INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of unsecured loan - Non-furnishing of PAN of creditors

AO treated loans received by assessee as unexplained credit under section 68 on the ground of assessee's failure to furnish PAN of creditors.Held: All the creditors had confirmed the transactions, submitted required documents and responded to notices under section 133(6). In compliance to the summon issued under section 131 three creditors appeared before AO and placed requisite details and documents as called for by summon issued under section 131 AO failed to demonstrate any defect in documents and evidences adduced before him by the creditors. Therefore genuineness of these creditors could not be doubted. All the creditors of assessee were his regular vendors and transactions with them were genuine business transactions and transactions with them had been undertaken wholly and exclusively for the purposes of business activities. Assessee's accounts were audited and not rejected by AO, therefore, to estimate separate profit in addition to profit shown in audited books of accounts was not tenable without any tangible material or corroborative evidence. Since assessment year under consideration was 2014-15 therefore, furnishing of PAN number was not mandatory as per rule 115B vide entry No. 18, which came into force with effect from 1-1-2016. Based on the factual position, assessee had proved identity, creditworthiness of the creditors and genuineness of loan transactions and accordingly, no addition could be sustained under section 68.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

SUBSCRIBE FOR FULL CONTENT

OR Try Reload the Page