ITO v. Lal Chand Yadav

INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 68 Creditworthiness, genuineness of creditors not proved----Addition under section 68 was justified as assesse had brought on record only confirmations in respect of loan taken from various creditors and none of the creditors were maintaining any bank account, therefore, mere recording of the statement and filing acknowledgement of ITR was not sufficient to prove their creditworthiness and genuineness of the transaction in the matter.--During relevant year, assessee borrowed money from various creditors who confirmed the fact of having given loan to assessee before AO. AO found that though those creditors had been filing return of income but they were having only meagre income and out of the same also, they were incurring household expenditure as well. No evidence of earning of source of income by any of the creditors had been filed. AO thus rejected explanations of the creditors and added amount in question to assessee's taxable income.Held: It was found that the creditors were having only meagre income and had failed to produce any cogent and reliable evidence of source of their income. Moreover, none of the creditors were maintaining any bank account, therefore, mere recording of the statement and filing acknowledgement of ITR was not sufficient to prove their creditworthiness and genuineness of the transaction in the matter. The evidences and material produced on record were not sufficient to discharge the onus upon assessee to prove creditworthiness of the creditors and genuineness of the transaction in the matter.