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Issues Involved:
- Claim of deduction of purchase of textile goods in March 1985 from twelve parties residing in Bhiwandi. Summary: The appellant's appeal challenged the disallowance of the claim of deduction of purchase of textile goods in March 1985 from twelve parties in Bhiwandi. The Assessing Officer disallowed the claim due to various reasons, which was upheld by the CIT(A)-V, Bombay, leading to the appeal. The appellant, engaged in textile business, filed income tax return for 1985-86, showing income of Rs. 2,824, accepted u/s 143(1). Subsequently, assessment was reopened u/s 143(2)(b), disallowing purchases of Rs. 1,84,695 due to doubts on genuineness. Summonses to parties in Bhiwandi were unserved, leading to suspicions. The appellant argued that non-service of summonses should not be held against them, as parties may have left Bhiwandi. The Assessing Officer and CIT(A) raised concerns about lack of evidence for transport and possession of goods, and non-encashment of cheques at Bhiwandi. They deemed the transactions as sham. The appellant contended that bills and cheques were evidence of genuine purchases, and non-encashment at Bhiwandi was not their responsibility. They also highlighted the loan taken and interest paid, showing genuine transactions. The appellant's nexus in adjusting sale price against the loan was emphasized. The Tribunal found the bills and cheques as prima facie evidence of genuine purchases, and upheld the appellant's claim. The appellant's business activities in March 1985 were considered valid, and the sales to M/s. Shree Sitaram Dyeing and Printing Mills (P.) Ltd. were deemed genuine, leading to allowance of the deduction. In conclusion, the appellant succeeded in proving the genuineness of the purchases and the appeal was allowed.
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