The appellant bears the burden to prove the genuineness of cash credits under Section 68 of the Income Tax Act, which was not fulfilled, resulting in upheld additions by the ITAT.

JUDGMENT:

P.Sam Koshy, J.

1. Heard Mr. Y. Ratnakar, learned counsel for the appellant; and Ms. J. Sunita, learned Senior Standing Counsel for Income Tax Department appearing on behalf of the respondent.

2. Income Tax Tribunal Appeal No.279 of 2010 is filed by the appellant under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’) challenging the order dated 23.10.2009, in ITA No.791/Hyd/2003, passed by the Income Tax Appellate Tribunal, Hyderabad Bench ‘A’, Hyderabad (for short the ‘ITAT’) for the assessment year 1998-99. Similarly, Income Tax Tribunal Appeal No.460 of 2010 is filed by the appellant under Section 260A of the Act challenging the order dated 23.10.2009, in ITA No.678/Hyd/2003, passed by the ITAT for the assessment year 1998-99.

3. Since the issue involved in the instant appeals being the same and the parties also being the same, we proceed to decide the instant appeals by this Common Judgment.

4. For convenience, the facts in Income Tax Tribunal Appeal No.279 of 2010 are discussed hereunder.

5. The brief facts of the case is that the dispute originated when the Assessing Officer made additions to the appellant's income on account of cash credits and share application moneys, questioning the genuineness of loans and deposits received by the company. The Assessing Officer added a total sum as unexplained cash credits under Section 68 of the Act suspecting these transactions to be bogus arrangements. The appellant challenged this addition before the Commissioner of Income-Tax (Appeals) providing extensive documentation including affidavits, confirmation letters from creditors, details of demand drafts and cheques, bank statements, share application forms, and responses to specific observations made by the Assessing Officer regarding serially numbered drafts and the conversion of loans into share capital aggregating to Rs.25,29,999/-.

6. The commissioner of Income Tax (Appeal) conducted independent and through inquiries calling for additional information through letters dated 15.04.2002, and 05.07.2002, and the appellant supplied all available information to the extent possible. The Commissioner of Income-Tax (Appeals) wrote to the Banks seeking confirmation of transactions and addressed letters to 60 creditors requesting their confirmation, with some creditors and Banks confirming the transactions while others did not respond. The Commissioner of Income-Tax (Appeals) also provided the appellant with copies of replies received from banks and creditors for the appellant's response. After examining all the evidence, confirmations, and inquiry reports, the Commissioner of Income- Tax (Appeals) granted substantial relief by deleting additions aggregating to Rs.68,56,515/- and upheld only Rs.11,18,000/- as additions, which comprised (a) Rs.4,16,000/- for cash credits where no confirmations were received from creditors or banks (6 persons); (b) Rs.5,68,000/- for confirmations received from parties but not supported by bank confirmation (7 persons); and (c) Rs.1,34,000/- for differences in amounts between loans claimed by the appellant and amounts confirmed by parties/banks (3 persons). The Commissioner of Income-Tax (Appeals) decision was based on satisfaction regarding the genuineness of the remaining cash credits after detailed verification and direct inquiries with creditors and banking institutions.

7. Both the parties filed cross appeal before the ITAT where the appellant challenged the confirmed addition of Rs.11,18,000/-. While the Revenue appealed against the relief of Rs.68,50,515/- granted by the Commissioner of Income-Tax (Appeals). The ITAT vide its common order dated 23.10.2009 dismissed the appellant’s appeal and a