Law: Income Tax Act, 1961

Section: 68,263

Section 68, read with section 263, of the Income-tax Act, 1961 - Cash credits - Assessment year 1998-99 - Business of assessee-company was of purchasing raw cotton, processing it and then selling processed cotton - For relevant assessment year, assessee filed its return of income declaring loss - Assessing Officer noticed credit entries under heads of 'Share-application money', 'Unsecured loan' and 'Trade creditors' - On being required by Assessing Officer, assessee produced those creditors for examination - Assessing Officer after examination of lenders/creditors completed assessment - Commissioner, however, passed an order under section 263 directing Assessing Officer to make a fresh assessment after making proper enquiries - Tribunal, inter alia, found that persons who had deposited share application money/ paid unsecured loans were examined by Assessing Officer and found to be income-tax assessees with PAN numbers and money had been received through account-payee cheques; that all trade creditors who had supplied cotton to assessee and to whom amounts were due, were duly examined by Assessing Officer and that wherever there was doubt of genuineness of such farmers, assessee's claim was rejected - On basis of aforesaid findings, Tribunal held that order of Assessing Officer was neither erroneous nor prejudicial to interest of revenue and quashed order of Commissioner - Whether, on facts, it could be said that findings of fact recorded by Tribunal did not suffer from any infirmity and did not give rise to any question of law - Held, yes FACTS The business of the assessee-company was of purchasing raw cotton, processing it and then selling the processed cotton. For the assessment year 1998-99, the assessee filed its return of income declaring loss. The Assessing Officer noticed credit entries under the heads of 'Share application money', 'Unsecured loans' and 'Trade creditors'. On being required by the Assessing Officer, the assessee produced those creditors for examination except one trade creditor and one share applicant. The Assessing Officer, therefore, did not accept the credits relating to them and added certain amount to the income of the assessee. In…

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