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. 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 allowed the Revenue’s appeal, reversing the Commissioner of Income-Tax (Appeals) order on the ground that the Commissioner of Income-Tax (Appeals) had not narrated the basis for deleting the addition Rs.68,56,515/- or the proportionate interest of Rs.7,36,653/-. The ITAT observed that while the Commissioner of Income-Tax (Appeals) had given reasons for sustaining certain additions, it failed to understand the reason for deleting the substantial amounts, stating the deletions appeared to be a "made to believe arrangement" without proper basis. The ITAT did not examine the inquiry reports, confirmations from creditors and banks or the affidavits that were on record with the Commissioner of Income-Tax (Appeals) and in the Revenue's files. 8. The ITAT did not examine the inquiry reports, confirmations from creditors and banks or the affidavits that were on record with the Commissioner of Income-Tax (Appeals) and in the Revenue's files. 8. Aggrieved by this order, the appellant filed the present appeal under Section 260A of the Act before this Court, contending that the ITAT's reversal was arbitrary and untenable, especially when the Commissioner of Income-Tax (Appeals) had conducted independent inquiries and obtained reports from creditors and banks establishing the genuineness of the transactions, and that the ITAT should have either called for these reports or remitted the matter back to the Commissioner of Income-Tax (Appeals) for providing detailed reasons rather than completely reversing the relief granted. 9. The learned counsel for the appellant contended that the ITAT erred in reversing the well-reasoned order of the Commissioner of Income-Tax (Appeals) who granted relief by deleting addition of Rs.68,56,515/- after conducting independent and thorough inquiries. The Commissioner of Income-Tax (Appeals) had written directly to 60 creditors and various banks, obtained confirmations, verified the genuineness of transactions through demand drafts, cheques, bank statements, share application forms and affidavit filed by each creditor and only after satisfying himself about the authenticity of the cash credits did, he delete the additions. These inquiry reports, confirmations from creditors and banks, and affidavits were all available on record with the Revenue and in the files of the Commissioner of Income-Tax (Appeals), yet the ITAT did not examine this crucial evidence before reversing the Commissioner of Income-Tax (Appeals) order. The learned counsel for the appellant submits that the ITAT’s failure to consider the detailed documentary evidence and the result of independent inquiries conducted by the Commissioner of Income-Tax (Appeals) constitute a serious error of law and has resulted in grave miscarriage of justice. 10. Further, the learned counsel for the appellant contended that the ITAT was of the opinion that the Commissioner of Income-Tax (Appeals) had not adequately narrated the basis for deleting the additions or had not provided sufficient reasons in the appellate order, the proper course of action should have been to remit the matter back to the Commissioner of Income-Tax (Appeals) with a direction to furnish detailed reasons, indicate the outcome of the inquires made and provide copies of the reports obtained from creditors and banks. Instead, the ITAT took the extreme and unjust step of completely reversing the Commissioner of Income-Tax (Appeals) order and sustaining the entire addition of Rs.68,50,515/- without examining the evidence that was available with the Revenue. The ITAT’s observation that the deletions appeared to be a "made to believe arrangement" is wholly unsubstantiated and based on no material evidence, particularly when neither the ITAT nor the Revenue disputed the fact that the Commissioner of Income-Tax (Appeals) had made independent inquiries with creditors and banks. He also submitted that the ITAT should have called for the inquiry reports, confirmations, and other documents from the Commissioner of Income-Tax (Appeals) before arriving at any conclusion and its failure to do so renders the impugned order perverse and unsustainable in law. 11. Furthermore, the learned counsel for the appellant raised a specific contention regarding the treatment of share application money aggregating to Rs.25,29,299/- which was treated by the Assessing Officer as cash credits for the purpose of making additions. He submitted that the nature of receipt of moneys as share application money is fundamentally different from receipt of moneys as cash credits or loans, and the provisions of Section 68 of the Act cannot be mechanically applied to share capital without considering the specific nature of equity investments even after the appellant company had provided complete details of share applicants like their addresses, PAN numbers, bank account details, share application forms and confirmations of payments made through banking channels. However, the Commissioner of Income- Tax (Appeals) had verified these details and satisfied himself about the genuineness of the share application moneys before deleting the additions. Therefore, he submitted that the ITAT’s blanket reversal of the Commissioner of Income-Tax (Appeals) order without distinguishing between different categories of receipts, without examining the evidence on record and without considering the legal distinction between loans and share capital is erroneous in law and liable to be set aside. 