2006 (1) TMI 58

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....rchase transactions took place. Out of these, the assessee showed profits in two transactions and loss in the remaining two. The Assessing Officer, in order to verify the genuineness of the transactions resulting in loss, examined the persons concerned and also made further necessary enquiries. On verification, the Assessing Officer found that sales and purchase of rice made by Ram Krishan Dass Narinder Prakash on behalf of the assessee were not genuine and represented a paper transaction only. He, therefore, disallowed the loss of Rs. 86.11 lakhs. Against disallowance of loss of Rs. 86.11 lakhs by the Assessing Officer, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) but without success as the Commissioner o....

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....set aside the order passed by the Commissioner of Income-tax (Appeals) and confirmed the one passed by the Assessing Officer. While setting aside the order of the Commissioner of Income-tax (Appeals), the Tribunal observed thus: "Even during the original assessment proceedings, the assessee could not lead any evidence also whether any payment was made towards advance or commission. Despite this factual position the learned Commissioner of Income-tax (Appeals) entertained the submissions of the assessee that it had actually made the payment to RKDNP. When the statement of Shri Ram Rishan, partner of RKDNP is categorical that no payment is made throughout the year by the assessee and further no evidence was produced before the Assessing Of....

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....atment and the same standard ought to have been applied in respect thereto. It appears that the very same argument was advanced on behalf of the assessee before the Tribunal also. The Tribunal, however, declined to accept the contention noticing that the Assessing Officer had found specific defects in respect of the entries pertaining to losses, necessitating an enquiry into the two sets of transactions in regard to losses only, while leaving the other part of accounts relating to profits undisturbed. It was observed that since the assessee had voluntarily disclosed the profits on two sets of transactions in its return and the Assessing Officer in his wisdom did not find anything wrong therewith, there was no reason for him to have not acce....