JUDGMENT : 1. The Appellant is represented by Mr. J.A. Kawoosa. Despite service, none appears for the respondent. 2. We have heard learned counsel for the Appellant-Principal Commissioner of Income Tax, Jammu, at length. 3. The Appeal has been admitted to hearing on 27th September, 2016 with the following three substantial questions of law: "1. Whether in the facts and circumstances and in law, the Hon'ble ITAT Amritsar was right in not appreciating that the creditors were found to be not existent on the basis of inquiries conducted u/s. 133(6) of the Income Tax Act, 1961 by the Assessing Officer. Out of the 23 letters issued to the creditors, 14 were returned un-served with the postal remarks Not known/Not traced? 2. Whether in the facts and circumstances in law, the Hon'ble ITAT Amritsar was right in dismissing the appeal filed by the Revenue thereby upholding the decision of the CIT(A) in deleting the addition on account of bogus creditors by not considering the decision of Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. Nova Promoters and Finlease (P) Ltd.? 3. In respect of non-availability and non-production of PAN of the alleged creditors, the Hon'ble ITAT Amritsar has erred in holding that if a person has exceeded his income over a specific limit. He is supposed to file his return u/s. 139(1) and it is not mandatory to have PAN. The Hon'ble ITAT Amritsar overlooked the provisions of section 139A(1)(ii) wherein it is mandatory to have pan, if sales of a person exceeds or likely to exceeds 5 lakhs." 4. In addition to the above, we are inclined to consider the Appeal on yet another issue, which is as to whether the Tribunal and the Commissioner, Appeals, were justified in upholding that the creditors were bona fide and genuine and that the Assessing Officer erred in holding that the amount reflected against creditors is not genuine and that it should be added as income of the assessee. 5. The facts relevant to the present case is that the assessment made is of the year 2007-08. The Assessee follows mercantile system of accounts. He filed the income tax returns, which was taken up for scrutiny by issuance of notice u/s. 143(2) of the Income Tax Act, 1961. 5. The facts relevant to the present case is that the assessment made is of the year 2007-08. The Assessee follows mercantile system of accounts. He filed the income tax returns, which was taken up for scrutiny by issuance of notice u/s. 143(2) of the Income Tax Act, 1961. A detailed questionnaire was issued on 15th July, 2009 along with notice u/s. 142(1); 129 of the Income Tax Act, 1961. The Assessee was represented by Mr. M.D. Wani, Attorney Holder. The books of account were produced for verification. 6. The assessee is engaged in the business of handmade carpets and other handicrafts. In the balance sheet of the assessee for the financial year 2006-07, it was seen that Sundry creditors at Rs. 2,43,53,058/- have been shown on the liability side as against total turnover of Rs. 7,29,13,391/- and the gross purchase of Rs. 7,12,76,587/-. In the questionnaire dated 15th July, 2009, the assessee was requested to furnish the complete address in respect of creditors, in whose name the sum exceeding Rs. 20,000/- is outstanding. The assessee furnished the details in respect of 23 creditors. In order to verify the genuineness of these creditors, information u/s. 133(6) of the Income Tax Act, 1961 was sought vide letter issued to the address provided by the assessee. The letters were issued vide speed post on 03rd August, 2009 in respect of 23 parties. The nature of queries was as follows: "1. Nature of transaction entered into with M/s. Irfan Carpets, Nigeen during financial year 2006-07. 2. The amount outstanding in the name of M/s. Irfan Carpets, Nigeen as appearing in your books of Accounts. 3. Furnish a confirmed copy of account of M/s. Irfan Carpets, Nigeen pertaining to the financial year 2006-07." 7. Out of 23 letters issued, 14 were returned as unserved with the postal remark "not known/not traced." On 31st August, 2009, the assessee submitted letters, purported to be confirmation in respect of creditors. According to the Assessing Officer, it did not have PAN numbers. These letters did not reflect details of account as per books of the creditors. The Assessing Officer found that the letters were of uniform language and type. Doubting the genuineness, one creditor, Shri Shafat Ahmad Wani, Nawa Kadal, Srinagar, was taken up for enquiry purposes to check his genuineness. The assessee owed the said Shafat Wani a sum of Rs. 13.19 Lacs. The Assessing Officer found that the letters were of uniform language and type. Doubting the genuineness, one creditor, Shri Shafat Ahmad Wani, Nawa Kadal, Srinagar, was taken up for enquiry purposes to check his genuineness. The assessee owed the said Shafat Wani a sum of Rs. 13.19 Lacs. The said person was subject to a detailed examination. 8. In the present case, the statement made by Shri Shafat Wani is relevant. He stated that he is engaged in purchase and sale of carpets. He further states that he is neither income tax payer nor does he have any PAN number. He stated that he was in this business for 4-5 years. He also stated that he does not maintain any book of account. The Assessing Officer, therefore, concluded that the ledger submitted by the assessee, showing Shri Shafat Wani as a creditor was bogus and fictitious. Other responses given by Shri Shafat Wani were vague stating that he has no details of his annual turnover etc. He stated that he does not have any workers and he keeps his stock at his home. He transport carpets by bus and public transport. From the details of transaction as stated, it is found that Shri Shafat Wani had sold carpets for Rupees 18.19 lacs to the assessee. The Assessing Officer however came to hold that since letters to 14 creditors were returned unserved and by the vague nature of transaction, which is evident from the case of Shri Shafat Wani, it is a case of unaccounted money going to the books of account of the assessee, which has been wrongly shown as liability of Sundry Creditors. The Assessing Officer, therefore, holds that the said amount of Rs. 1,02,82,924/- should be added to the total income of the assessee in terms of section 68 of Income Tax Act, 1961. The Assessing Officer also takes note of two payments, one made to A1-Khudam in a sum of Rs. 5/- lacs and another cheque to Mr. Noor Hussain, Accountant of M/s. Mirza Sons. In both cases, the Assessing Officer, on verification, holds that a sum of Rs. 5/- lacs is debited to partners' account and the payment made to Noor Hussain is for day today expenses and there is, therefore, nothing in relation to payment to creditors. Accordingly, the said amount was added to the income. 