1980 (8) TMI 25 - HC - Income Tax

Summary

Issues:
1. Assessment of cash credits in the account books of the assessee for the assessment year 1967-68.
2. Rejection of evidence produced by the assessee to prove the genuineness of cash credits.
3. Refusal by the ITO to examine parties on commission.
4. Setting aside of assessment order by AAC.
5. Legality of remand order by AAC.
6. Appeal before the Income-tax Appellate Tribunal.
7. Upholding of AAC's order by the Tribunal.
8. Question of law referred to the High Court.

Analysis:
1. The judgment pertains to the assessment of cash credits in the account books of the assessee for the assessment year 1967-68. The ITO found various cash credits and accepted the genuineness of one credit but rejected others.

2. The assessee produced evidence including pronotes, account copies, affidavits, and witness testimonies to prove the genuineness of the cash credits. However, the ITO rejected this evidence, considering the parties as mere name-lenders and adding the sum to the assessee's income from undisclosed sources.

3. The assessee requested the ITO to examine parties on commission to further prove the genuineness of the cash credits. However, the ITO refused and placed the burden on the assessee to produce the parties.

4. The AAC set aside the assessment order, citing the ITO's unjust refusal to examine parties on commission. The AAC directed the ITO to re-examine the case and reconsider the genuineness of the cash credits.

5. The legality of the remand order by the AAC was challenged, arguing that it put the department at an advantage. The Tribunal held that the AAC had the authority to set aside the order and direct further inquiries in a judicial manner.

6. The case was appealed before the Income-tax Appellate Tribunal, where arguments were made regarding the refusal to summon or examine parties on commission and the consequences of the remand order by the AAC.

7. The Tribunal upheld the AAC's order, emphasizing the importance of producing primary evidence and directing the ITO to re-examine the genuineness of the cash credits in question.

8. The High Court, after considering the facts and circumstances, upheld the Tribunal's decision, ruling against the assessee and in favor of the revenue. The High Court emphasized the AAC's plenary powers and the legality of passing a remand order to ensure justice.

This detailed analysis covers the issues involved in the legal judgment, highlighting the assessment of cash credits, rejection of evidence, refusal to examine parties on commission, the remand order by the AAC, and the subsequent appeals and decisions by the Tribunal and High Court.