TMI Blog2001 (11) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... s as unexplained cash credits and assessed the same under section 68 of the Income-tax Act? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in interfering with the reasoning of the Assessing Officer who logically concluded that the bank account, through which the deposits are said to have been routed have been opened only to lend a shade of genuiness to these transactions which were not genuine?" On receipt of notices on these substantial questions of law on which the appeal was to be heard, the assessee appeared through counsel. Both sides were finally heard. For the assessment year 1988-89, the assessee, a private limited company, filed its return of income showing a loss of Rs. 1,320. The co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to have paid the amounts to the depositors, who had allegedly deposited the amounts in the assessee company, was a partnership wherein P.D. John, a director of the assessee company, was a partner. The Assessing Officer also found that the payments were channelled into the assessee-company and have in most of the cases found their way back to the director, Mr. P. D. John, his wife, and his son in one way or another. It was thus that the Assessing Officer treated this amount as income of the assessee for the previous year. The assessee appealed. The argument on behalf of the assessee was that the amounts were paid by Jaya Electricals to the various persons shown as depositors in the assessee-company, by cheques and that they had in turn p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to above. Section 68 of the Income-tax Act reads thus: "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." There is no doubt that a sum of Rs. 3,33,700 was found credited in the books of the assessee maintained for the previous year relevant to the assessment year. The Assessing Officer was, therefore, entitled to call for an explanation regarding the credit thus shown. The Assessing Officer called for an explanation. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or this sum credited in the books of the assessee was not satisfactory. He had nothing to say about the evidence gathered by the Assessing Officer while completing the assessment on the basis that the sum had to be treated as income in terms of section 68 of the Act and charged to income-tax as the income of the assessee for the previous year. Accepting the case of the assessee that since the deposits were made by way of cheques nothing more remains, the Commissioner of Income-tax (Appeals) allowed the appeal and deleted the sum of Rs. 3,33,700. As we have noticed, the Appellate Tribunal has also done the same, thereby misdirecting itself into an erroneous line of enquiry. It is clear on the terms of section 68 of the Act, that the burden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lves the right question. In such a situation, it has to be held that they have committed a substantial error of law in interfering with the order of the assessing authority without proper basis. We are, therefore, satisfied that interference by this court is called for in this appeal filed under section 260A of the Income-tax Act. Then the question is whether the Assessing Officer was justified in proceeding to treat the deposit as income of the assessee in the previous year in terms of section 68 of the Income-tax Act. We have already indicated that the Assessing Officer has made the correct approach to the question and the finding rendered by him is amply supported by the materials relied on by him and discussed by him in his order. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc., by Jaya Trust was bogus and that the same was liable to be added to the income of Jaya Trust. Counsel also points out that there is also reference to the decision of the Commissioner of Income-tax (Appeals) in the case relating to the present assessee, while completing the assessment against Jaya Trust. Counsel submitted that the impact of this order on the present proceeding has also to be considered by this court. If a sum of Rs. 1,50,000 out of sum of Rs. 3,33,700 is found to be a fictitious payment by Jaya Trust (if it is the same as Jay Electricals) and the same is disallowed by the Assessing Officer in the case of Jaya Trust, the question would arise whether the said sum of Rs. 1,50,000 already taxed at the hands of Jaya Trust ..... X X X X Extracts X X X X X X X X Extracts X X X X
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