Genuineness of unsecured loans established by records, so unexplained credit addition was deleted.

Documentary evidence, bank statements and lender confirmations established the genuineness of the alleged unsecured loans, and replies to section 133(6) notices supported the assessee's explanation. Amounts covered by cheques issued on 31.03.2010 were not encashed during the year and therefore were not received in the relevant year, while the balance related to genuine purchase transactions supported by a running ledger and purchase documents. In the absence of any contrary evidence, the material on record rebutted the inference of unexplained credits, and the addition under section 69A was deleted.

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Issues: Whether the addition made under section 69A of the Income-tax Act, 1961, treating amounts shown as unsecured loans as unexplained credits, was sustainable.

Analysis: The assessee had produced confirmations, bank statements, income-tax particulars and other supporting material for the lenders. A substantial part of the addition represented cheques issued on 31.03.2010 that were not encashed during the year and therefore had not accrued as received amounts in the relevant year. The balance was found to relate to genuine purchase transactions with a running ledger and purchase documents, and the replies received in response to notices under section 133(6) of the Income-tax Act, 1961 supported the assessee's explanation. The material on record rebutted the inference drawn by the Assessing Officer, and no contrary evidence was shown.

Conclusion: The addition under section 69A of the Income-tax Act, 1961 was rightly deleted, and the assessee succeeded on the substantive issue.

Final Conclusion: The assessment addition was not sustained, and the revenue's appeal failed.

Ratio Decidendi: Where documentary evidence, banking records and creditor confirmations establish the genuineness of the transaction and show that the alleged amount was either not received during the year or related to proved purchase dealings, an addition as unexplained credit cannot be sustained.

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