Law:

Section:

Section 254 of the income-tax act, 1961-Appellate tribunal-Powers of-Assessee applied to tribunal against additions made on account of cash credits on the ground that it was not given opportunity of being heard and to produce evidence in support of its explanation-Tribunal remanded matter to aac holding that in the absence of verification or enquiry by ito it was not possible for it to hold whether cash credits were genuine or spurious-Whether assessee justified in claiming that tribunal should have considered documents produced, by itself and should have disposed of case on merit instead of remanding it to aac-Held, on facts, no-Whether tribunal's power of remand was exercised in a disciplined and responsible manner-Held, on facts, yes Facts On scrutiny of accounts of the assessee, the ITO found cash entry in the name of S. Co. The assessee explained that the amount was received from the creditor by cheque and was duly deposited in the assessee's account on the same date. However, the ITO treated the income as the assessee's income from undisclosed sources under section 68, holding, the creditor firm to be a name lender. The AAC also confirmed the ITO's order. On further appeal, the Tribunal, however, upheld the assessee's contentions that (i) it was the duty of the ITO to place the statements of the money-lender before the assessee to enable it to take steps to rebut them ; and (ii) the ITO had violated the provisions of section 142(3) in not affording the assessee an opportunity to produce evidence in support of its case notwithstanding prayers therefor. The Tribunal further held (i) that the mere production of the accounts by the assessee showing the receipt of the amount by cheque as well as payment of the amount by cheque, in the absence of verification by the ITO whether the receipt and payment by cheques were actually made by the creditor to the assessee and repayment thereof by the assessee to the creditor, respectively, did not establish the nature or source of the entries ; and (ii) that as the ITO had failed to verify the same, there were no sufficient materials before it to adjudicate and decide whether the loan was genuine or spurious. It set…

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