12. Per contra, the learned Senior Standing Counsel for the Income Tax Department contended that the appellant is bound to prove the genuineness of the transactions involving unsecured loans and share application money totaling Rs.79,74,515/-. 12. Per contra, the learned Senior Standing Counsel for the Income Tax Department contended that the appellant is bound to prove the genuineness of the transactions involving unsecured loans and share application money totaling Rs.79,74,515/-. The Assessing Officer had conducted detailed investigations and observed several suspicious circumstances including the fact that demand drafts were serially numbered, suggesting a pre-arranged bogus transaction, that many creditors were not traceable at their given addresses, that there was no commercial rationale for investing substantial sums in a company with minimal operations, and that the source of funds of the creditors could not be independently verified. The learned Senior Standing Counsel submitted that on inquiry by the Commissioner of Income-Tax (Appeals) it was observed that in certain cases neither the parties nor the banks on which the DDs/Bankers' cheques/cheques were drawn had confirmed the transactions. Specifically, transactions to the tune of Rs.4,16,000/- were not confirmed by either parties or banks, Rs.5,68,000/- was not confirmed by banks, though parties confirmed the same, and in respect of Rs.1,34,000/- there was a difference between the loan amount claimed by the appellant and the loan amount confirmed by the parties. Further, it was argued that the Commissioner of Income-Tax (Appeals) did not bring anything on record regarding the capacity of the parties to lend money or invest in the appellant company. Most of the parties were agriculturalists or persons having small land holdings with very minimum income and, therefore, their capacity to advance substantial amounts was highly doubtful and not established. 13. The learned Senior Standing Counsel further argued that merely filing confirmation letters is insufficient to prove credits to the satisfaction of the assessing officer and that the appellant failed to establish the credit-worthiness and capacity of the creditors to lend money or invest in the company. The Assessing Officer's addition was based on substantial material and justified suspicion and the deletion of such additions by the Commissioner of Income- Tax (Appeals) without adequate reasoning constitutes a serious error warranting interference. 14. The Assessing Officer's addition was based on substantial material and justified suspicion and the deletion of such additions by the Commissioner of Income- Tax (Appeals) without adequate reasoning constitutes a serious error warranting interference. 14. Referring to deletion of additions relating to share application moneys amounting to Rs.25,29,299/-, the learned Senior Standing Counsel contended that there is no material distinction between cash credits and share application moneys and any sum credited in the books of account of the assessee, whether as a loan, deposit or share application money, falls within the ambit of Section 68 of the Act if the appellant fails to satisfactorily explain the nature and source thereof. It was contended that the share applicants were not genuine investors but were merely name-lenders used to route back the appellant's own unaccounted money as share capital. The circumstances surrounding these investments, including the timing of applications, the serial numbering of demand drafts, the lack of any commercial rationale for investing in a company with minimal business operations, and the failure to produce many of the alleged share applicants for verification, all point to the bogus nature of these transactions. The fact that some confirmations may have been filed or some parties may have appeared before the Commissioner of Income-Tax (Appeals) does not conclusively establish the genuineness of the transactions, as it is well established that accommodation entries and bogus transactions are often supported by fabricated documentation and sham confirmations. Therefore, it was submitted that the Commissioner of Income-Tax (Appeals) failed to apply proper judicial scrutiny and accepted the documentary evidence at face value without examining the intrinsic probabilities and surrounding circumstances that clearly indicated the transactions were not genuine. 