Unexplained unsecured loans cannot be added in an unabated assessment without incriminating material.

In an unabated assessment, additions for unexplained unsecured loans can be made only if supported by incriminating material found during the relevant proceedings. The Tribunal found that no such material existed in relation to the impugned loans, so the addition could not be sustained and was deleted.

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Issues: Whether addition of unsecured loans as unexplained cash credits in an unabated assessment could be sustained in the absence of incriminating material.

Analysis: The assessment was reopened under section 148/147 of the Income-tax Act, 1961 on the basis of alleged escaped income arising from unsecured loans. The Tribunal noted that the assessment was unabated and, therefore, any addition could be made only if supported by incriminating material found during the relevant proceedings. It further found that no such material was available with the Assessing Officer in relation to the impugned unsecured loans.

Conclusion: The addition could not be sustained and was directed to be deleted.

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