INCOME TAX ACT, 1961

Section 68

Income from undisclosed source - Addition under section 68 - Unexplained cash credit - Assessee discharged onus

Assessee was engaged in business of trading and processing of grey and fabrics cloth and had taken loan from certain parties. AO during assessment proceedings to verify the veracity of the loan taken by assessee observed that there was cash /cheque deposit in the bank account of the parties immediately before the date of transfer of the fund to the account of assessee. AO was of the view that none of the party, who advanced loan was the man of means. Since assessee failed to prove the creditworthiness of the parties and accordingly made addition of amount received by assessee as unexplained cash credit under section 68.Held: Admittedly assessee had discharged his onus by furnishing the necessary details such as a copy of PAN, bank details, etc. in support of identity of the parties. There was also no dispute that all the transactions were carried out through the banking channel. Therefore, assessee had discharged the onus regarding the identity of the parties. There was no doubt that transaction of the loan was carried out through the banking channel. Assessee had duly explained the source of money received in their hands. Therefore, addition under section 68 could not be made in the hands of assessee.

REFERRED : CIT v. Green Infra Ltd. (2017) 78 taxmann.com 340 (Bom) : 2017 TaxPub(DT) 0640 (Bom-HC), Dy. CIT v. Rohini Builders (2002) 256 ITR 360 (Guj) : 2002 TaxPub(DT) 0305 (Guj-HC), CIT v. Precision Finance Pvt. Ltd. (1994) 208 ITR 465 (Cal) : 1994 TaxPub(DT) 0368 (Cal-HC)

FAVOUR : In assessee's favour.

A.Y. : 2012-2013

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