SRINIKETAN FASHIONS PVT. LTD.,KOLKATA vs. D.C.I.T.,CENTRAL CIRCLE-XVIII, KOLKATA

The only issue that arises for our adjudication is the disallowance made on purchases. The assessee had made purchases from Mayfair Knitting Industries and Manoj Kumar Rajesh Kumar of Rs.1,05,505/- & Rs.1,97,199/-. The assessee had made payments through account payee cheques. The bills issued by them and details of the payments through banking channels were produced before the authorities below. The amount was disallowed solely on the ground that these persons are not available at the given addresses and the assessee has not furnished the new address and that the assessee has not produced evidence of transportation.

After hearing rival contention, I find that the Hon’ble Jurisdictional High Court in the case of M/s. Diagnostics vs. CIT in of 2004, judgement dt. 04/03/2011, has held as follows:- “However, as regards the payments made to M/s. Selvas Photographics are concerned amounting to Rs.3,12,302/-, we find that those have been made by account payee cheques and those have been encashed through the bankers Assessment Year: 1996-97 Sriniketan Fashions Pvt. Ltd of M/s. Selvas Photographics. It appears that according to the appellant, at the of M/s. Selvas Photographics. It appears that according to the appellant, at the of M/s. Selvas Photographics. It appears that according to the appellant, at the time of assessment, the appellant had no business transaction with M/s. Selvas time of assessment, the appellant had no business transaction with M/s. Selvas time of assessment, the appellant had no business transaction with M/s. Selvas Photographics and consequently, the said party did not co Photographics and consequently, the said party did not co-operate with the operate with the Assessing Officer. However, the transaction having taken place through ssing Officer. However, the transaction having taken place through ssing Officer. However, the transaction having taken place through account payee cheques, we are unable to accept the contention of Mr. Agarwal, account payee cheques, we are unable to accept the contention of Mr. Agarwal, account payee cheques, we are unable to accept the contention of Mr. Agarwal, the learned advocate appearing for the Revenue that the transaction was a the learned advocate appearing for the Revenue that the transaction was a the learned advocate appearing for the Revenue that the transaction was a non- existent one. If an assessee too existent one. If an assessee took care to purchase materials for his k care to purchase materials for his business by way of account payee cheques from a third party and subsequently, business by way of account payee cheques from a third party and subsequently, business by way of account payee cheques from a third party and subsequently, three years after the purchase, the said third party does not appear before the three years after the purchase, the said third party does not appear before the three years after the purchase, the said third party does not appear before the Assessing Officer pursuant to the notice or even has stopped Assessing Officer pursuant to the notice or even has stopped business, the claim business, the claim of the assessee on that account cannot be discarded as non of the assessee on that account cannot be discarded as non-existent. In the case existent. In the case before us, the Revenue has not put forward any other ground, such as, it was before us, the Revenue has not put forward any other ground, such as, it was before us, the Revenue has not put forward any other ground, such as, it was not a genuine transaction for other reasons but has simply rejected the claim not a genuine transaction for other reasons but has simply rejected the claim not a genuine transaction for other reasons but has simply rejected the claim on the ground as if there was no such transaction. on the ground as if there was no such transaction. The transaction having taken place through payment by account payee The transaction having taken place through payment by account payee The transaction having taken place through payment by account payee cheques, such plea is not tenable and in such circumstances, the Tribunal cheques, such plea is not tenable and in such circumstances, the Tribunal cheques, such plea is not tenable and in such circumstances, the Tribunal below erred in law in reversing the finding arrived at by the Commissioner of below erred in law in reversing the finding arrived at by the Commissioner of below erred in law in reversing the finding arrived at by the Commissioner of Income- tax (Appeal) accepting the s tax (Appeal) accepting the said transaction as a genuine transaction. aid transaction as a genuine transaction. We, therefore, set aside the order of the Tribunal below only in respect of We, therefore, set aside the order of the Tribunal below only in respect of We, therefore, set aside the order of the Tribunal below only in respect of the deletion of the amount of Rs.3,12,302/ the deletion of the amount of Rs.3,12,302/- paid to M/s. Selvas Photographics paid to M/s. Selvas Photographics by account payee cheques and direct the Assessing Officer t by account payee cheques and direct the Assessing Officer to deduct the said o deduct the said amount as business expenditure of the appellant.” amount as business expenditure of the appellant.”

Applying the propositions of law laid down in the above case Applying the propositions of law laid down in the above case Applying the propositions of law laid down in the above case-law to the facts of the case on hand, we delete the addition and allow this ground of the facts of the case on hand, we delete the addition and allow this ground of the facts of the case on hand, we delete the addition and allow this ground of the assessee.

In the result, appeal of the assessee is allowed. of the assessee is allowed.

Kolkata, the Kolkata, the 8th day of January, 2020. Sd/- [J. Sudhakar Reddy] Accountant Member Dated : 08.01.2020 {SC SPS} Assessment Year: 1996-97 Sriniketan Fashions Pvt. Ltd Copy of the order forwarded to: opy of the order forwarded to: