(a) Income‑tax‑‑--

‑‑‑‑Total income‑‑‑Determination‑‑‑Application of sales tax law/rules‑‑ Relevance‑‑‑Assessing Officer when making a determination of total income for purposes of levy‑of income‑tax was not bound to refer to the sales tax record maintained, as per sales tax law/rules.

(2000) 82 Tax 105.(Trib.) rel.

(b) Income Tax Ordinance (XXXI of 1979)‑‑‑--

‑‑‑‑S. 13(1)(a)‑‑‑Addition‑‑‑Advance from customers‑‑‑Genuineness of parties‑‑‑Record of sales tax‑‑‑Assessing Officer, purely on the basis of sales tax record, was not bound to hold that the cited parties were genuine parties.

(c) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S.13(1)(a)‑‑‑Addition‑‑‑Advance from customers‑‑‑No documenta tion‑‑‑Adverse inference‑‑‑Fact that huge amounts had been shown as having been deposited by the specific parties for which no documentation was admitted could only cast an adverse inference against the assessee‑‑ Assessing Officer could not be forced to accept the undocumented transactions.

(d) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑-‑Ss. 13(1)(a) & 62‑‑‑Addition‑‑‑Notice‑‑‑Non‑issuance of specific notice styled as notice under S.13(1)(a) of the Income Tax Ordinance, 1979‑‑‑Validity‑‑‑Notice under S.62 of the Income Tax Ordinance, 1979 had been issued, comprehensively detailing the facts and circumstances on which assessee's explanation was required and reference to S.13(1)(a) of the Income Tax Ordinance, 1979 had been made therein‑‑‑Necessary opportunity had been accorded to assessee‑‑‑No prejudice had been caused to assessee by the alleged non‑issuance of .notice styled as notice under S.13(1)(a) of the Income Tax Ordinance, 1979‑‑‑Objection amounted to legal quibbling and carried no weight.

(e) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S. 13(1)(a)‑‑‑Addition‑‑‑Independent charging section‑‑‑Section 13 of the Income Tax Ordinance, 1979 was an independent charging section and it was the intent of the Legislature to allow its independent invocation‑‑‑No substantive defect in law and procedure appeared that could render the addition made under S.13 (1)(a) of the Income Tax Ordinance, 1979 to be untenable in law.

(f) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S. 13(1)(a)‑‑‑Addition‑‑‑Advance from customers‑‑‑Burden of proof of the same was squarely on the assessee when confronted with the credits found to be unexplained as to their source.

(g) Income Tax Ordinance (XXXI of 1979)‑‑‑--

‑‑‑‑S. 13(1)(a)‑‑‑Addition‑‑‑Advance from customers ‑‑‑Undocumented transaction‑‑‑Effect‑‑‑When an assessee chooses to have business dealings with persons placed in the informal sector of the economy and as a consequence the assessee fails to maintain proper documentation for its dealings with such persons, then the assessee must accept the necessary consequences, when the Assessing Officer refused to acknowledge such undocumented transaction.

(h) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S. 13(1)(a)‑‑‑Addition‑‑‑Advance from customers‑‑‑Genuineness of parties‑‑‑Sales were made against advance amount‑‑‑Contention was that bona fides of such parties automatically stood established on the acceptance of declared sales by the Assessing Officer‑‑‑Validity‑‑‑Fact that the Assessing Officer did not "estimate" sales could not be taken to mean that the bona fides of the persons claimed to have made advance amounts to assessee/company had indeed been established.

(i) Income fax Ordinance (XXXI of 1079)‑‑‑

‑‑‑‑S. 13(1)(a)‑‑‑Addition‑‑‑Advance from customers‑‑‑Genuineness of parties‑‑‑Sale against advances‑‑‑Non‑appearance of persons‑‑‑Record of sales tax‑‑‑Effect‑‑‑Cited persons having not appeared before .the Assessing Officer could not be considered genuine persons under sales tax law when no actual effort had ever been made to look into their bona fides.

