INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of cash loan - Assessee proved identity, creditworthiness and genuineness

Assessee received unsecured loans in cash from certain parties. AO treated loan amount as unexplained cash credit under section 68 and made addition.Held: Assessee has furnished the basic details about loan taken from all the parties such as, confirmation along with address, ledger copy of ITR, but AO had not made any verification from such parties and arrived at the conclusion that loan amount represented unexplained cash credit under section 68. There is no prohibition to accept loan in cash under section 68. As such section 68 has not differentiated the amount of cash credit accepted by assessee through cash and cheque. It means that test laid down to justify cash credit under section 68 is same when loan is taken in cash and through banking channel. Once assessee had discharged primary onus by proving identity of lender, genuineness of transaction and capacity to advance the loan, then it was burden of AO to prove it otherwise which AO failed to do so, therefore, addition made under section 68 could not be sustained.

Relied:CIT v. Metachen Industries (2000) 116 Taxman 572 (MP) : 2000 TaxPub(DT) 822 (MP-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2003-04

INCOME TAX ACT, 1961

Section 36(1)(iii)

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