INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Unexplained cash credits -

Assessee carried on the business of manufacturing and trading. AO noticed that assessee had shown in his books of account a sum as an unsecured loan taken from M/s. A. AO issued a notice under section 133(6) M/s. A calling upon them to furnish their bank statements showing the transactions of unsecured loan. M/s. A confirmed having given the loan to the assessee. They also furnished bank statement showing the mode of payment. The AO on perusal of the bank statement noticed that just prior to the transaction of loan to assessee, there was a cash deposit of M/s. A. AO was of the view that the money which was obtained as loan from M/s. A was nothing but assessee's own money. Held: Without examining the partner of the M/s. A, it was not possible to conclude that the sum which was added as unexplained cash credit in the hands of the assessee was unexplained cash credit. If on examination, admitted having given the said sum then the addition in question cannot be sustained. In such an event the assessee should be considered to have explained the source of the credit. Therefore, order was set aside and matter was remanded back to AO for fresh consideration after providing opportunity of being heard to assessee.

Relied:Principal CIT v. NRA Iron & Steel Pvt. Ltd. SLP (Civil) No. 29855 of 2018 dt. 5-3-2019 : 2019 TaxPub(DT) 1628 (SC).

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2016-17

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