As per sec 68 if the assessee fails to provide the details of credit worthiness of creditor than AO can treat the loan as income

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The facts in brief are that the AO during the assessment proceedings noted from details of unsecured loans that the assessee had taken unsecured loan of Rs.14,60,052/- from Shri Balwantbhai Grewal during the year. The AO therefore, asked the assessee to furnish loan confirmation and copies of bank statement, balance sheet etc. of the creditors to substantiate the loans. The assessee however failed to file the above documents. The AO, therefore, concluded that the assessee had not been able to prove the identity and creditworthiness of the creditors and genuineness of transactions. The AO, therefore, treated the sum of Rs.14,60,052/- as income of the assessee under section 68 of the Act. The assessee disputed the decision of AO and submitted before CIT(A) that the impugned amount shown in the books of assessee in fact related to sister concern M/s. Kaypan Vanijya Pvt. Ltd. and had been wrongly posted in the books of the assessee as unsecured loans. The assessee filed confirmation of Shri Balwantbhai Grewal to substantiate the claim. CIT(A) however noted from the said confirmation that Shri Balwantbhai Grewal in the confirmation had only mentioned that he had forwarded Rs.14,60,052/- to the assessee in the concerned assessment year on different dates. He had not mentioned anything about nature of transactions and nothing was also mentioned about claim of the assessee that the transaction related to the sister concern. Shri Balwantbhai Grewal had also not stated that the amount represented a trade receipt. Bank account details of Shri Balwantbhai Grewal had also not been submitted to verify the claim nor was there any evidence to establish the identity of Shri Balwantbhai Grewal who stayed in UK or about his creditworthiness. CIT(A) also observed that in case amount was wrongly entered in books, the same should have been corrected in due course of time but no material was produced to show any such correction. CIT(A), therefore confirmed the addition made by AO aggrieved by which, the assessee is in appeal before the Tribunal.

Citation :
Kaypan Exports Pvt. Ltd. Formerly known as Mukund Exports Pvt. Ltd. 2, Vardhman Complex LBS Marg, Vikroli (W) Mumbai-400 083. PAN NO: AAACK 3404 B (Appellant) Vs. Income tax Officer Aayakar Bhavan M.K. Road, Churchgate Mumbai-400 020. (Respondent)