COMMISSIONER OF INCOME TAX Vs. GOBI TEXTILES LIMITED

JUDGEMENT

(1.) THE relevant assessment year is 1996-97. The appeal is filed formulating the following substantial questions of law:-

(2.) THE necessary facts as culled out from the statement of facts are as follows: for the assessment year 1996-97, the assessee Company filed its return of income on 29. 11. 1996 declaring a total loss of Rs. 72,21,172/ -. The assessment was completed under Section 143 (3) of the Income Tax Act on 12. 9. 1999 determining the net loss of Rs. 21,56,526/- after considering the unexplained cash credit of Rs. 56,47,470/ -.

(3.) WHILE processing the assessment, the assessing officer found a sum of Rs. 72. 90 lakhs was received in the financial year 1996-97 as share application money thereby the assessee company's share capital was increased to Rs. 1,67,88,000/ -. Out of Rs. 72. 90 lakhs received, a sum of Rs. 53,88,100/- was claimed to have been received from persons who were not Income-tax assessees. Hence the assesseee was required to prove the genuineness of the transactions by producing persons who have deposited more than Rs. 1 lakh. The assessee company produced salary certificates of 10 persons and land holding papers of certain properties but not produced any persons. On consideration of the particulars furnished by the assessee, the assessing officer was of the view that except one person others were not capable of depositing money in cash out of their savings. On that view, the assessing officer treated the share application money of Rs. 53,88,100/- as unexplained cash credit under Section 68 of the Income-Tax Act and added the same in the income of the assessee. On appeal, the Commissioner of Income Tax (Appeals) upheld the order of the assessing officer.