- (1.) Through the instant appeal filed under section 260A of the Income-tax Act, 1961 (for brevity, "the Act"), the appellant-Revenue is questioning the legality and propriety of the order dated December 1, 2006 (annexure A-2) passed by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter, to be referred as "the Tribunal", in short) in I.T.A. No. 74 (ASR)/2006 relating to the assessment year 2002-03, vide which the orders passed by the authorities directing addition of an amount of Rs. 86,737 in the income of the respondent and initiation of penalty proceedings under section 271(1)(c) read with Explanation 1(A), have been set aside. On October 19, 2007, the instant appeal was admitted to determine the following substantial questions of law : "1. Whether the Income-tax Appellate Tribunal has erred in law in deleting the addition sustained by the Commissioner of Income-tax (Appeals) despite having returned the finding that as per the provisions of section 68 of the Income-tax Act, the onus to establish the genuineness of the transaction lies upon the assessee and the assessee having been miserably failed to discharge the onus ? Whether the Income-tax Appellate Tribunal was right in holding that failure to issue summons under sections 133(1) to the creditor was sufficient to delete the addition, though the onus to establish the genuineness of the transaction was upon the assessee ? Whether the Income-tax Appellate Tribunal has erred in law in recording a finding that the addition made on the basis of satisfaction recorded by the Assessing Officer to the effect that M/s. Vishnu Jewellers was engaged in providing 'accommodation entries' to various beneficiaries against charging of commission is perverse and without any factual basis ?"
(2.) The factual matrix. The respondent-assessee is engaged in the business of supply of LPG stoves, pipes, burners, etc. For the financial year 2002-03, he filed the return showing the total sales of Rs. 22,62,814, having a credit entry of Rs. 86,737 in the name of M/s. Vishnu Jewellers. The assessing authority doubted the veracity of the said entry and called upon the assessee to render explanation thereto. The assessee took a stand that he received an advance amount of Rs. 86,737 from M/s. Vishnu Jewellers, vide cheque No. 331190, dated May 10, 2001, for supply of packing charges of 200 LPG stoves. But the order did not mature and he returned the amount without interest, vide cheque No. 64838, dated December 12, 2002. The version was not accepted by the assessing authority and treated the entry of Rs. 86,737 as an unexplained credit and ordered addition thereof in the return of the assessee, vide order dated March 26, 2005.
(3.) Dissatisfied with the same, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), Jammu (Headquarters Amritsar) (for short, "the CIT(A)"), which concurred with the view taken by the assessing authority and dismissed the appeal, vide order dated February 16, 2006 (annexure A-1).;