INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of unsecured loan - Deposit of equal amount of cash in bank account of creditors before giving cheques to assessee--Assessee produced necessary documents and subsequent deposit made less than the withdrawal amount

Assessee received unsecured loan from certain parties. AO noticed that in bank accounts of creditors an equal amount in cash was deposited before issuing of cheques to assessee. Therefore, AO doubted genuineness of the transaction and creditworthiness of lenders and made addition of loan amount under section 68. Held: AO had not brought on record any material to show that cash deposited in bank accounts of the creditors belonged to assessee and, was a case of round tripping of unaccounted income of the assessee in the shape of unsecured loans. Whereas assessee had produced confirmations as well as affidavits of loan creditors along with bank account details and returns of income filed by loan creditors. Also, making deposits subsequently less than the withdrawal amount clearly showed that all the loan creditors were having sufficient funds to make deposits in their bank accounts prior to issuing cheques to assessee and therefore, in absence of assessee's own role in withdrawal and deposits made in bank accounts of loan creditors, addition of loan amount made under section 68 could not be sustained.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16

INCOME TAX ACT, 1961

Section 143(3)

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