2010 (11) TMI 240 - HC - Income Tax

Unexplained cash credit - Genuineness of the deposits - In case of cash credits, the onus of proving the source and genuineness is entirely on the assessee and mere filing of confirmations or affidavits without there being any corroborative evidence does not by itself prove the source and genuineness thereof - the assessee had been provided ample opportunities substantiate its claim with regard to depositors to be genuine, but the assessee had failed to discharge the onus placed upon it by establishing the identity of the creditors, their creditworthiness and genuineness of the deposits - The Tribunal had remanded the case with regard to four depositors whereas other depositors were held not to be genuine on the ground that the amount was stated to have been paid to the assessee by them out of saving from household expenses etc. without producing any evidence - Hence, the proposition of law laid down therein is well recognized, but in view of the findings, the judgments do not come to the rescue of the appellant - Thus, are answered against the assessee and finding no merit in the appeal, the same is dismissed.

Summary

Issues:
1. Treatment of deposits as unexplained cash credits.
2. Failure to establish the genuineness of deposits.

Analysis:
Issue 1: The appeal raised substantial questions of law regarding the treatment of certain deposits as unexplained cash credits by the authorities. The assessing officer marked deposits in the names of 35 parties totaling Rs. 4,22,300 and treated them as unexplained cash credits. The CIT(A) directed the assessing officer to examine further evidence provided by the assessee, including affidavits of depositors. However, despite multiple opportunities, the assessee failed to substantiate the genuineness of the deposits. The Tribunal partially allowed the appeal, giving the assessee another chance to prove the genuineness of four depositors. The Tribunal found that the assessee had not established the identity, creditworthiness, and genuineness of most deposits, leading to the sustained additions.

Issue 2: The assessee contended that the Tribunal's findings were based on surmises and conjectures without sufficient material. The assessee argued that the affidavits of depositors should have been accepted as proof of identity. However, the Tribunal noted that the assessee had not filed evidence or affidavits during the assessment proceedings and only submitted affidavits for 15 depositors during the appellate proceedings. The Tribunal emphasized that the onus was on the assessee to prove the source and genuineness of cash credits. Despite opportunities, the assessee failed to produce depositors or provide corroborative evidence. The Tribunal rejected the argument that affidavits alone should suffice as evidence without additional corroboration. The Court upheld the findings of the authorities, concluding that the assessee had multiple opportunities to establish the genuineness of the deposits but failed to do so convincingly. The Court dismissed the appeal, finding no merit in the arguments presented and upholding the sustained additions as justified based on the facts and circumstances of the case.