INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of unsecured loan - AO doubted creditworthiness of lender

AO issued notices under section 133(6) to the sundry creditors as per details furnished by assessee. In respect of 23 parties, notices were returned unserved and in respect of balance parties, sundry creditors had complied with the notices under section 133(6). Then AO took recourse to issue commission to the jurisdictional AO for recording evidence from said parties in exercise of power vested with him under section 131(1)(d). The findings of respective jurisdictional AO in compliance to the commission were extracted by AO. Based on the findings given by Jurisdictional AO, AO observed that in many cases sundry creditors were not traced by jurisdictional AO and sundry creditors had no capacity to advance such loans to the assessee, AO concluded that creditworthiness and genuineness of transactions had not been proved. Accordingly, AO made addition under section 68. Held: Indisputably, assessee had discharged the onus lying upon him by filing all the necessary details and particulars such as PAN Numbers, copies of returns of income, bank statements, etc. The mere fact that sundry creditors had failed to respond to the notices issued under section 131 could not justify any adverse inference being drawn against the assessee. Therefore, addition could not be upheld.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

INCOME TAX ACT, 1961

Section 68

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