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Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 1988-89 - Assessee-company had obtained a loan from one 'M' - During assessment proceedings, assessee filed an affidavit of 'M' confirming said transaction but failed to produce her for cross-examination - Assessing authority found that 'M' had not mentioned source of said amount and, thus, concluded that transaction was not genuine - An addition was made to assessee's income - Whether assessee must prove prima facie identity of his creditor, capacity of such creditor to advance money and lastly, genuineness of transaction and mere filing of confirmatory letters does not discharge onus that lies on assessee - Held, yes - Whether satisfaction of Assessing Officer is basis for invocation of powers under section 68 and satisfaction must be derived from relevant factors on basis of proper enquiry - Held, yes - Whether, therefore, Tribunal was justified in not quashing addition on account of alleged unexplained cash credit and in remitting matter for fresh enquiry - Held, yes FACTS During the assessment proceedings, the assessing authority noticed that the assessee-company had obtained an unsecured loan of Rs. 50,000 from one 'M'. The assessee filed an affidavit of 'M' confirming that she had deposited said sum with the assessee and the same was repaid to her. However, she failed to appear before the assessing authority for cross-examination. Further, she had not mentioned the source from which the said amount was advanced as loan to the assessee-company. In view of that, the assessing authority held that 'M' was not in a capacity to deposit such a huge amount and, as such, treated a sum of Rs. 50,000 as the income of the assessee from the undisclosed sources and added the said sum to the total income of the assessee. The finding of the assessing authority was upheld by the Commissioner (Appeals). On further appeal, the Tribunal restored the matter back to the assessing authority for examining 'M' and to verify the relevant facts. In the instant appeal under section 260A, the assessee submitted that on the same material, the addition made on account of cash credit of Rs. 16,000 standing in the…

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