COMMISSIONER OF INCOME TAX Vs. SAROJ KUMAR DAS

JUDGEMENT

(1.) BY this reference under S. 256(1) of the IT Act, 1961 ('the Act'), the following two question have been referred at the instance of the Revenue for opinion of this Court:

(2.) THE AO sent a requisition under S. 133(6) addressed to Bimal Iron and Hardware Stores. The ITO held that the liability in question that is, Rs. 20,000 to the creditor was not genuine and a fictitious credit was shown in the name of that creditor in the assets disclosed in the balance sheet. According to him assuming that the payments were made to the said creditor it ought to have been made by crossed cheque or crossed draft on a bank as required in S. 40A(3) and that apart the said creditor was also not traceable as will appear from the record.

(3.) BEING aggrieved, second appeal was preferred before the Tribunal. The Tribunal after hearing the parties concerned and after going through the records gave opinion that since the payments have not been doubted for the year under consideration the existence of liability by itself is not a valid ground for making the addition of Rs. 20,000 and the appeal by the assessee was allowed.