Cash credits treated as undisclosed income where genuineness of deposits and identity of depositors were not proved.

Cash credit entries were treated as the assessee's income from undisclosed sources where the assessee failed, on the facts found by the Tribunal, to prove the genuineness of the deposits or the identity and participation of the alleged depositors. The Supreme Court treated the issue as governed by its earlier decision and accepted that the declarations and letters of the depositors were relevant material, but noted that they were not produced before the Income-tax Officer despite being called for. In the absence of satisfactory proof, the taxing authorities were entitled to infer that the amounts belonged to the assessee, and the addition was upheld.

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Issues: Whether the assessee had proved that the cash credit entries represented genuine deposits made by the named depositors, and whether the taxing authorities were justified in treating the amounts as income from undisclosed sources.

Analysis: The question was held to be concluded by the earlier decision of the Court. The Tribunal had found, as a matter of fact, that the assessee failed to establish the genuineness of the transactions or the identity and participation of the alleged depositors. The declarations made by the depositors under section 24 of the Finance (No. 2) Act, 1965, and their letters were treated as relevant material, but the assessee did not produce them before the Income-tax Officer despite being asked to do so. In the absence of satisfactory proof, the authorities were entitled to hold that the amounts belonged to the assessee and represented income from undisclosed sources.

Conclusion: The addition of the cash credits as the assessee's undisclosed income was upheld, and the appeal failed.

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