INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Unexplained credit received from two companies -

Assessee was engaged in the business of trading in minerals and iron ores. AO in the course of the scrutiny assessment inter alia found that the nature and source of unsecured loan received from two companies was not found to be satisfactory on the touchstone of section 68. AO, accordingly, inter alia, added the aforesaid sum to the income of assessee. Held: Documents placed by assessee before Revenue authorities sufficiently discharged the onus towards the identity and genuineness of transactions and creditworthiness of the lender as contemplated under section 68. Statutory discretion available to AO under section 68 ought to have been exercised in favour of assessee. Addition made under section 68 on credit received from one company deserved to be reversed and cancelled. For another credit, it is case of assessee that the relevant confirmation from the lender towards repayment of loan could not be furnished due to strained relations cropped up owing to some dispute. Assessee, however, adverted to the bank statement of assessee to show that an amount was promptly repaid against the credit received which proved bona fides of the credit received. It was also fairly submitted by assessee that additions might, at best, be restricted to balance amount remaining unpaid. Additions on this score was, therefore, restricted and the remaining amount was reversed.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2013-14 & 2014-15

INCOME TAX ACT, 1961

Section 145

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