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Section 68: Identity and credit worthiness of creditors not establishes with mere Submission of Name and address not sufficient

In the present case, the assessee has failed to carry out his obligations and hence, the burden cannot be shifted to the revenue to find out from the creditors about their identity and credit worthiness after receiving the names and addresses of the creditors.

It was submitted by learned AR of the assessee that addresses of the persons from whom deposits were received was provided by the assessee to the AO but AO did not make efforts to make verification from these persons. At this juncture, a query was raised by the bench as to whether the assessee had fulfilled its obligations of establishing the identity and credit worthiness of the persons from whom the cash credit was received and establishing the genuineness of the transactions as required under section 68. In reply, the learned AR of the assessee could not produce anything in respect of identity and credit worthiness of the persons from whom cash credit in question was received.

Regarding the 1st issue i.e., addition made by the AO under section 68 in respect of cash credit on account of receipt of deposits by the assessee and consequent disallowance of interest on such cash credit, I find that this is a settled position of law by now that for the purpose of section 68, the burden is on the assessee to establish identity of the cash credit or and his credit worthiness and genuineness of the transactions. In the present case, the assessee has failed to carry out his obligations and hence, the burden cannot be shifted to the revenue to find out from the creditors about their identity and credit worthiness after receiving the names and addresses of the creditors. Hence, in the facts of the present case, I find no infirmity in the orders of the authorities below on this issue.

Categories: Income Tax
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