(j) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S. 13(1)(a)‑‑‑Addition‑‑‑Advances from customers‑‑‑Payments through Banks from third parties accounts‑‑‑No documentation ‑‑‑Benami parties‑‑‑Addition of sale to such parties‑‑‑Validity‑‑‑Assessing Officer when making the computation of assessee's income could possibly have estimated sales in view of the un verifiability of the cited persons who had made advance payments and were also shown to have purchased from the assessee‑‑‑Fact that Assessing Officer did not estimate sales could not necessarily be taken to mean that he had accepted the said persons as genuine and verifiable persons when he computed the trading results‑‑‑When Assessing Officer found that such persons were not genuine persons insofar as there was no documentation that could conclusively establish their alleged dealings with the assessee in the context of advance payments made‑‑‑Assessing Officer had no choice but to invoke the provisions of S.13(1)(a) of the Income Tax Ordinance, 1979‑‑‑Assessing Officer could not be compelled to accept the DDs and TTs referred to by the assessee as satisfactory evidence to substantiate remittances allegedly made to the assessee by such parties‑‑‑Mere fact that the assessee had in its possession certain DDs and TTs purportedly made out by the persons who were claimed to have made advance payments to the assessee, was not by itself conclusive evidence of the veracity of assessee's contention, especially when on enquiry made from Banks, the Assessing Officer found that the contention as made by the assessee was not established and the payments had not been made out of the Bank

accounts of .such persons‑‑‑First Appellate Authority had rightly upheld the addition made under S.13(1)(a) of the Income Tax Ordinance, 1979 by the Assessing Officer in circumstances.

(1988) 57 Tax 224; (1984) 51 Tax 11; 1993 PTD 1198; (1989) PTD 638; 2000 PTD 1320; (1963) 7 Tax 184; (1973) 27 Tax 229; 1984 PTD 438; (1978) 114 ITR 691 and (1968) 17 Tax 78 ref.

(2000) 82 Tax 105 (Trib.); 1981 PTD 213 and (1978) SCC 226 Muhammad Iqbal Khawaja and Faisal Iqbal Khawaja for Appellant.

Abdul Rasheed, D.R., Dr. Hamid Ateeq, D.C.I.T. and Shahid Jamil, L.A. for Respondent.

Date of hearing: 2nd November, 2002.

ORDER

MUHAMMAD MUNIR QURESHI (ACCOUNTANT MEMBER).‑‑‑This appeal by a public limited company (unlisted) arises out of order of the CIT(A), Zone‑1, Lahore, dated 4‑2‑2002.

2. It is the appellant's contention that the First Appellate Authority has wrongly maintained addition under section 13(1)(a) of the Ordinance amounting to Rs.32,312,800. Add backs against P&L expenses have also been contested.

3. Briefly stated, the facts in this case are that on scrutiny of assessee‑company's accounts and supporting documentation during the course of assessment proceedings, the Assessing Officer found that an amount of Rs.32,312,800 was shown as advances received from customers. As the amount of advances from customers had shown a sharp increase vis‑a‑vis last year when such advances were cited at Rs.83,84,348 only, the Assessing Officer issued formal notice and interrogated the assessee‑company on the matter and reply was ‑received as under:‑‑

"The detail of advance payments receipts was already submitted and is on record. These payments are received through crossed Demand Draft & Cross Pay Order only and relates to the sugar parties. The parties making the payments are genuine and can be verified if your good‑self like so. Thus declare d position being fully protected under law may kindly be accepted".

