2019 (8) TMI 1130

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....rverse in the facts of the present case and the provisions of Section 40A(3) of the Income Tax Act as well as Rule 6-DD (j) of the Income Tax Rules, 1962 have been wrongly interpreted ?" 2. The facts in brief are that the Assessee, as the proprietor of M/s. Studio Saket, filed a return of income on 3rd January, 1994 declaring an income of Rs. 5,19,440/-. The Assessing Officer (AO) picked up the return for scrutiny and sent notices to the Assessee asking her to furnish information in respect of the trading results declared the profit and loss account in various items of liabilities and assets as appearing in the balance sheet. Inter alia, on examining the accounts, the AO found that substantial cash payments had been made towards purchase....

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....ter dated 5th June, 1996 of M/s Kodak India, confirming purchases and receipt of payments in cash was also placed on record. Since these documents were brought on the record afresh before the CIT (A), they were forwarded to the AO for his comments in terms of Rule 46 A of the Income Tax rules. The AO maintained that the genuineness of the purchases has not been established, and that, therefore, the evidence brought on record was an afterthought and should not be accepted. 6. The CIT (A) noted that the Assessee was a wholesaler in photographic goods, which have the characteristic of a short shelf life. On account of the expiry date, goods were required to be lifted on payment to avoid the risk of loss. It was further noted that the Assess....

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....s was evident from the fact that M/s. Durga Photo Sales and M/s. Hearing House were not assessed to tax. However, it has not been appreciated by the Assessing Officer that for these two firms also it was their first year of business. Thus, this argument of the learned DR has also no force. Considering all these facts, we are of the view that the CIT (Appeals) was justified in deleting the disallowance and hence we uphold his order on this issue." 8. Learned counsel for the Revenue pointed out that one of the grounds on which the Revenue preferred the present appeal was that the audit report furnished by the Assessee in the course of the assessment proceedings revealed that in the accounts, cash purchases were mentioned as 'nil', while th....