Thank you Mr. TELEGU SATAYANARAYANA for your sincere efforts in my matter. I will try to apply these arguments at appeal level now as my case was time barring which ended on 31st Dec 2011. I am hereby attaching the judgement of the A.O. in the concerned matter for your reference and would really be looking forward for your comments on it.

sir/mam

thanx for ur compliment !

First of all u have to get the Order Copy of the Riddhi Siddhi Enterprises, from the ITO Ward -2 (3), Gaziabad, either from Party / under RTI Act. pls verify in the order that the same quantum of sales  amount is added in the order or not. if the same is added in the respected party order. u have to get the certified copy of both the orders from IT Dept. and file quash proceedings in the high court seeking the remedy of double jeopardy.

get the order copy and send to my maid id adradv.13905 @ gmail.com or call 9848038306 so that i wil give my suggestions.

thanx

Ms. Garg,

while going through the order, it is found that you have submitted purchase bill and VAT registration letter along with confirmation. It is also mentioned that your client has paid the amount through account payee cheques and not in cash. In this case you can file an appeal against the order if you can show that the cheques were issued in the name of proprietor of Riddhi siddhi enterprise or in the firm name and it is reflected in bank statement as cleared. The AO has only relied on the statement on oath by that proprietor and the letter of cancellation of VAT registration. This can not be considered as ground to consider the purchase as bogus if you can prove the above things. I had gone through such judgement before. I'll find it out and will let you know about that.

Here as suggested by many respondents ,section 69 will come in to play..even suppose the case flaas within the salestax authority purview,I tax authority can initiate proceedings.here section 69 of the I tax comes i to play.however appeal can be done against AO order..

S.69C: Unexplained expenditure- Payment by assessee to hospital doctors-Fees received which was distributed.

In the course of search unaccounted collection of fees was noticed in the names of doctors which claimed to be distributed to various doctors whether as regular employees or as consultants. The Court held that addition cannot be made in the hands of assessee, department should have issued the notice to the Doctors for confirmation of the payments and if they deny then only proceedings can be initiated under section 69C . On the facts the assessee has discharged the burden by providing the particulars of payments made to doctors. High Court confirmed the order of Tribunal which has deleted the addition.( A.Ys 2001-02 to 2003-04).

CIT v Lakshmi Hospital ( 2011) 62 DTR 261 ( Ker) (High Court).

This judgement supports what I mentioned in above post. if you can prove through your bank statement that assessee has actually paid the amount then addition can not be made. I'll look out for other judgements also.

Kindly go through the attached judgement of Hon'ble Bombay High Court. Many other case laws are mentioned in the order which will be helpful to you. This case is very much similar to your case so far as I know. I have highlighted some judgements in it.

Thanks a lot Mr. Neil ji for the wonderful case law.Kindly check your Inbox for further discussion. I am trying to search case law passed by Delhi High Court in recent years.

This post is getting longer and longer by the day. Thanks to our members for contributing their esteemed thoughts on this.

Ms. Garg : Please update us if the AO has granted full stay if you have applied for stay on demand. I doubt if the AO will grant full stay even if you have filed an appeal.

Regards

yes Mr. Dipjyoti ji, I agree that all the members overhere are really active and supportive and I thank all for their valuable suggestions.Now as far as the case is concerned we have filed an application to CIT for stay on demand but I guess it will just be allowed 50% and meanwhile I am preparing my case for Appeals.The one major drawback in my case is ,that when the cheque was paid to Seller i.e. to M/s Riddhi n siddhi, the party deposited the cheque into one Bank a/c- say "A" and on the same day made a withdrawl from that bank "A" and deposited the same amount into another bank "B".all this happened within the period of two days and even from second bank"B" he made a withdrawl and used it else where.Now the A.O. doubts that it was a work of entry and no sale -purchase actual took place. In such condition how do i prove the genuiness of the transaction?

There are some cases wherein it is mentioned that once actual purchase booking, stock register and payment is proved by the assessee then he is least concerned with what the other party does with that amount. In such case, now the burden to prove it bogus lies on the AO. so don't worry and go ahead..you will definitel have it in your favour. Best of luck for the further proceedings.

sir,

i agree with mr neil ganatra, our responsibility ceases when we have paid the out standing amount to the party, we not at all concerned to the amount what the  party should be done with that amount, now the burden to prove it bogus lies on the AO.

now a days in some cases the stay is will just be allowed 25%. U ask to the CIT (A) other wise file the same before ITAT, hope u will get the stay.

Hai, I want to replies of scrutiny assessments under income tax act