4. The names of the persons making advances and the amount deposited by each person was intimated by the assessee as under:‑‑

1. Mr. Abdul Jabbar2,949,000

2. Mr. Azam Khan Karak5,895,000

3. Mr. Ali Jan Khan4,092,000

4. Mr. Farhan Shah1,564,800

5. Mr. Khan Zada Khan4,074,000

6. Mr. Mir Zaman3,900,000

7. Mr. Niamat Khan3,760,000

8. Mr. Noor Zaman6,078,000

5. In order to appraise the bona fides of, the cited eight parties from whom the advances were claimed to have been received, Assessing Officer issued notices under section 148 of the Ordinance to them through registered post/acknowledgement due, but the were received back with the remarks from the Postal Authorities "such persons do not exist at the given addresses". The Assess advised the assessee‑company accordingly and called per necessary documentation, including sale argument of assessee‑ company with them, their national identity cards and national tax numbers and the assessee was also requested to produce the said eight persons before the Assessing Officer.

6. In response to the Assessing Officer's demand, the assessee company expressed its inability to comply and the Assessing Officer was also advised that there is no sale agreement with these eight persons and the company was not in a position to produce them before the Assessing Officer as these eight persons were not contactable.

7. The Assessing Officer then requisitioned specific information regarding various bank accounts cited against the advances received. On scrutiny of the information furnished by the concerned banks, the Assessing Officer found that the advances amounts claimed by the company to have been received from the cited eight persons had not been routed through their respective individual bank accounts. Rather, the amounts had been routed through the bank account of other persons in the said bank branch and not from the bank account of the cited eight persons.

8. The Assessing Officer, then concluded that the amounts attributed by the Assessing Officer to the cited eight parties in. matter pertaining to advances from customers" could not be substantiated from the documentation available to him and he accordingly advised the assessee‑company that the cited eight parties appeared to be "Benami Parties" and thus the creditors shown in the balance‑sheet of the company were not genuine creditors.

9. In response, the assessee‑company advised the Assessing Officer that by asking the company to physically produce the cited eight parties before him for their interrogation/verification, the company was being directed to do something "which is beyond our control". The company further advised the Assessing Officer that it had never considered it necessary to enter into formal agreement with customers making advance deposit and in its opinion such a agreement "is neither physical nor practicable". Furthermore, the Assessing Officer was told that sales of sugar had actually been made to the cited eight parties, subsequently. Also, according to the company, as the amounts in question have been, statedly, routed through crossed demand drafts and telegraphic transfers, the remittances could not be treated as suspect. In the opinion of the company, the cited persons having subsequently lifted sugar from the company premises/gate, the bona fides of such persons were beyond any doubt as only the persons making advance payments to the company could be allowed by the company to lift the amount of sugar from the company premises. As to why the bank entries were found to relate to other parties not to the cited eight persons, the company speculated that the cited eight persons might have had their own dealings with these other persons from whose bank accounts payments were found to have been made.

10. The company specially, emphasized before the Assessing Officer that as transactions as reported by the company in matter pertaining to sales made were fully consistent with the sales tax record that was subject to regular scrutiny by the sales tax authorities‑and such sales tax record was allegedly binding as far as income‑tax proceedings were concerned. The sales tax authorities having accepted the identity of Mr. Niamat Khan, Malakand and others, the company was of the opinion that the same was sufficient evidence to satisfactorily establish their bona fides and there was no justification for the Assessing Officer to treat these eight persons as "Benami".

