RAJESH BABUBHAI DAMANIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Ahmedabad Bench 'C', has referred the following questions of law for the opinion of this court under Section 256(1) of the Income -tax Act, 1961 :

(2.) THE relevant assessment year is 1985 -86. The assessee was carrying on business on a small -scale in stainless steel utensils. He had filed a return of income for the said assessment year declaring a total income of Rs. 15,423. The assessee had received deposits from six parties on April 14, 25, 1984, and had repaid all of them in the years 1984 and 1985. The Assessing Officer, disregarding the evidence produced by the assessee in respect of the identity and genuineness of the parties and their financial capacity, made an addition of the amount of the said six deposits totalling Rs. 2,80,000. An appeal was preferred by the assessee before the Commissioner of Income -tax (Appeals) who accepted the assessee's contentions regarding the genuineness of these transactions and deleted the addition of the said amount of six deposits.

(3.) ON going through the decision of the Tribunal, it appears to us that the Tribunal has totally ignored the fact that the order of the Assessing Officer had merged in the appellate order of the Commissioner of Income -tax (Appeals) before whom the assessee had succeeded. The Commissioner of Income -tax (Appeals), in his order dated October 24, 1988, while deleting the addition of Rs. 2,80,000, held that the assessee had done all that he could do to prove that the cash credits were genuine and that the Income -tax Officer was not correct in rejecting the evidence led by the assessee during the course of the proceedings merely on the ground that the loan was not substantiated by means of any other corroborative evidence. The appellate authority noted that the Income -tax Officer was supplied withthe copies of affidavits, etc., well in time. The parties were produced before him for examination. The Commissioner of Income -tax (Appeals) appreciated the evidence as follows :