DEPUTY COMMISSIONER OF INCOME TAX Vs. ADINATH INDUSTRIES

JUDGEMENT

(1.) TAX Appeal No. 169 of 1999 and other companion appeals arise out of two judgments. Tax Appeal No. 166 of 1999 is arising on a consequential order that might be required to be passed.

(2.) FOR the asst. year 1984 85 the assessee M/s Adinath Industries was assessed under S. 143 of the IT Act, 1961 (hereinafter referred to as the Act). Along with its return filed on 28th July, 1984, showing the total income at Rs. 60,814 a statement showing computation of total income was filed along with copies of P&L a/c, manufacturing account, balance sheet and partner's capital account. It appears that the AO issued show cause notice on 23rd Jan., 1987, pointing to the assessee as under :

(3.) THE AO considered the materials and found that the statement with regard to the transaction could not be confirmed by one Mahesh a partner of M/s Vadilal Popatlal & Sons. The AO also found that the Dalal as per letter dt. 18th Feb., 1996, produced copy of the bill dt. 5th Dec., 1983, issued in favour of the alleged party M/s Geeta Industries for Rs. 5,100 being brokerage received by cash for sale of oil cake. It appears that thereafter the said firm was reconstituted in the name of Maganlal Vashram and Sons. Manganlal Vashram & Sons had totally blank books of accounts. The AO also came to the conclusion that the letters dt. 1st Aug., 1983, and 12th Aug., 1983, alleged to have been signed by one Kishor were not in the handwritings of said Kishor as handwriting were different, AO held that the same were not genuine. The AO also noticed that cheques were issued in favour of M/s Geeta Industries of which Shri K.H. Lakshani was the proprietor. In turn said cheques were deposited in the bank account at Dhoraji and the proceeds of the cheques were withdrawn by bearer cheques. The AO arrived at a conclusion that persons who received the amount at the bank counter were connected either directly or indirectly with the assessee firm and as such, the amount withdrawn out of bank account in cash as discussed above, had by all means passed on to assessee's hand. In a statement it has been pointed out that in all 16 cheques were issued and by 15 cheques the amount was withdrawn by five different persons. In view of all these materials the AO was of the view that the transactions indicated were fake.