11. According to the AR of assessee, the department has adopted a very unreasonable attitude in matter pertaining to bona fides of the cited eight persons who are claimed by the company to have deposited advance amount With the company for sales of sugar to them and which sales crave been made in the subsequent periods. The AR of appellant submitted that the books of accounts maintained by the company had been duly produced before the Assessing Officer during the course of assessment proceedings and these books alongwith the supporting documentation had been examined and the trading result of the company had been accepted. That being so, the AR opined that the Assessing Officer had no justification to arbitrarily treat the advances from customers as "suspect". According to the AR, it was the cautionary market practice to receive advance amounts from customers in this manner without any written agree Tent etc. The AR repeated the earlier contention made before the Assessing Officer at assessment stage that sales of sugar had in fact been made to these eight parties subsequent to the advance amount receipt by the company and such sales duly disclosed in the sales tax record and it could not therefore, be said that these were "Benami Parties". The AR also repeated that the advance amount received were against "crossed demand drafts" and "telegraphic transfers" and there was thus no question as to their genuineness. The AR also argued that statutory notices had not been served on the company during the course of assessment proceedings strictly in the manner required by law. As for the Assessing Officer's interrogation of the assessee through a general notice issued under section 62 and not through a specific notice under section 13(1)(a), as statedly required by law, this, according to the AR, was allegedly fatal to the entire superstructure built up by the Assessing Officer and rendered the same, null and void. The AR also affirmed that it was actually not possible for the assessee‑company to ensure the physical attendance of these eight persons before the Assessing Officer after a lapse of considerable time from the date of receipt of the amounts in question. This is mainly because most of these persons were statedly resident in tribal area of the N.W.F.P. The AR was of the view that the Assessing Officer could himself have trade attempt to enforce their attendance rather than direct the assessee‑company to do so and in case the Assessing Officer found that it was not possible for him to enforce their attendance then it was not realistic for him to expect. the assessee‑company to produce them before him.

12. The AR has cited the following case‑law in support of the arguments made before the Tribunal:‑‑

(1988) 57 Tax 224 (H.C. Kar.); 1984 PTD 315; 1993 PTD 1198; (1989) PTD 638; 2000 PTD 1320; (1963) 7 Tax, Page 184 (H.C. Kar.).

13. The arguments as made by the AR have been strongly contested by the Legal Adviser to the department. According to the L.A., the onus was directly on the asses see‑company to substantiate the final accounts filed before the Assessing Officer alongwith the return of income. According to the L.A., the Assessing Officer had provided "reasonable opportunity', as envisaged in law, to the assessee‑company to establish the bona fides of the eight persons cited by the company as the company's customers who had made advance payments to the company aggregating Rs.32,312,800. The L.A. emphasised that the company had itself advised that "the parties making the payments are genuine and can be verified if your good‑self like so" (SIC). Having made such a categorical written declaration in its reply, dated 26‑5‑2000, the company had subsequently reneged and expressed its inability to produce the cited eight parties before the Assessing Officer for necessary verification and this failure, according to the L.A. must necessarily go against the assessee‑company.

14. According to the LA, having failed miserably to establish the bona fides of the cited eight parties before the Assessing Officer, the assessee‑company was now attempting to take cover behind hyper technical legal niceties which was evident from the fact that the A.R. had stated before the Tribunal that the correct notice under section 13(1)(a) had not been' issued by the Assessing Officer. The stated that necessary notices had actually been issued by the Assessing Officer and the queries had been carefully drafted and properly confronted to the assessee on all pertinent aspects having a bearing on the advances disclosed by the company in the balance‑sheet.

15. According to the LA, it was not correct that the Assessing Officer was bound, under all circumstances, to accept the record maintained, as per sales tax rules/regulations, especially when compelling contrary evidence was available to the Assessing Officer as in the case of the present assessee.

16. The LA deposed before the Tribunal that the deeming provisions incorporated in section 13 of the Ordinance had statedly no nexus with any particular Head of Income and the provisions of section 13 can be invoked without there being any express need to first reject the accounts produced. Section 13(1) is statedly a "charging section" in its own right and could thus be independently invoked.

17. According to the L.A, the "ambient circumstances" were highly suspect insofar as huge amounts have been shown as deposited by the cited eight parties for which no documentation whatsoever (sale agreement etc.) was admitted to have been maintained. This according to the LA was just not plausible and where subsequently the said person wanted a refund of the advance amount in case the company was unable, for any reason, to make the sale, then there was no way that its claim could be legally enforced (in the absence of any documentation). The abnormal increase in advance deposit from customers vis‑a‑vis preceding year was also, according to the LA, highly suspicious and no satisfactory explanation on the matter had statedly been made by the company to date.

18. The LA was firmly of the opinion that the assessee's reference to "crossed DDs/TTs" was wholly unjustified and without any basis whatsoever as the amounts in question had admittedly not been deposited from the bank accounts of the cited eight parties.

