TaxTMI 
TaxTMI 
2010 (12) TMI 776
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.... proposing to raise following substantial question of law:- "On the facts and circumstances of the case, whether the Hon'ble ITAT was right in upholding the order of Ld. CIT(A) deleting the addition of Rs.2,09,37,000/- made by the Assessing Officer u/s 68 of the Income Tax Act, 1961, even though the assessee had not discharged its burden of proving the identity, genuineness and crediworthiness of the creditors." 2. The assessee is a private limited company. During assessment, the Assessing Officer found that the assessee had made cash credit entries of huge amount of unsecured loans, genuineness of which was doubtful. Accordingly, the assessee was called upon to prove the identity, creditworthiness and genuineness of the....
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....nuineness of the depositors are automatically proved. Moreover, the requirements of the provisions of Section 58A of the Companies Act were complied with and accepted by them. Accordingly, in view of the explanation given by the Ld. Counsel in the rejoinder quoted above, the addition made by the AO is hereby deleted. " 4. Appeal of the revenue against the order of CIT(A) has been dismissed by the Tribunal. The relevant finding is as under:- "8....... The assessee, as is evident from our discussion from the earlier paragraph, could not submit confirmation from each of the creditors. Certainly in our view, seeking a confirmation from each and every individual creditor was not an easy task. Nevertheless, it also cannot be disregar....
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....that the entire deposits in question have been received by the assessee on the basis of the application forms submitted by the depositors. 10. Further it is clear from the assessee's communication to the lower authorities that only three application forms were submitted merely to illustrate the manner in which the transaction has been carried out. Moreover, for none of the deposits had the Assessing Officer taken any unexplained. Therefore, considering the overall gamut of facts and circumstances of the issue, we are inclined to affirm the conclusion of the CIT(Appeals) in deleting the addition made by the Assessing Officer. 12. The plea of the revenue that the order of the CIT (Appeals) is non-speaking, we do not find any just....
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.... was not conclusive of genuineness of the deposits made. 7. Section 68 of the Act is intended to check undisclosed income being shown as deposits, so that real income does not escape assessment. Whenever cash deposits are found in the account books, burden is placed on the assessee to explain nature and source thereof and if no explanation is furnished or the explanation furnished is not satisfactory, the amount credited can be charged as income of the assessee. Mere fact that procedure under Section 58A of the Companies Act was followed, cannot be conclusive of genuineness of the deposits. The statutory procedure under the Companies Act is merely intended to safeguard the interest of the depositor and the company is required to a....