JUDGMENT 1. By Court: Heard learned Counsel for the parties. 2. The following substantial question of law is involved in this appeal: Whether the Income Tax Appellate Tribunal, Circuit Bench, Ranchi was justified in reversing the order passed by the C.I.T.(A) dated 26.12.2008 and in upholding the assessment order dated 26.12.2007 when the assessing officer itself rejected the books of accounts of the Assessee after holding that the transaction shown in the name of Sundry Creditors were not genuine yet the assessing officer instead of proceeding to determine the assessment Under Section 144 proceeded to add the Sundry Creditor's amount in the income of the Assessee Under Section 68 of the Income Tax Act? 3. Learned Counsel for the Appellant vehemently submitted that the Appellant Assessee discharged all its obligations to justify the entries made in the books of accounts showing the credit balance as Sundry Creditors amounts of 12 persons by disclosing the identity of those persons who supplied the materials to the Appellant and admittedly the Appellant is the contractor engaged in the construction activities and out of 12 persons 8 persons were summoned Under Section 131 of the Act of 1961 by the Assessing Officers and they have deposed that they have supplied the materials to the Assessee. 4. It is submitted that the Assessee discharged its obligations and thereafter it was the duty of the department to proceed further in the matter and it was not the duty of the Assessee to find out more about the credit worthiness of the persons who supplied the materials. It is also submitted that even such was not necessary in the matter of trade creditors which may be necessary in the matter of cash deposit. 5. In the alternative, it has been submitted that once the assessing officer has rejected the books of accounts after appreciation of the evidence of the alleged materials suppliers then the assessing officer should have proceeded to assess the income of the Assessee Under Section 144 (3) of the Act of 1964. It is submitted that non-proving of genuineness of the transaction shown by the Assessee in his books of accounts itself cannot be a ground to treat those entries to be taxable sum Under Section 68 of the Act of 1961 as it has not been held that said amount is cash credit in terms of Sec 68. It is submitted that non-proving of genuineness of the transaction shown by the Assessee in his books of accounts itself cannot be a ground to treat those entries to be taxable sum Under Section 68 of the Act of 1961 as it has not been held that said amount is cash credit in terms of Sec 68. It is submitted that Section 68(1) has been enacted for taxing the sum where there is entries of sum in the books of the accounts of the Assessee and those transactions have not been proved genuine transactions to the satisfaction of the assessing officer then such transaction only could have been taxed Under Section 68A. 6. Learned Counsel for the Appellant in support of his contention relied upon the two Judgments of the Division Bench. The first judgment is dated 28.01.2009 passed by the Division Bench of Rajasthan High Court in the case of CIT v. G.K. Contractor and Anr. judgment is passed by the Division Bench of Allahabad High Court in the case of Commissioner of Income Tax, Agra v. Pancham Dass Jain reported in (2006) 156 Taxman 507 (ALL.). 7. Learned Counsel for the Revenue submitted that from the evidence of the persons whose identities have been disclosed by the Assessee himself it is fully proved that the transaction recorded in the books of accounts of the Assessee was not genuine transaction and for this the assessing officer as well as the Tribunal has given cogent reasons and that finding of fact may not be interfered with by this Court. 8. However, it is submitted that since the transaction were in the form of cash entry only though having been described in the head of amount of persons alleged to have supplied the material to the Assessee but when the transactions were found not to be genuine then that entry can be treated to be a cash amount in the hands of the Assessee for the purpose of taxing Under Section 68 of the Act of 1961. 9. We have considered the submissions of the learned Counsel for the parties and perused the above Judgments. 9. We have considered the submissions of the learned Counsel for the parties and perused the above Judgments. This is not in dispute that the names of the persons, who alleged to have supplied the materials to the Assessee, were disclosed by the Assessee and the assessing officer summoned 8 persons out of 12 persons and they gave their statements before the assessing officer and we after perusal of the reasons given in the assessment order and after considering the reasons given by the C.I.T.(A) and reasons given by the Income Tax Tribunal while considering the credibility of those persons and the genuineness of the transaction we are of the firm opinion that the transaction shown in the books of accounts were not genuine in the light of the statement given by those persons who were examined by the assessing officer. We may mention a few facts which have been taken by the assessing officer as well as the by the Income Tax Appellate Tribunal that none of the alleged supplier of the materials was maintaining the books of accounts, none of them have filed any return of income, none of them have any evidence regarding purchase of goods supplied by them, none of them have any evidence regarding transport of goods supplied by them and even though a number of them had claimed to have bank accounts, none of the payments was ever received by those persons for the goods from the Assessee's bank account and even though the transaction of each of the Sundry Creditors run into several lakhs not even a single rupee out of the cash (bearer cheque) received was deposited into their bank account. 10. We have mentioned these reasons only because of the reason that the learned Counsel for the Assessee tried to assail the finding of the fact recorded by the Tribunal but we are satisfied that the finding of the fact recorded by the assessing officer and Tribunal was based on some reasons and cannot be interfered. 11. However, so far as assessment of the income of the Assessee is concerned, for that purpose few facts are very relevant and which are that the total gross receipt of the Assessee was Rs. 4,51,01,011/-the disclosure of his income is Rs. 14,13,624/-and interestingly this income was accepted by the assessing officer itself which is apparent from the assessment order. 11. However, so far as assessment of the income of the Assessee is concerned, for that purpose few facts are very relevant and which are that the total gross receipt of the Assessee was Rs. 4,51,01,011/-the disclosure of his income is Rs. 14,13,624/-and interestingly this income was accepted by the assessing officer itself which is apparent from the assessment order. Then the assessing officer added the amount shown in the accounts of Sundry Creditors to the tune of Rs. 1,59,90,274/-and assessed the total income as Rs. 1,74,03,900/-meaning thereby by this order of assessment the assessing officer accepted the books of accounts for the purpose of finding out the profit shown by the Assessee to be correct as disclosed in the return and thereafter added the amount of the credit shown in the account of Sundry Creditors. In view of the above it appears that the assessing officer has passed the contradictory order by holding that the books of accounts are not reliable while deciding the issue of Sundry Creditors but relied upon the return for accepting profit shown to be correct which is supported by the books of accounts. The other fact relevant is that for gross receipt of Rs. 4,51,01,011/-the assessing officer has not declared that gross receipt is the correct figure and yet added the income of Rs. 1,59,90,274/- merely an account of case entries. 12. In the facts of the case, the assessing officer has committed an error of law by adding that amount Under Section 68 of the Act of 1961 straightway merely because of the reason that the genuineness of the transaction shown in the heading of the Sundry Creditors was not found genuine. 13. In view of the above reasons, following Section 145(3) the assessing officer should have proceeded Under Section 144 and should have followed the procedure of assessment of the tax. 14. In view of the above reasons the question is answered that the Tribunal and the Assessing Officer though recorded finding of fact correctly that the transaction of the Sundry Creditors were not genuine but so far as assessment order is concerned that deserved to be set aside and the assessing officer should assess the income afresh Under Section 144(3). 15. The appeal is accordingly allowed and the order of the Income Tax Appellate Tribunal, Circuit Bench, Ranchi and the Assessing Officer are set aside. 15. The appeal is accordingly allowed and the order of the Income Tax Appellate Tribunal, Circuit Bench, Ranchi and the Assessing Officer are set aside. The matter is remanded back to the assessing officer for passing a fresh assessment order and the parties are directed to appear before the concerned authority on 13th June, 2011. Appeal allowed.