19. The LA look issue with the contention of the AR of assessee that as per the provisions of section 13(1)(a) of the Ordinance only "unexplained cash credits" could be brought to tax under section 13(1)(a) and as in the case of the assessee‑company the amounts in question with regard to the cited eight parties had allegedly been routed through banking channels since demand drafts and telegraphic transfer's had been made out, h6nce there was no question of treating the said remittances as "unexplained cash credits". The LA opined that words "any sum" had been deliberately used in clause (a) of subsection (1) of section 13 of the Income Tax Ordinance, 1979 in contradistinction to the use of the word "cash" in the parallel provisions of the Income Tax Act, 1922, and there was nothing in the law therefore, that prevented the Assessing Officer from treating the said amounts as unexplained sums actionable under section 13(1)(a).

20. The LA also took issue with the statement of the AR that the Assessing Officer had accepted the disclosed book results in their entirety and the LA pointed out that an addition of Rs. 1 crore odd had in fact been made by the Assessing Officer in the trading profit and loss account.

21. The LA conceded that the Assessing Officer had not attempted to verify each and every rupee of the advances received from the customers. However, he argued that the verification actually made was fairly illustrative and sufficient for the purposes of invoking the provisions of section 13(1)(a).

22. The LA has cited the following case‑law in support of the arguments made before the Tribunal:‑‑

(1973) 27 Tax 229 (H.C. Lah.), 1984 PTD 438, 1978 ITR Vol. 114. Page. 691; 1968 PTD 442.

23. We have perused the case‑law cited before us and have very carefully considered the arguments made by both sides and have also examined the available record. After due consideration of all pertinent aspects, our findings are recorded as under:‑‑

(1) In our considered judgment, the assessee‑company is wholly misconceived in its view that the advance amounts have been remitted against "crossed bank drafts". It is a fact that the amounts in question have not been routed through the bank accounts of the cited eight parties.

(2) Under the law, the Assessing Officer when making a determination of the total income of an assessee for purposes of levy of income‑tax, is not bound to refer to the sales tax record maintained, as per sales tax law/rules. The ITAT in reporter decision cited as (2000) 82 Tax 105 (Trib.) has held that:‑‑

"The main trust of appellant's arguments in support of its contention that declared‑version be accepted is that the record maintained as per prescribed Excise Rules is sufficient to substantiate the final accounts of the company submitted before the Assessing Officer alongwith the Return of income. We have given this matter our earnest consideration as it is of considerable significance in deciding the issue before us. In our considered opinion, there is a fundamental difference in the requirement of maintenance of record/accounts in the context of liability to be determined for purposes of sales tax acid for purposes of determination of total income. In the case of determination of liability for purposes of levy of sales tax, the Excise/Sales Tax Authorities are mainly concerned with monitoring production and evaluating average sale rate. The Excise Authorities expect a minimum level of production to be achieved periodically and provided that level is achieved, the Excise Authorities are generally satisfied with the results disclosed. The Excise Duty is paid with reference to achieved production and sales tax is levied on the turnover (i.e. manufactured goods) that are disposed off in the market. If the Excise/Sales Tax Authorities are satisfied that production of goods is correctly recorded and the average sale price disclosed is reasonable, then in their view of the matter the available record as per the prescribed Excise Rules are sufficient and no further queries are considered necessary.

In the case of determination of total income however, the range and scope of accounts/supporting documentation required, is in our opinion, much wider. The Assessing Officer is not simply concerned with the achieved level of production and the quantum of sales made in the market. The Assessing Officer must go beyond actual physical production and examine purchases and incidental expenses thereon. He must examine average purchase price in‑depth and be satisfied that it is correctly disclosed and that there is no under/over invoicing. Similarly, the sales are subjected to close scrutiny to see that there are no significant variations in sale rate of the same commodity/goods and that the average sale rate is consistent with the bona fide price prevailing in the market. The cost of sales is a matter of consequence for the Assessing Officer as the gross profit rate evolving, expressed as a percentage, is often referred to while evaluating the declared trading results .........

