INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of unsecured loan - Absence of any documents/details being filed by assessee

Assessee has taken loan of Rs. 26 lakhs from one Prakash Gore. He was asked to give loan confirmation, creditworthiness, cashflow statement and other documentary evidences along with proof of the persons who had given loan and their income particulars. AO vide Order, dated 29-12-2008, passed under section 143(3) read with section 154B(b), inter alia, made an addition of Rs.26 lakhs as unexplained credit under section 68 in the absence of any documents/details being filed by assessee. Held: The source of the loan and even source of the sources appeared to be all in cash and an arrangement was made to explain the credits in the hands of assessee to the extent of Rs. 26,00,000. Even claim of repayment of loan did not appear to be genuine as from the bank statement of Prakash Gore in Parvara Sahakari Bank Ltd., it was seen that loan claimed to be repaid to P.N. Yadav and E.K. Kapase of Rs. 5,00,000 and 4,00,000 respectively on 23-10-2006 occurs after a cash deposit of Rs. 12,00,000 in the same account on the same date. In any case, these so-called loan repayments from the above said account appeared to be unique when compared to other transactions in the bank account. Also, all these transactions in the bank account had happened subsequent to ACB search on assessee's father and the requisition made under section 132A by IT Department. Therefore, it could be inferred that this arrangement was made to explain to the authorities the investment in the name of assessee. In view of the above, claim of loan from Prakash Gore to the extent of Rs. 26,00,000 was not accepted and the addition made by AO to that extent was upheld for assessment year 2007-08.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2003-04 to 2007-08

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