Unexplained cash credits: assessee must prove source and genuineness, and a fresh assessment remand may be justified.

In unexplained cash credit cases, the primary burden rests on the assessee to establish the source and genuineness of the entries with reliable supporting evidence. The High Court noted that the Tribunal had misdirected itself by treating the Department's material as insufficient without first examining whether the assessee had discharged that burden. A remand for fresh assessment was justified so the assessee could meet the adverse material and adduce further evidence, and the creditor's death did not dispense with proper enquiry. The Tribunal was therefore not right in setting aside the remand order, and the issue was decided in favour of the Revenue.

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Issues: Whether the Appellate Tribunal was right in setting aside the Appellate Assistant Commissioner's order of remand directing a fresh assessment after giving the assessee an opportunity to adduce and test evidence regarding two cash credits of Rs. 25,000 each.

Analysis: The assessee had claimed the two credits as loans from a creditor whose later statement indicated that transactions above Rs. 2,500 were generally hawala transactions. The Tribunal treated the deceased creditor's statement as weak and concluded that the Department had not rebutted the assessee's explanation. The Court held that the Tribunal misdirected itself on the burden of proof. In respect of unexplained entries in the books, the burden lay on the assessee to establish the source and genuineness of the credits and to produce reliable supporting evidence. The Appellate Assistant Commissioner was justified in remanding the matter for a fresh assessment so that the assessee could meet the adverse material and adduce further evidence. The death of the creditor did not eliminate the need for proper enquiry, and the available evidence, including the creditor's statement, remained relevant.

Conclusion: The Tribunal was not right in setting aside the remand order. The issue was answered in favour of the Revenue and against the assessee.

Ratio Decidendi: In cases of unexplained cash credits, the primary burden is on the assessee to prove the source and genuineness of the entry; where that burden is not satisfactorily discharged, a remand for fresh enquiry and assessment is permissible.

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