A payment of Rs. 45,470/- vide cheque no.563305 dated 2.12.2002 was made. According to the AO, this cheque was endorsed to Faizan Texturising Unit. Now it is for the assessee to demonstrate that M/s.Anamika Fabrics has received the payment by crediting the account of Faizan Texturising Unit. The link between the Anamika Fabrics and Faizan Textuising Unit is missing as to whether Faizan Texturising Unit has supplied the goods to the assessee on behalf of the Anamika Fabrics or M/s.Anamika Fabrics directed th....
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....d that the assessee has maintained quantity register; however, he could not produce the bills of purchases. Therefore, the quantity of purchase cannot be ascertained. Moreover, the assessee stated in his reply, vide letter dated 23/12/2009, that "I am not able to produce all the bills because heavy flood was at our shop and almost all the records were destroyed." However, the assessee has neither produced any copy of insurance claim or FIR registered in respect of the destruction of goods nor provided copy of any claim made before the Local authority for loss of goods and books destroyed in flood." 11. Thus, the assessee miserably failed in this year to establish a reconciliation between the payments made by him towards purchases vis-à-vis the ultimate recipient of the amounts being his vendor. As far as the Asstt.Year 2001-02 is concerned, we find that in that year purchases were made from four parties. The assessee has demonstrated that the payments have been received by two parties. The ld. AO has accepted it as a fact. Thus, the assessee has proved on record that who was the ultimate recipient of the money that entity was found to be vendor of the assessee. Ther....