15. Lastly, the learned Senior Standing Counsel contended that ITAT in its impugned order correctly appreciated the deficiencies in the order passed by the Commissioner of Income-Tax (Appeals) and rightly reversed the deletions made by him. The ITAT's observation that it could not understand the reason for deleting the substantial additions when the Commissioner of Income-Tax (Appeals) had failed to narrate the basis for such deletions is entirely justified and based on sound legal principles. That the ITAT was not obligated to call for the inquiry reports or other documents from the Commissioner of Income-Tax (Appeals) when the appellate order itself did not refer to or discuss such materials. That the ITAT was not obligated to call for the inquiry reports or other documents from the Commissioner of Income-Tax (Appeals) when the appellate order itself did not refer to or discuss such materials. That it is the responsibility of the Commissioner of Income-Tax (Appeals) to incorporate all relevant findings, evidence and reasoning in the appellate order itself and the failure to do so cannot be remedied by subsequently referring to the documents that may exist in the departmental files but were not discussed in the order. 16. Having heard the contentions put forth on either side and on perusal of records, the question of law that arises for consideration in this case is “whether the ITAT was justified in upholding the Assessing Officer's additions in entirety when the appellant failed to satisfactorily explain the nature and source of the unexplained unsecured loans and also failed to justify the proportionate interest disallowance as sustained by the Commissioner of Income-Tax (Appeals), thereby warranting dismissal of the appellant's appeal by the ITAT?” 17. This Bench after exhaustive examination of the entire factual matrix, the assessment proceedings, the appellate order of the Commissioner of Income-Tax (Appeals), and the impugned order of the ITAT dated 23.10.2009, finds itself in complete agreement with the findings and conclusions reached by the ITAT in dismissing the appellant's appeals. The central issue is that the appellant's persistent failure to discharge the statutory burden casts upon it under Section 68 of the Act to satisfactorily explain the nature and source of cash credits aggregating to Rs.79,74,515/- that appeared in its books of account during the relevant assessment year. The Commissioner of Income-Tax (Appeals), in its appellate order, had specifically adverted to the fact that the appellant could not adequately explain the genuineness of unexplained unsecured loans and had rightly sustained the proportionate interest disallowance on such unexplained credits. The ITAT's decision to uphold the entire addition, while reversing the deletions made by the Commissioner of Income-Tax (Appeals) in respect of Rs.68,56,515/- is founded on sound legal principles and is supported by the material on record. The ITAT's decision to uphold the entire addition, while reversing the deletions made by the Commissioner of Income-Tax (Appeals) in respect of Rs.68,56,515/- is founded on sound legal principles and is supported by the material on record. The appellant's contention that the Commissioner of Income-Tax (Appeals) had conducted independent inquiries and obtained confirmations from creditors and banks, while factually correct to some extent, does not alter the fundamental reality that these inquiries and the resultant findings were never properly documented, analyzed or discussed in the appellate order itself, rendering the deletions legally untenable and unsustainable. 18. This Bench finds that the approach of the ITAT in dismissing the appellant's appeal is consistent with the well-established principles of appellate adjudication and the proper application of Section 68 of the Act. The ITAT's observation that the deletions made by the Commissioner of Income-Tax (Appeals) appeared to be a "made to believe arrangement" may seem harsh at first blush, but when examined in the context of the complete absence of reasoning in the appellate order and the Commissioner of Income- Tax (Appeals) own findings regarding unexplained unsecured loans and interest disallowance on a portion of credits, this observation cannot be characterized as perverse or unreasonable. The responsibility of an appellate authority is not merely to conduct inquiries or obtain documents, but to analyze the evidence, weigh the probabilities, address the concerns raised by the assessing authority, and arrive at reasoned conclusions that are reflected in the appellate order itself. The Commissioner of Income-Tax (Appeals) failure to discharge this fundamental responsibility, coupled with the appellant's inability to satisfactorily establish the genuineness, creditworthiness and capacity aspects required under Section 68 of the Act is fully justified. Accordingly, the instant appeal viz., Income Tax Tribunal Appeal No.279 of 2010 is dismissed and the order passed by the Commissioner of Income-Tax (Appeals) is hereby upheld. 19. Consequently, Income Tax Tribunal Appeal No.460 of 2010 also stands dismissed. 20. As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs.