Summary
The Supreme Court deleted a Rs.2,26,000 cash-credit addition after subsequent penalty proceedings established the genuineness of credit purchases from unregistered marble dealers. Affidavits and statements accepted by the appellate authority displaced the factual foundation of the assessment addition. The Court allowed the appeal on that ground alone and left the competing arguments about rejected books and best-judgment assessment undecided.
Issues
- Whether subsequent accepted evidence concerning the credit purchases displaced the basis of the assessment addition.
- Whether the Court needed to decide the alternative arguments about reliance on rejected books of account.
Provisions considered
- Section 68, as applicable to assessment year 1998–1999, Income-tax Act, 1961Set aside the cash-credit addition because accepted subsequent evidence dispelled its factual basis. (¶¶ 13, 14, 15, 17)
Held
- The assessment addition rested on the assessee’s failure at that stage to establish the alleged purchases and creditors. In subsequent penalty proceedings, affidavits and statements established the dealers’ identities and supported their sales on credit; the assessing officer found no infirmity in those statements. (¶¶ 10, 13, 14)
- The appellate authority accepted the explanation and found neither concealment nor inaccurate particulars. Although those findings arose in penalty proceedings, the accepted evidence directly dispelled the factual basis of the same assessment addition, which could no longer be maintained. (¶¶ 14, 15)
- The appeal succeeded on that ground alone. The Court did not decide the other submissions about rejection of books, best-judgment assessment or further additions from the same accounts. (¶ 16)
Result
Appeal allowed; Rs.2,26,000 addition under Section 68 deleted. Remaining assessment, as modified by the first appellate authority, left undisturbed. No costs; pending applications disposed of.