INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 68Unexplained cash credits--assessing officer found certain loan transactions entered into by assessee and on analysis of said loan transaction, assessing officer held that they were not genuine and treated them as unexplained and made additions under section 68 of the Act. Commissioner (Appeals) deleted the addition except for one creditor. Commissioner (Appeals) held that assessee has established the identity of cash creditors, their credit worthiness and genuineness of the transaction by furnishing evidence like their Income Tax details, mode of payment and addition has been made merely on the ground that some of the deposits made in the balance account of the cash creditors has not been satisfactorily explained by assessee-company. Therefore now the onus shifts to the revenue. Further, addition made merely on the ground that assessee-company might have deposited its own money in the accounts of cash creditors which were taken to assessee account in form of account payee cheque was totally based on conjectures and surmises. Held: In matters regarding cash credit the onus of proof was not a static one. As per the provisions of the section 68, the initial burden of proof lies on assessee. Amount appearing in books of account of assessee was considered a proof against him. He can prove the identity of the creditors by either furnishing their PANs or assessment orders. Similarly, genuineness of transaction could be proved by showing that money was received by an account payee cheque or by draft. Credit worthiness of the lender could be established by attending circumstances. Once assessee produces evidences about identity, genuineness and credit worthiness of the lender, onus of proof shifts to revenue. Therefore, it was held that assessee had furnished all the details regarding genuineness of cash credit, i.e., he had discharged his burden of proof. Assessing officer did not make any attempt to discharge his burden of proof to rebut the evidences produced by assessee. It was beyond comprehension that when the new loans received from the various creditors during the assessment year 2003-04 amounted to Rs. 38.35 lakhs only, then how an addition of Rs. 80 lakhs could have been made. Hence, as assessing officer made additions without any material, order of the Commissioner (Appeals) deleting the said additions was upheld. Further, in regards to addition on account of one creditor matter remitted back to assessing officer for proper verification regarding receiving and maturity of FDR received by assessee from an non-resident.

Income Tax Act, 1961 section 68

Evidence Act, 1872 Section 106