- (1.) This appeal was admitted by this court on the following substantial questions of law: I. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in confirming the addition of Rs. 8,50,000 as unexplained cash credit made by the Assessing Officer solely relying on an entry made in the order sheet which has no direct nexus with the present issue and while completely ignoring all the relevant materials and evidence available? II. Whether the addition of Rs. 8,50,000 to the income of the assessee as unexplained cash credit by the Tribunal is sustainable in law and/or is not unreasonable and perverse? This appeal relates to the assessment year 1994-95. The facts of the case is summarised as follows: The assessee-appellant at the relevant point of time has been trading bidis and as such used to sell and distribute to various customers situates at different parts of the country. In the course of business the assessee used to receive from time to time cash from the customers by way of advance. In the relevant assessment year in the return a sum of Rs. 8,50,000 was shown to have been received cash advances. As such the deduction of the said sum from the income was sought for.
(2.) The Income-tax Officer, however, did not accept the claim of the appellant rather added to the income and so it was assessed. It was held by the Income-tax Officer that the assessee under section 68 of the Income-tax Act, 1961, failed to establish the identity of the creditors of this cash advance. Initially the assessee was asked to bring those creditors who are alleged to have advanced the amount of cash as against the supply of bidis. On failure of production of those creditors summons were issued under section 131 by the Income-tax Officer. Despite issuance of summons none of the creditors turned up and even some cases summons returned back with the endorsement made by the postal authority "no such person concerned was found".
(3.) In view of such circumstances, the Income-tax Officer disbelieved the case of cash credit under section 68. Hence, the claim of deduction was disallowed.;