...............................The purchases and sales are also scrutinised to see how far these are properly vouched and verifiable .,

....................The examination of the balance‑sheet is again a very significant requirement in the Assessing Officer's appraisal of accounts. The assets and liabilities sides of the balance‑sheet require close scrutiny to ensure that whatever accretion/decretion is cited is properly explained. Any unexplained accretion has to be looked into and evaluated in terms of express statutory stipulation. Such unexplained accretion can be found to constitute `deemed income' and separately included in a tax‑payer's total income. Even where an accretion is explained, it can sometimes have tax consequences. Thus where a loan is received otherwise than by crossed cheque beyond a stipulated threshold, the same is to constitute tax‑payer's deemed income under section 12(18). The valuation of stocks is also required to be made in a consistent manner according to well‑defined parameters.

As is obvious from what is stated above, the Assessing Officer's examination of a taxpayer's accounts has a much wider range and scope than the examination of Excise/Sales Tax Authorities in the context of levy of Excise duty/Sales Tax."

In view of the Tribunal's findings reproduced .Supra, we find that the AR's submissions on the matter are not correct and under the given facts and circumstances of the present case, the Assessing Officer, purely on the basis of the sales tax record of the assessee‑company, was not bound B to hold that the cited eight parties were genuine parties.

(3)The 'ambient circumstances' in this case are of particular significance and cannot be ignored. The fact that huge amounts, have been shown as having been deposited by the specific parties for which no documentation is admitted can only cast an adverse inference against the assessee. The Assessing Officer cannot be forced to accept the undocumented transactions. In the case presently before us, there is admittedly no sale agreement between the assessee‑company and the alleged persons making advance payments nor with the alleged persons making payment assessee‑company out of their own bank accounts. Rather, the payment to the company has been made against the bank account of the third party with which the assessee‑company has no relationship whatsoever. It is also incredible that the assessee‑company professes to have no knowledge whatsoever about the whereabouts of any of the eight persons, when they are cited as regular customers of the company who have made advance payments for sale of sugar to them. It is also highly significant that the assessee‑company having very confidently and unequivocally asserted that the cited eight parties were genuine parties open to verification, suddenly makes an about face and declares that it was just not possible for the assessee company to comply with the Assessing Officer's demand for their production before him after he had failed to elicit any response to the statutory notices issued under section 148.

(4)The Lahore High Court in decision cited as (1982) 45 Tax 47) has held that accounts produced may be rejected without assigning any reason where the ambit circumstances are found to be suspect in the present case, the `ambient circumstances' are indeed not found to lend support to the assessee‑company's contention regarding advances received from customers.

(5)We do not agree with the contention of the AR that the additions as made under section 13(1)(a) is legally untenable for the reason that specific notice styled as notice under section 13(1)(a) had not been issued. It is a fact that a notice under section 62 of the Ordinance has in fact been issued, comprehensively detailing the facts and circumstances on which assessee's response was required and reference to section 13(1)(a) has been made therein. Necessary opportunity, as envisaged in law, has therefore been accorded to the assessee‑company and no prejudice whatsoever has been caused to the assessee by the alleged non‑issuance of notice styled as notice under section 13(1)(a). The assessee's objections on the matter amount to legal quibbling only and carry no weight.

(6)We agree with the departmental contention that section 13 is an independent charging section and it is the intent of the legislature to allow its independent invocation. In our, judgment, there is no substantive defect in law and procedure that could render the addition under section 13(1)(a) as made by the Assessing Officer in the case presently before us, to be untenable in law.

(7)The burden of proof is squarely on the assessee When confronted with the credits found to be unexplained as to source. In the present case, assessee‑company has not discharged this onus.

