The Tax Publishers2020 TaxPub(DT) 4793 (Mum-Trib)

INCOME TAX ACT, 1961

Section 68

Where assessee furnished all the documents and details proving conclusively the three ingredients of section 68, viz. identity, creditworthiness of lenders and genuineness of transactions and further, the loan amounts were duly accounted in the books of account of the assessee as well as the lenders, the addition made under section 68 by treating such loans as unexplained cash credits, was liable to be deleted.

Income from undisclosed sources - Addition under section 68 - Unexplained cash credits - Assessee duly furnished details proving three ingredients viz. identity, creditworthiness of lenders and genuineness of transactions

AO found that assessee was beneficiary of accommodation entries of loans from various group companies belonging to a person named 'P', who was a hawala operator. AO called for various details from the assessee such as names and addresses of lenders, their PANs, purpose of loans, loan confirmations from the lenders or produce the lenders. Assessee filed all the necessary details. Further, the AO also issued notices under section 133(6) to the lenders; however, the same remained unserved or unanswered. Finally, the AO added the said loans to the income of the assessee under section 68 as unexplained cash credits. Held: Assessee furnished all the documents and details proving conclusively the three ingredients of identity, creditworthiness of lenders and genuineness of transactions. Further, the loan amounts were paid from running accounts and duly accounted in the books of account of the assessee as well as the lenders as was evident from the financial statements. Further, all the lenders confirmed the transactions and thus the loan transactions were genuine. Moreover, the loans taken from those parties were repaid during the year itself and nothing was outstanding at the year end. Accordingly, the addition made under section 68 on account of unexplained cash credit was deleted.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2008-09



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