Law:

Section:

Section 158B of the Income-tax Act, 1961 - Block assessment in search cases - Undisclosed income - Block period from 1987-88 to 1996-97 - During scrutiny of returns and relevant material available for assessing income for block period, Assessing Officer found cash credits against names of various persons in regular books of account - Amounts shown against each person were petty - All creditors except one 'S' appeared before Assessing Officer and confirmed credit and also disclosed their source of income - However, Assessing Officer disbelieved genuineness of loans and made additions thereof - Whether it could be said that creditors were not capable to advance petty amount, which had been shown against their names - Held, no - Whether, therefore, creditworthiness of creditors, their confirmation and, consequently, genuineness of cash credits should not have been disbelieved except in case of 'S' and as such, no addition could be made except in respect of credit shown in name of 'S' - Held, yes - Whether, however, merely because some entries are shown in regular books of account, that does not prohibit Assessing Officer to tax that amount in block period, if that amount has not been taxed in regular assessment - Held, yes FACTS Subsequent to a search proceeding under section 132, the assessee filed return for the block period. During the course of scrutiny of the returns and relevant material available for assessing the income for block period, the Assessing Officer found cash credits shown in the regular books of account. All creditors except one 'S' appeared before the Assessing Officer and confirmed the credits. However, the Assessing Officer dis-believed the genuineness of the loans advanced by the cash creditors and made an addition. In appeal before the Tribunal, it was held that the cash credits were genuine. The Tribunal further held that once the cash credits had been shown in the books of account maintained by the assessee in the regular course of business activities, no addition was warranted and, hence, deleted the addition. On appeal under section 260A : HELD A perusal of reasons given by the Assessing Officer for disbelieving the cash credits did…

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