Genuineness of unsecured loan proved-addition deleted where no incriminating seized material supported the cash credit.

Tribunal examined ledger entries, confirmations, bank statements and repayment records and found no incriminating material seized relating to the assessee; it held that the assessee discharged the burden of proof for a cash credit by establishing identity, creditworthiness and genuineness of an unsecured loan. Applying the settled principle that additions cannot be sustained in completed assessments under seizure-linked proceedings absent incriminating material discovered during search, the Tribunal deleted the disputed addition and allowed the appeal in favour of the assessee.

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Issues: Whether the addition of Rs. 50,00,000 made under section 68 of the Income-tax Act, 1961 in assessment completed under section 153C, in the absence of any incriminating material seized during search and in the face of documentary evidence (confirmations, bank statements, ledger entries) proving identity, creditworthiness and genuineness of the loan, was justified.

Analysis: The Tribunal examined the material on record including ledger accounts found during the connected search, confirmations, bank statements, repayment details and financial statements produced by the assessee. It noted that the seized material relating to the assessee consisted only of ledger entries forming part of regular books of account and that no separate incriminating material pertaining to the assessee was seized. The Tribunal observed that the assessee had produced documentary evidence corroborating receipt and repayment of the unsecured loan and had discharged the primary onus under section 68 by establishing identity, creditworthiness and genuineness. The Tribunal also applied the settled principle that additions cannot be made in completed or unabated assessments in the absence of incriminating material discovered during search, as reflected in controlling precedent.

Conclusion: The addition of Rs. 50,00,000 under section 68 is deleted and the appeal is allowed in favour of the assessee.

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