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TMI Blog2009 (9) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 of the Income-tax Act, 1961. 2. In the grounds of appeal filed by the assessee, it has raised numerous grounds relating to the validity of the initiation of proceedings under section 147; justification in making additions against unexplained credits and disallowing the claim for deduction of losses by way of bad debts etc. In that way, the grounds raised by the assessee for both the assessment years under appeal are analogous. 3. But when these appeals were called on for hearing, Shri V.V. Eradi, learned counsel appearing for the assessee conceded that the assessee-company is pressing only those grounds raised by it against the partial additions sustained by the CIT (Appeals) towards unexplained credits of depositors and unexplai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d supporting evidences in respect of substantial deposits but could not collect the entire details as the matter related back to ten years and it was a herculean task to collect all the necessary details from past records within a short span of time. He explained that the assessee could produce further details before the CIT (Appeals), in the first appellate stage and the CIT (Appeals) has fairly granted relief to that extent but failed to examine the remaining particulars produced by the assessee whereby he has arbitrarily sustained a part of the addition for both the assessment years under appeal. The learned counsel for the assessee submitted that the assessee-company having established the nature of deposits and proved a substantial por ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce such details before the assessing authority in respect of a lion's share of the deposits collected from public. The assessee further produced evidences in respect of the remaining portion of the deposits before the CIT (Appeals) which were partially accepted. Regarding the remainder evidence, CIT (Appeals) was not inclined to admit the details furnished by the assessee and that is why he has sustained part of the addition. 11. One important aspect that to be born in mind while examining this issue is whether the assessee has rightly proved the sources of the deposits reflected in its books of account as credits. The assessee has proved beyond doubt that these deposits were accepted by the assessee-company from public in pursuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such deposits after a long span of time. The crucial test to be applied is whether the rule of probability is satisfied and the assessee has reasonably established the source of the credits and flow of the funds. 13. From the facts and circumstances available on record, we find that the assessee has successfully demonstrated the source of the deposits being deposits collected from public and the flow of funds by producing documentary evidences in respect of the majority of such deposit accounts. Therefore, we are of the considered view that the CIT (Appeals) is not justified in confirming the addition of Rs. 16,25,000 for the assessment year 1999-2000 and Rs. 29,40,000 for the assessment year 2001-02. 14. Once the source is proved, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... become defunct and the agency is terminated and any amounts are standing to the credit of those agents, the assessee-company is transferring those credit balances to its sales account. Therefore, it is clear that the name of the agents/dealers reflected in the accounts of the assessee-company are running accounts. As the volume of the agents' accounts are so large, it may not be possible for the assessee to produce confirmation letters and other details in respect of all such agents accounts within a short span of time. Majority of the accounts have been explained and proved before the assessing authority with confirmation and documentary evidences. Here also we have to apply the rule of probability. When majority of the accounts are proved ..... X X X X Extracts X X X X X X X X Extracts X X X X
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