Unexplained cash credit under section 68 overturned where no book entry or independent corroboration existed, addition deleted.

Unexplained cash credit was disallowed because the alleged Rs.39,00,000 receipt was not recorded in the assessee's books and no cogent material directly linked the assessee to the purported cash loan; the addition rested solely on an unidentified thirdparty statement and lacked independent corroboration, compounded by a name discrepancy in reopening reasons. For these evidentiary deficiencies the addition was found unsustainable and deleted, resulting in a decision in favour of the assessee.

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Issues: Whether the addition of Rs. 39,00,000/- made under section 68 of the Income-tax Act, 1961 treating the amount as unexplained cash credit is sustainable in law.

Analysis: Section 68 can be invoked only where a sum is found credited in the books of the assessee for the relevant previous year and the assessee fails to offer a satisfactory explanation regarding the nature and source of such credit. The assessment addition was founded solely on a third-party statement recorded under section 132(4), with no specific identification of the assessee in that statement and without production of the Annexure relied upon. The record establishes that no amount of Rs. 39,00,000/- was found credited in the assessee's books for the year under consideration. There is no independent or corroborative material linking the assessee to receipt of the alleged cash loan, and the appellate order factually misrecorded non-filing of the assessee's reply. These deficiencies undermine the jurisdictional and substantive prerequisites for applying section 68.

Conclusion: The addition of Rs. 39,00,000/- under section 68 of the Income-tax Act, 1961 is unsustainable and is deleted; decision is in favour of the assessee.

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