Unexplained cash credit provisions do not apply where a brother's loan is proved genuine and already taxed in the lender's hands.

A loan of Rs. 8 lakhs received by an assessee from his brother was examined for possible treatment as unexplained cash credit or for protective taxation. The record showed that the brother was the lender, the transaction was genuine, and the creditor's identity and creditworthiness were established. As the same sum had already been assessed in the brother's hands on a substantive basis, taxing it again in the assessee's hands would amount to double addition. Section 69 was found inapplicable and section 68 also did not support the addition. The amount was therefore not taxable in the assessee's hands and was treated as a capital receipt.

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Issues: Whether the sum of Rs. 8 lakhs received by the assessee from his brother could be treated as an unexplained cash credit or otherwise be brought to tax on a protective basis.

Analysis: The seized material and the assessment in the hands of the brother showed that the amount was a loan advanced by the brother to the assessee and not an advance made by the assessee. The transaction was found outside the regular books, but the identity of the creditor, the genuineness of the transaction, and the creditworthiness of the creditor stood established from the record. The amount had already been assessed in the hands of the brother on a substantive basis, and taxing the same sum again in the assessee's hands would result in double addition. The invocation of section 69 was held to be inapposite, and on the facts section 68 also did not justify the addition.

Conclusion: The addition of Rs. 8 lakhs in the assessee's hands was not sustainable either substantively or on a protective basis, and the amount was held to be a capital receipt in the assessee's hands.

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