Section 68 unsecured loan addition fails where banking evidence exists and cross-examination of adverse witness is denied.

Addition under section 68 for an unsecured loan cannot be sustained where the assessee produces loan confirmation, bank statements, repayment evidence and a banking trail supporting the transaction. The evidentiary basis was further weakened because the assessee was denied access to the adverse material and requested cross-examination of the person whose statement was relied on. In these circumstances, the explanation for the loan remained unrebutted and the addition was deleted in favour of the assessee.

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Issues: Whether the addition made under section 68 on account of unsecured loan was sustainable when the assessee furnished loan confirmation, bank statements and repayment evidence, and was denied access to adverse material and cross-examination of the person alleged to be controlling the lender company.

Analysis: The addition was founded on the allegation that a third person was providing accommodation entries through various companies. The assessee, however, had placed on record documentary evidence showing receipt of the loan through account payee cheque, subsequent repayment through banking channels, and had specifically sought cross-examination of the person whose statement was relied upon. Since the adverse material was not supplied and the requested cross-examination was denied, the assessee was not given a fair opportunity to meet the case against it. In these circumstances, the evidentiary foundation for the addition was found insufficient, particularly where the banking trail and repayment supported the assessee's explanation.

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

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