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ITAT allowed the assessee's appeal regarding additions under Section 68 for unsecured loans and sundry creditors. For unsecured loans, the AO erroneously stated that the lender failed to respond to Section 133(6) notice, when evidence showed the lender had actually filed responses, provided bank details, and ledger accounts. The lender's income tax return further established creditworthiness. Regarding sundry creditors, ITAT held that outstanding credit balances from previous financial years cannot be taxed in the current assessment year under Section 68, following precedents from Bombay HC and ITAT Surat. The additions were made without reasonable basis as the sundry creditors represented opening balances from earlier years, not current year transactions requiring explanation.
ITAT allowed the assessee's appeal regarding additions under Section 68 for unsecured loans and sundry creditors. For unsecured loans, the AO erroneously stated that the lender failed to respond to Section 133(6) notice, when evidence showed the lender had actually filed responses, provided bank details, and ledger accounts. The lender's income tax return further established creditworthiness. Regarding sundry creditors, ITAT held that outstanding credit balances from previous financial years cannot be taxed in the current assessment year under Section 68, following precedents from Bombay HC and ITAT Surat. The additions were made without reasonable basis as the sundry creditors represented opening balances from earlier years, not current year transactions requiring explanation.
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