Law:

Section:

Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 1992-93 - Assessing Officer issued a show-cause notice to assessee requiring it to explain as to why in absence of production of creditors, amount standing to its credit be not treated as unexplained cash credit under section 68 - Since assessee furnished no reply to show-cause notice, Assessing Officer treated cash credits as unexplained and added it to assessee's income as income from undisclosed sources - Commissioner (Appeals) deleted said additions on ground that Assessing Officer ought to have counter checked and verified from records of creditors - Tribunal upheld order of Commissioner (Appeals) - Whether appellate authorities had failed to appreciate that assessee had totally failed to respond to notice of Assessing Officer - Held, yes - Whether even if appellate authorities were of view that Assessing Officer should have made cross-verifications with records of creditors available with him, they ought to have directed Assessing Officer to do so instead of straightaway accepting assessee's version without affording any opportunity to Assessing Officer to make verification - Held, yes - Whether, therefore, findings of appellate authorities were to be set aside and matter was to be restored back to Assessing Officer for fresh adjudication - Held, yes FACTS The assessee had filed its return for the relevant assessment year. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had raised certain loans and he required the assessee to file confirmation with permanent account numbers from the creditors and also produce them for examination. Since the assessee failed to produce the creditors, a show-cause notice was issued by the Assessing Officer requiring the assessee to explain as to why the said amount be not treated as unexplained cash credit under section 68. The assessee furnished no reply to the show-cause notice and, accordingly, while framing the assessment, the Assessing Officer treated the cash credits as unexplained and added it to the income as income from undisclosed sources under section 68. As a corollary thereto, the interest paid on…

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