Paltex Vs ITO (ITAT Mumbai)
ITAT Mumbai held that addition under section 68 of the Income Tax Act treating unsecured loan as unexplained credit not justified since assessee has proved identity, creditworthiness and genuineness of the credit. Accordingly, appeal is allowed.
Facts- The present appeal has been preferred by the assessee mainly contesting that CIT(A) has erred in confirming addition under section 68 of ₹ 2.50 lakhs by treating unsecured loan from Anjana Prajapati as unexplained credit. The lower authority has treated unsecured loan as unexplained credit only for the reasons that complete bank statement of lender pertaining to credit entry was not furnished.
Conclusion- Held that lower authority has treated unsecured loan as unexplained credit only for the reasons that complete bank statement of lender pertaining to credit entry was not furnished. On considering the details of bank statement of lender, I find no cash was deposited soon before debit entry of Rs. 2.50 lacs in favour of the assessee. The identity of lender was not disputed; the assessee has paid interest to the lender. Payment of interest in disallowed for the reasons that loan was added. Moreover, the amount is not huge, and the lender was having sufficient credit in her bank account. Thus, in my view the assessee has proved identity, creditworthy and genuineness of the credit. Hence, the addition of Rs. 2.50 lacs is deleted. Once the addition of loan is deleted, the interest disallowance of Rs. 19,333/-which is consequential, the same is also allowed. In the result, the appeal is allowed.