(8)When an assessee chooses to have business dealings with persons placed in the informal sector of the economy and as a consequence the assessee fails to maintain proper documentation for its dealings with such persons, then the assessee must accept the necessary consequences, when the Assessing Officer refused to acknowledge such undocumented transactions. In the case of the assessee‑company's alleged dealings with the cited eight parties, no proper documentation has been produced to establish conclusively the bona fides of the eight parties before the Assessing Officer in the context of advance amounts claimed to have been deposited by them. Assessee's main stance here appears to be that these same persons have subsequently lifted sugar from the mill gate against the advance amount allegedly deposited by the earlier and as the Assessing Officer has statedly accepted the assessee's declared sales therefore, their bona fides automatically stood established, especially when these persons are also cited in the sale tax record maintained by the company for purposes of levy of sales tax. In our judgment, the fact that the Assessing Officer did not "estimate" sales cannot be taken to mean that the bona fides of the persons claimed to have made advance amounts to the company have indeed been established. I Surely, it is not the assessee's contention that the persons whom the Assessing Officer sought to verify under the income‑tax law are rendered verifiable under sales tax law simply because no actual effort has been made for their formal interrogation under sales‑tax law. Thus if Mr., Niamat Khan, who is one of the eight cited persons did not appear before the Assessing Officer under income‑tax law, how he can be expected to be rendered a genuine person under sales tax law when no actual effort has ever been made under sales tax law to look into his bona fides? The fact of the matter is. that no actual effort has ever been made by the Sales‑tax Authorities to investigate the bona fides of Mr. Niamat khan and others and the declared sales have been routinely accepted by them. Admittedly, the Assessing Officer when making the computation of assessee's income could possibly have estimated sales in view of the un verifiability of the cited eight persons who have made advance payments and are also shown to have purchased sugar from the assessee‑company. However, the fact that the Assessing Officer did not estimate sales cannot necessarily be taken to mean that he has suddenly accepted the said eight persons as genuine and verifiable persons when he computed the assessee‑company's trading results.

(9)In our considered judgment, if the Assessing Officer had accepted the genuineness of the eight parties notwithstanding the fact that no reliable documentation could be produced by the assessee‑company to substantiate its contention that they were indeed the persons who have made the advance payments, then the Assessing Officer would have accepted the declared version purely on presumption. However, after making actual enquiry and after giving necessary opportunity to the assessee, when the Assessing Officer found that these eight persons are not genuine persons insofar as there is no documentation that can conclusively establish their alleged dealings with the assessee company in the context of advance payments made, the Assessing Officer had no choice but to invoke the provisions of section 13(1)(a). Under the law, the Assessing Officer cannot be compelled to accept the DDs and TTs referred to by the assessee as, satisfactory evidence to substantiate remittances allegedly made to the company by the cited eight parties. As explained above, did evidence produced by the assessee‑company is riot reliable evidence. The Hon'ble Supreme Court of Pakistan in its judgment cited as [(1978) SCC 226)] has held that there was nothing in the law that gait compel an Assessing Officer to accept a piece of evidence placed before him. Thus the mere fact that the assessee-company has in its possession certain libs and TTs purportedly made out by the persons who claim to nave made advance payments to the company is not by itself conclusive evidence of the veracity of assessee's contention especially when on enquiry made from banks, the Assessing Officer found that the contention as made by the assessee was not established and the payments had not been made out of the batik account's of the cited eight persons.

(10)Looking at all pertinent aspects, we, for the reasons recorded supra, hold that the CIT(A) has rightly upheld tie addition made under section 13(1)(a) by the DCIT amounting tot Rs.32,312,800.

(11)The Ground pertaining to P&L add backs, has not been pressed before us. We have looked into the add backs made under the different Heads and in our considered judgment, these have been made reasonably to take cognizance of personal element involved/party un verifiability of the claimed expenditure and the add backs are broadly consistent with the past history of the case and these are accordingly maintained.

The appeal for 1999‑2000, filed by the assessee, is hereby rejected.

C.M.A./803/Tax(Trib.)Appeal rejected.