Unexplained cash credit and delayed PF/ESI contribution issues: banking evidence defeated section 68 addition, while remand was ordered for due-date verification.

A loan transaction supported by banking channels, repayment within the same financial year, tax deduction at source on interest, and no specific discrepancy in the evidence cannot be treated as unexplained cash credit, so the section 68 addition was deleted. Employees' contribution to PF and ESI must be tested against the statutory due date, including the applicable grace period; delayed deposit attracts disallowance, so the matter was remitted for verification of the actual deposit dates and allowed for statistical purposes.

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Issues: (i) whether the addition made as unexplained cash credit under section 68 was sustainable in respect of the loan transaction; (ii) whether the disallowance of employees' contribution to PF and ESI under section 36(1)(va) was sustainable.

Issue (i): Whether the addition made as unexplained cash credit under section 68 was sustainable in respect of the loan transaction.

Analysis: The loan was taken through banking channels, bore interest, was repaid in the same financial year, and tax was deducted at source on the interest. No specific discrepancy was found in the supporting material and the transaction was supported by documentary evidence.

Conclusion: The addition under section 68 was deleted and the issue was decided in favour of the assessee.

Issue (ii): Whether the disallowance of employees' contribution to PF and ESI under section 36(1)(va) was sustainable.

Analysis: The matter required verification of the actual dates of deposit against the statutory due dates, including the applicable grace period. The legal position was taken from the rule that employees' contribution deposited beyond the prescribed due date is not allowable, while timely deposit does not attract disallowance.

Conclusion: The issue was restored to the Assessing Officer for verification and was allowed for statistical purposes.

Final Conclusion: The assessee succeeded on the cash credit issue, while the PF and ESI disallowance issue was sent back for factual verification in light of the governing law on delayed employee contribution deposits.

Ratio Decidendi: A loan transaction supported by banking records, repayment within the year, deduction of tax at source, and absence of specific discrepancy cannot be treated as unexplained cash credit; employees' contribution to PF and ESI deposited beyond the statutory due date is liable to disallowance, subject to factual verification of timely deposit.

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