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2013 (8) TMI 755 - AT - Income TaxUnexplained Credit – Addition u/s 68 - Assessee is a Public Limited Company. - Money borrowed through fixed deposit in a scheme under the Company (acceptance of deposit) Rule, 1975. credit worthiness - genuineness of transaction - onus to prove – Held that:- The Hon'ble Calcutta High Court in the case of C. Kant and Company vs. CIT (1980 (6) TMI 21 - CALCUTTA High Court) held that in respect of credit entry it is necessary for the assessee to prove not only the identity of the creditors but also to prove the capacity of the creditors, the advance money and genuineness of the transactions. Similar view has been taken by the Hon'ble Rajasthan High Court in the case of Kamal Motor vs. CIT 131 Taxman 155 (Raj.). - mere filing of the confirmatory letters will not discharge the onus that lies on the assessee. In the case under consideration, the assessee failed to furnish even confirmation of the depositors for which the CIT(A) has sustained the addition. The Hon'ble Calcutta High Court in the case of CIT vs. Precision Finance Pvt. Ltd. held that mere payment by account payee cheque was not sacrosanct nor could it make a non-genuine transaction as genuine. As per the judgment in the case of CIT vs. United Commercial and Industrial Co. (P) Ltd.[1989 (5) TMI 18 - CALCUTTA High Court], wherein it was held that The primary onus lies on the assessee to prove the nature and source of credits in its accounts. It is necessary for the assessee to prove prima facie the identity of his creditors, the capacity of such creditors to advance the money and lastly the genuineness of the transactions. Only when these things are proved by the assessee prima facie and only after the assessee has adduced evidence to establish the aforesaid facts does the onus shift on to the Department. - Decided against the assessee. Additin where fixed deposits taken during the earlier years - fixed deposits renewed during the year - Held that:- In the instant case, fixed deposits which were renewed during the year - In fact these fixed deposits were taken in earlier year, therefore, to that extent addition is not warranted - The assessee has furnished a chart of such 244 depositors amounting to Rs.29,84,000/- which has been placed in the Paper Book – Accepted the contention of the Assessee that section 68 requires that credit must be in the previous year and not of earlier year for the purpose of making addition in the income since renewal of fixed deposits are not credit of this year, therefore, addition cannot be made in the year under consideration - Balance addition of Rs.23,98,000/- (Rs.53,82,000.00 - Rs.29,84,000.00) sustained and confirmed and matter pertaining to addition of Rs.29,84,000/- is being sent back to the file of the A.O – Appeal of the assessee is partly allowed for statistical purpose.
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