Unsecured loan credits and initial burden: documentary proof of lender identity, genuineness and creditworthiness led to deletion of the addition.

Unsecured loan credits are not assessable as unexplained money under section 69A where the assessee produces lender confirmation, PAN, bank statements, income-tax returns, balance sheet, ledger entries, compliance with section 133(6), and proof of repayment through banking channels. On these documents, the assessee discharged the initial burden by establishing the lender's identity, creditworthiness and the genuineness of the transactions, and the onus shifted to the Revenue to rebut the evidence with cogent material. In the absence of any material showing fictitious transactions, unexplained money, or an accommodation entry arrangement, the addition was deleted.

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Issues: Whether the addition of Rs. 2,17,00,000/- under section 69A of the Income-tax Act, 1961, in respect of unsecured loans was sustainable where the assessee produced lender confirmation, PAN, bank statements, ITR, balance sheet, ledger, compliance to notice under section 133(6), and evidence of subsequent repayment through banking channels.

Analysis: The assessee discharged the primary burden by placing on record material establishing the identity of the lender, the genuineness of the loan transactions and the lender's creditworthiness. The transactions were routed through banking channels, were reflected in the books, and were followed by repayment in subsequent assessment years. The Revenue did not bring any cogent material to rebut these documents or to establish a live link showing that the transactions were fictitious or represented unexplained money. The authorities below also could not justify treating the transaction as an engineered or accommodation entry arrangement. The principles that once primary documents are produced the onus shifts to the Revenue, and that the assessee is not required to prove source of source in such circumstances, were applied.

Conclusion: The addition under section 69A was deleted and the assessee's appeal was allowed.

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