Section 68 cash credit addition fails where loan identity, creditworthiness and genuineness are duly supported by evidence.

Loans supported by confirmations, bank statements, sale deeds, repayment evidence and interest paid after TDS deduction established the lenders' identity, creditworthiness, source of funds and transaction genuineness. On that factual basis, the addition as unexplained cash credit under section 68 was not sustainable, and deletion of the addition was upheld.

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Issues: Whether the addition made under section 68 of the Income-tax Act, 1961 as unexplained cash credit was liable to be sustained in respect of loans received from three creditors.

Analysis: The loans were supported by confirmations and other documentary evidence before the assessing authority and the appellate authority. The record showed repayment during the year in respect of part of the loans, payment of interest after deduction of tax at source, and source of funds traceable to sale proceeds of land supported by bank statements and sale deeds. The appellate authority had accepted the evidence and recorded a reasoned finding that the assessee had established the identity of the lenders, their creditworthiness, the source of funds, and the genuineness of the transactions.

Conclusion: The addition under section 68 was not sustainable and the deletion of the addition was upheld.

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