2006 (8) TMI 117

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..... ari was summoned by the Assessing Officer. She appeared before the Assessing Officer and produced   her bank statement which indicated that she had issued three cheques of Rs. 5 lakhs each to the assessee. Prior to this she had received three cheques of Rs. 5 lakhs each from the State Bank of India, Fateh Puri, Delhi and these cheques were issued by M/s Mahal Chand Moti Lal Kothari and Co. The Assessing Officer tried to find out the source of the amounts given by M/s Mahal Chand   Moti Lal Kothari to Smt. Kavita Kothari and found that cash deposits were made   in the bank account of M/s Mahal Chand Moti Lal Kothari. The Assessing Officer,  therefore, issued summons to M/s Mahal Chand Moti Lal Kothari at it .....

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..... which cheques were issued to Smt. Kavita Kothari. Given these facts, the Tribunal was of the view that the assessee cannot be foisted with a liability under Section 68 of the Act. 6 We are of the view that the Revenue has not been able to raise any substantial question of law. It is clear that the assessee received share application money from Smt. Kavita Kothari who is not only a genuine person but was also creditworthy. She was able to show that she had received cheques from   M/s Mahal Chand Moti Lal Kothari. Her bank statements were produced before the Assessing Officer which clearly showed that she had the requisite amount for investment. 7 Learned counsel for the Revenue submitted that for the purpose of invoking Section .....

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..... hen the amount received by the company would be regarded as a capital  receipt and to that extent the observations in the case of Stellar Investment  Ltd. (1991) 192 ITR 287 (Delhi), are correct but if, on the other hand, the  assessee offers no explanation at all or the explanation offered is not  satisfactory then, the provisions of Section 68 may be invoked. In the latter case Section 68, being a substantive section, empowers the Income Tax Officer to treat such a sum as income of the assessee which is liable to be taxed in the previous year in which the entry is made in the books of account of the  assessee.?  8 A reading of the aforesaid passage does not support the case of the  Revenue. The Revenue .....

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