M/S. PONNUSAMY HOTEL,CHENNAI vs. JCIT, CHENNAI

In reply, the Ld.DR vehemently supported the order of the AO and the Ld.CIT(A).

We have considered the rival submissions.

A perusal of the ledger account as produced by the assessee clearly shows that all the payments to Smt.V.Latha in respect of the purchase of prawns are clearly by cheque. The AO recognizes that reconciliation statement has been filed before him. The AO also recognizes that closing balance as recorded by the assessee and as recorded by Smt.V.Latha, the supplier, are identical to an extent of Rs.5,77,186/-. However, the AO when he states that an amount of Rs. Rs.8,30,380/- has not been shown in the banking account of Smt.V.Latha, admittedly, has not satisfied which are the payments or the bills, which has not been shown to have been paid in the case of the assessee. Further, if the opening balance and the closing balance of the ledger, is removed in so far as the said opening balance is related to the earlier year and the closing balance is not to be considered as it would not be reflected in the bank account in so far as it has not been paid by issuance of cheque, the accounts would tally. This being so, we are of the view that there is no difference in the purchase account, which calls for any addition and consequently, the same stands deleted.

In the result, the appeal filed by the assessee is allowed.