Unexplained loan addition fails where identity, creditworthiness and transaction genuineness are established through banking and supporting evidence.

An alleged unexplained unsecured loan addition was examined against the assessee's evidence of the lender's identity, creditworthiness and the genuineness of the transaction. The loan was received and repaid through banking channels, supported by ledger accounts, confirmation, bank statements, tax-return acknowledgement, PAN, address and source-of-funds details. The lender's active MCA/ROC status supported its existence, while no cash deposit or cash trail was identified. The amount was also duplicated for assessment purposes. On these facts, the material states that the assessee discharged the evidentiary burden and that deletion of the addition was sustained.

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Issues: Whether the addition for an alleged unexplained unsecured loan could be sustained where the assessee furnished evidence of the lender's identity, creditworthiness and the genuineness of the transaction.

Analysis: The loan was received through banking channels and repaid within the same financial year. The assessee produced the lender's ledger account, confirmation, bank statement, income-tax return acknowledgement, its own bank statement, and details including the lender's PAN, address and source of funds. The lender was also found active on the MCA/ROC portal. The amount had been duplicated for assessment purposes, and no cash deposit or cash trail was found.

Conclusion: The assessee established the identity and creditworthiness of the lender and the genuineness of the loan transaction; deletion of the addition was sustained in favour of the assessee.

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