Law:

Section:

Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 2001-02 - Whether though in section 68 proceedings, initial burden of proof lies on assessee, yet once he proves identity of creditors/share applicants by either furnishing their PAN numbers or income-tax assessment numbers and shows genuineness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then onus of proof would shift to revenue and just because creditors/share applicants could not be found at address given, it would not give revenue right to invoke section 68 - Held, yes FACTS During the assessment proceedings of the assessee-company, the Assessing Officer found an addition of certain amount in the share capital of the assessee. He sought explanation of the assessee in that regard and not being satisfied with the explanation in respect of certain subscribers, made addition with the aid of section 68 on account of unexplained cash credits appearing in the books of the assessee. On appeal, the Commissioner (Appeals) deleted the addition on the ground that the assessee had proved the existence of the shareholders and the genuineness of the transaction. The Tribunal confirmed the order of the Commissioner (Appeals). On revenue's appeal to the High Court : HELD In any matter, the onus of proof is not a static one. Though in section 68 proceedings, the initial burden of proof lies on the assessee, yet once he proves the identity of the creditors/share applicants by either furnishing their PAN numbers or income-tax assessment numbers and shows the genuineness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the revenue. Just because the creditors/share applicants could not be found at the address given, it would not give the revenue the right to invoke section 68. One must not lose sight of the fact that it is the revenue which has all the powers and wherewithal to trace any person. Moreover, it is settled law that the assessee need not to prove the 'source of source'. [Para 8] Therefore, in the instant case, no question of law arose…

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