Section 68 unsecured loan credits require more than lender income; banking records and repayment evidence can establish genuineness.

Unsecured loans supported by confirmations, bank statements, ledger accounts and evidence of repayment with interest were held to satisfy section 68 requirements. The Tribunal treated receipt through banking channels and documentary corroboration as sufficient to establish the genuineness of the transactions. It also held that lenders' earning capacity, by itself, does not conclude the question of creditworthiness, which depends on the ability to arrange funds for lending. On that basis, the addition under section 68 was deleted.

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Issues: Whether the addition made under section 68 of the Income-tax Act, 1961 in respect of unsecured loans was sustainable when the assessee produced confirmations, bank statements, ledger accounts and evidence of subsequent repayment with interest.

Analysis: The sustained addition was founded mainly on the lenders' earning capacity. The record showed that the loans were received through banking channels, confirmations were filed, and the assessee produced bank statements, ledger accounts and evidence of repayment along with interest. The Tribunal treated these materials as sufficient to establish the genuineness of the transactions and held that earning capacity alone does not conclude the issue of creditworthiness, which depends on the ability to arrange funds for lending.

Conclusion: The addition under section 68 was deleted and the assessee succeeded on the issue.

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