TMI Blog2012 (4) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... 4310 (MUM.) of 2007 - - - Dated:- 30-3-2012 - VIJAY PAL RAO, RAJENDRA, JJ. ORDER Rajendra, Accountant Member The two appeals, one by the assessee being ITA No. 3584/Mum/07 and other by the Assessing Officer (AO) being ITA No. 4310/Mum/07 are cross appeals which are directed against the order of the CIT(A) (IX), Mumbai, dated 02-03-2007. ITA No. 4310/Mum/07: 2. The AO has challenged the action of the CIT(A) for deleting an addition amounting to Rs. 80 lacs made by the AO u/s.68 of the Income-tax Act, 1961 (the Act) on account of unexplained cash credits. 3. During the period under consideration, the AO made additions of Rs. 86,47,500/- (Rs. 80,06,000 + Rs. 6,41,000) as unexplained cash credits. As per AO, "Perusal and analysis of loan transactions clearly shows that the assessee company has used the accounts of different relatives and friends for mere entry purpose. Verifications of the entries in the banks clearly show the transactions wherein cheque/cash are deposited by Karnani's and on same day it is transferred to company's account. Later, when the returns of loans done by the company were verified, it is seen that the same is withdrawn from the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as additions made on account of other cash creditors are concerned, I find that the assessee has been able to establish the identity of the cash creditors, their credit worthiness and the genuineness of the transaction by furnishing evidence like their I.T. details, mode of payment etc. The addition has been made merely on the ground that some of the deposits made in the balance account of the cash creditors have not been satisfactorily explained by the appellant company. In this regard, I am of the considered view that the appellant company has discharged its onus by establishing the identity, credit worthiness of those parties as well as genuineness of the transaction. Therefore now the onus shifts to the department. In the instant case addition made merely on the ground that the appellant company might have deposited its own money in the accounts of the cash creditors which were taken to the appellant's account in the form of account payee cheque is totally based on conjectures and surmises. No material has been brought on record to prove that the cash credits in the books of accounts of the assessee represents its income from undisclosed sources. Therefore it cannot be char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .68 on similar lines for the A.Y. 2004-05 were deleted by the ITAT 'A' Bench on 07-08-2009 while deciding the appeal in ITA No.6665/Mum/2007. He further argued that identity, genuineness and credit worthiness of the creditors were established by the assessee. So, the FAA was right in deleting the addition. 7. We have heard both the parties and perused the documents produced before us. Question to be decided, in this matter, is whether FAA was justified in allowing appeal filed before her by the assessee. Additions to the income of the assessee were made u/s.68 of the Act, as the AO was not satisfied with the details filed by the assessee. It will be useful to understand the provisions of sec. 68 of the Act in right perspective. While dealing with the taxation laws Courts have regularly invoked Section 106 of the Evidence Act, 1872.Section 68 of the Act is the statutory recognition of the said section according to which a person is in the best position to know the relevant facts related to him. Treating the cash credits as income of the assessee is not a new concept introduced by the Act. The position under the 1922 Act, in respect of income from undisclosed sources was that suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv ) In the matters related to section 68 burden of proof cannot be discharged to the hilt -such matters are decided on the particular facts of the case as well as on the basis of preponderance of probabilities. Credibility of the explanation, not the materiality of evidences, is the basis for deciding the cases falling under Section 68. ( v ) Confirmatory letters or A/c payee cheques do not prove that the amount in question is properly explained for the purpose of section 68.Assessee has to establish identity and creditworthiness of the creditor as well as the genuineness of the transaction. All the three ingredients are cumulative and not exclusive. ( vi ) In matters regarding cash credit the onus of proof is not a static one. As per the provisions of the section the initial burden of proof lies on the assessee. Amount appearing in the books of a/cs. of the assessee is considered a proof against him. He can prove the identity of the creditors by either furnishing their PANs or assessment orders. Similarly, genuineness of the transaction can be proved by showing that the money was received by an account payee cheque or by draft. Credit worthiness of the lender can be estab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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