Law:

Section:

2007] 294 ITR 663 [2008] 170 TAXMAN 142 (MAD.) HIGH COURT OF MADRAS Commissioner of Income-tax * v. Gobi Textiles Ltd. K. RAVIRAJA PANDIAN AND MRS. CHITRA VENKATARAMAN, JJ. TAX CASE (APPEALS) NOS. 439 AND 440 OF 2004 SEPTEMBER 4, 2007 Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 1996-97 - While processing assessment, Assessing Officer noticed that assessee-company had received certain amount as share application money - As regards genuineness of transactions, assessee produced salary certificates of some of creditors and land holding papers of certain properties, but did not produce any person - Assessing Officer, though did not dispute existence of those persons, yet did not issue notice to any one of them to disprove claim of assessee and concluded that said persons were not capable of depositing share application money - Thus, he treated said sum as income of assessee under section 68 - Whether by providing basic information in respect of creditors, assessee had discharged onus cast upon it and thereafter it was Assessing Officer who had to prove to contrary - Held, yes - Whether in absence of any enquiry conducted by Assessing Officer as to creditworthiness of creditors, even when all details about them were available before him, addition made by Assessing Officer could be sustained - Held, no FACTS While processing the assessment, the Assessing Officer found that the assessee-company had received certain amount as share application money. The Assessing Officer required the assessee to prove the genuineness of the transactions by producing persons who had deposited more than Rs. 1 lakh. The assessee produced salary certificates of some of the creditors and land holding papers of certain properties, but did not produce any person. On consideration of the said particulars, the Assessing Officer was of the view that except one person, others were not capable of depositing money in cash out of their savings and, hence, he treated the share application money as unexplained cash credit under section 68 and added it to the income of the assessee. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. On second…

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