9. In both cases, the Assessing Officer, on verification, holds that a sum of Rs. 5/- lacs is debited to partners' account and the payment made to Noor Hussain is for day today expenses and there is, therefore, nothing in relation to payment to creditors. Accordingly, the said amount was added to the income. 9. Aggrieved by this, the assessee filed Appeal before the Income Tax Commissioner, Appeals, and it appears from the order of the Commissioner, Appeals, that additional records (Annexure A, B & C) to the Appeal, were produced. These records, apparently, show details of cheque payments made to the trade creditors. The Commissioner Appeals goes in detail into the chart giving details on payments made by cheques for various assessment years. A perusal of account of Shri Shafat Wani, at page No. 51, there is reference of payment of Rs. 5/- lacs by cheque No. 511021 and it relates to assessment year 2007-08. The Commissioner Appeals, taking note of certain payments made by cheque, was of the view that the assessee had established proof of payment through cheque of trade creditors and concluded that the transaction as genuine. He, therefore, allowed the Appeal in part, against which, the department filed Appeal to the Tribunal and the Tribunal, primarily relying upon the plea of payment of amount by cheque to various persons, as stated before the Commissioner Appeals, came to hold that the Revenue was not correct in holding that the trade creditors are bogus and fictitious. It also declined to remand the matter to the Assessing Authority in relation to a sum of Rs. 1,02,82,924/- which has been deleted by the Commissioner Appeals. 10. Learned Counsel for the Revenue, Mr. Kawoosa, would plead that the factual plea of payment through banking channels was not taken by the assessee before the Assessing Authority. The details that were produced before the Commissioner Appeals and veracity of these claims have not been tested by the competent authority, namely Assessing Officer. The alleged payment made to Shri Shafat Wani, has to be verified as to the relevant assessment year. 11. The details that were produced before the Commissioner Appeals and veracity of these claims have not been tested by the competent authority, namely Assessing Officer. The alleged payment made to Shri Shafat Wani, has to be verified as to the relevant assessment year. 11. The primary contention of the department before the Tribunal was that in view of the new records produced before the appellate authority and the inconsistency in the records coupled with dispute on facts, by the department, the case should have been remanded as pleaded to the Assessing Officer to re-look into the issue. Merely on the basis of a chart, produced by the assessee, the Commissioner Appeals has discredited the finding of the Assessing Officer, who has held on detailed analysis that it is a case of bogus and fictitious transaction. 12. We find much force in the contention of the Appellant department because what has been produced before the Assessing Officer and the vagueness in the statement of Shri Shafat Wani the AO was correct in his inference. What is recorded in the Commissioner Appeals order, is based on new facts. 13. The finding of the Commissioner Appeals is that Shri Shafat Wani only received payment by cheque and there is no payment by cash. Whereas (Shafat Wani's) statement before the Assessing Officer and the records produced by him are totally different and unsubstantiated. A proper enquiry should have been made by the competent authority enabling him to examine and verify the facts, which were pleaded before the Commissioner Appeals and which were not verified in the manner known to law. 14. There cannot be any contradiction on the documents, letters and the payments made by cheque and, therefore, if the assessee had produced proper records before the Commissioner Appeals, which is a proceedings in continuation to the original proceedings, the department should have been allowed to verify and rebut claim of the assessee. Apparently that exercise has not happened as we can see from the findings of the Commissioner Appeals, that he has based his view merely on the statement and records placed by the assessee. In the appeal proceedings it is only on this premise that an earnest plea was made before the Tribunal by the department for remanding the case to the Assessing Officer, which was declined. 15. In the appeal proceedings it is only on this premise that an earnest plea was made before the Tribunal by the department for remanding the case to the Assessing Officer, which was declined. 15. We find much force in this contention of learned counsel for appellant that there is apparent contradiction in the statement made by the creditor before the Assessing Officer, vis-a-vis the documents provided by assessee to the Commissioner Appeals. 16. In this view of the matter, the order of the Tribunal and CIT(A) are reversed. Accordingly, we allow this Appeal by way of remand. The Assessing Officer shall consider all the documents produced by the assessee before the CIT(A) and decide the issue afresh on merits. The Appeal shall stand disposed of as above.