Section 68 unsecured loan addition deleted after confirmations, ledger extracts and bank transfer evidence proved lender identity and genuineness.

Unsecured loan additions under section 68 were deleted where the assessee produced confirmations, declarations, ledger extracts and other material showing the identity, creditworthiness and genuineness of the two lenders. One creditor's disputed sum largely related to an opening balance and transactions routed through family members or as advances against gem stones, with part of the dealings already accepted by the Revenue in the same and later years. The other creditor was shown to reside and carry on business in Bahrain, with lending activity before and after the year, bank transfers, and supporting correspondence. The absence of complete bank statements did not justify the addition because the assessee had discharged the initial burden and the Revenue brought no cogent adverse evidence.

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Issues: Whether the addition under section 68 of the Income-tax Act, 1961 towards unsecured loans from the two cash creditors was sustainable.

Analysis: The assessee furnished confirmations, declarations, ledger extracts and other supporting material to establish the identity, creditworthiness and genuineness of the lenders. For one creditor, the disputed amount substantially related to an opening balance and other amounts routed through family members or as advances against gem stones, while the Revenue had already accepted part of the transactions in the same year and in later years. For the other creditor, the record showed residence and business activity in Bahrain, prior and subsequent lending to the assessee, confirmation of transfers through banking channels, and correspondence from the creditor supporting the transactions. The addition was made mainly because complete bank statements were not produced, but the material already filed was held sufficient to discharge the assessee's initial burden and the Revenue had not rebutted it with cogent adverse evidence.

Conclusion: The addition under section 68 was not justified and was deleted.

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