INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of unsecured loan - Notices under section 133(6) issued to lenders returned unserved

AO in order to verify transactions of receipt of unsecured loan by assessee, issued noticed under section 133(6) to lender companies which returned unserved. Accordingly, AO treated loan amount as unexplained cash credit and made addition under section 68.Held: It was pertinent to mention that AO had also served notices under section 133(6) to banks of each lender company who had furnished the bank statement of the lender companies. A perusal of the same revealed that no cash was found to be deposited prior to the date of issue of cheques to assessee company. This conclusively proves that the assessee has not purchased cheques by paying cash to the lender companies. Since banks had responded to the notice by furnishing the Articles of Association, Memorandum of Association, bank opening forms of lender companies which clearly demonstrated that all the companies have fulfilled KYC Norms of banks. Therefore, identity of lender companies had been established beyond doubts. The genuineness of the transactions can be safely concluded as all the transactions have been done through proper banking channel. 21. The source of funds are clearly established from the financial statements of these lender companies, irrespective of their meager income or nil income. 22. Considering the facts of the case in totality, the assessee has discharged the onus cast upon it by the provisions of section 68 of the Act and, therefore,AO was not justified in making addition

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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