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The Ahmedabad Bench of the Tribunal in the case of Rohini Builders v. Dy. Commissioner of I Tax (2001) 117TAX25 pointed out that unsatisfactoriness of explanation does not and need not automatically result in deeming amount of credit found in the books of the assessee as its income u/s 68 of the Act. The assessing officer is bound to consider the totality of facts and circumstances of case. In this case the assessee claimed interest on such credits in books as well as deducted tax at source on such interest. Even when the assessing officer allowed the claim for interest on the alleged unexplained credits it chose to invoke section 68.

In this case the assessee furnished copies of returns/assessment orders in some cases while it furnished the complete addresses along with GIR/PAN in all 21 cases. The capacity of the creditors was further proved on the basis that all the loans were received by account payee cheques and also even repaid in the same manner. In some cases though the summons could not be served and in some cases the creditors did not appear and in fact only 6 persons appeared though all of who acknowledged their entries but such facts alone could not, according to the Tribunal, lead to the belief that such transactions were non-genuine. Though it was found that cash was deposited in the accounts of such creditors prior to the issue of cheques in favour of the assessee but the Tribunal held that under law the assessee can be asked to provide the source of the credits in its books of account and not the source of the source. The Tribunal suggested that in such a case the action lie against such creditors under section 69 and not against the assessee.

In yet another case before the Amritsar Bench of the Tribunal in ITO v. Maan Rice & General Mills (2001) 117TAX71 the assessee showed that he received account payee cheques/drafts from persons owning sizeable wealth. To this the Tribunal held that the primary onus to prove the genuineness of the credits is discharged by the assessee.

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