COMMISSIONER OF INCOME-TAX Vs. JAY TEXTILE MILLS

JUDGEMENT

(1.) IN the course of assessment proceedings for theassessment year 1967-68, relevant to the accounting "period ending on March 31, 1967, the ITO found the following cash credits in the account books of the assessee: No. Name of the Date party Amou of Date ntreceipt of retur n Rs. (i) M/s. Tola Singh Inderjit Singh, 10,00 22-12-28-9 Majith Mandi, 0 66 -67amritsar. (ii) M/s. 9,000 Amritsar (a)23-11-28-9 66 -67 General 10,00 Mills, (b) 0 17-1-6 26-9 7 -67 Amritsar. ( 9,000 c)3-12-6 26-9 6 -67 _____ _ 38,000

(2.) IN order to prove the genuineness of the cash credits in question, the assessee produced evidence, documentary as well as oral. The ITO rejected the evidence produced by the assessee by observing that M/s. Tola Singh Inderjit Singh and M/s. Amritsar General Mills, Amritsar, were mere name-lenders, that various parties had surrendered the cash credits appearing in their names and that the transactions in question were not genuine. He, therefore, added a sum of Rs. 38,000 to the income of the assessee as income from undisclosed sources.

(3.) ON appeal, the AAC set aside the order of the ITO and directed him to make a fresh assessment, by observing as follows : "i have considered the explanation of the appellant. I find that though the Income-tax Officer has stated in the assessment order that both the above-said creditors have admitted that they advanced the loans in question to the appellant but he has not relied on the statements of the creditors only referring that same parties of Amritsar have surrendered cash credits standing in their books of account in the name of the above-said parties. The Income-tax Officer has not even mentioned the names of these parties. I am of the view that by merely stating that same parties have surrendered the cash credits, addition cannot be made in the hands of the appellant unless the Income-tax Officer proves to the hilt that credits, appearing in the account books represent the appellant's own money in the garb of spurious cash credits. The assessment is set aside to be made de novo with the direction that the Income-tax Officer should find out as to whether the facts in the cases (sic) who surrendered the cash credits in the names of creditors in the appellant's case were the same or the facts were different. The Income-tax Officer is further directed to gather cogent material in case he wants to make the above-said addition in the appellant's hands and the appellant should be given full opportunity in the matter. "