INCOME TAX ACT, 1961

Section 68

Income from undisclosed source - Addition under section 68 - Allegation that primary ingredients of section 68 not fulfilled - Fresh unsecured loans received from four parties

Assessee was engaged in the business of manufacturing of engineering items and carrying out job work. During assessment proceedings, it transpired that assessee received fresh unsecured loans from various parties. After examining the supporting documentary evidences furnished by assessee, AO came to a conclusion that although assessee established the identity of the lenders but failed to establish creditworthiness of lenders and also genuineness of the said transactions, since assessee did not furnish necessary documentary evidences such as copy of return of income of the lenders, statement of total income, etc., of lenders. Accordingly, amounts were treated as unexplained cash credit under section 68. Held: It was quite evident that no independent inquiry was made by AO to ascertain genuineness of the transactions from loan creditors either in original assessment proceedings or in remand proceedings. Documents furnished by assessee with respect to loan creditors include copies of return of income of lenders, computation of income, Balance Sheet, ledger extracts and bank statements, etc., were carefully perused. Therefore, there was no reason to make addition under section 68 and appeal was dismissed.

REFERRED : ITO v. Anant Shelters (P.) Ltd. (2012) 20 taxmann.com 153 (Mum) : 2012 TaxPub(DT) 2257 (Mum-Trib) Navodaya Castle (P.) Ltd. v. CIT (2015) 56 taxman. com 18 (SC) : 2015 TaxPub(DT) 1868 (SC) and CIT v. Lovely Exports (P.) Ltd (2009) 216 CTR 195 (SC) : 2009 TaxPub(DT) 0261 (SC)

FAVOUR : In assessee's favour

A.Y. :

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