INCOME TAX ACT, 1961

Section 68

Income from undisclosed source - Addition under section 68 - Unexplained cash credit -

During the course of assessment proceedings, it was found that many members of different families allegedly extended loans to assessee firm, one of which is Thakkar family. Along with others, Mrs. K allegedly extended loan to assessee-firm. AO held that creditor did not have the source to extend such a huge loan to assessee-firm, neither creditor further had required balance in her bank account prior to extension of the said loan to the firm. Further, it was also observed that return of income filed in various years was not substantial to extend such a loan to assessee and the entire amount of alleged loan was added in hands of assessee. Held: Additions could not be made in the hands of assessee, particularly when assessee had extended all co-operation to the revenue by providing the required documents as asked for time to time even before the appellate authority by way of additional evidence in order to justify the genuineness of the transactions. Merely because creditor Mrs. K did not appear before the authorities below in spite of notice under section 133(6) being sent, raising doubts on the genuineness of loan was not warranted. Hence, addition under section 68 was deleted.

REFERRED : Pr. CIT v. D & H Enterprises (2016) 72 taxmann.com 91 (Guj.) : 2016 TaxPub(DT) 4522 (Guj-HC) CIT v. Shiv Dhooti Pearls & Investment Ltd. (2015) 64 taxmann.com 329 (Del) : 2015 TaxPub(DT) 5377 (Del-HC) MOD Creations (P) Ltd. v. ITO 2012 TaxPub(DT) 3314 (Del-HC) CIT v. Divine Leasing & Finance Ltd. & Ors. (2008) 299 ITR 268 (Del) : 2008 TaxPub(DT) 0400 (Del-HC)

FAVOUR : In assessee's favour

A.Y. : 2010-11, 2011-12 & 2012-13

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