Caselaw Required for Loan considered as income

AO has to issue summons u/s 131(1) before disallowance, and assesse has to provide complete postal / contact details of the loan giving person, and AO may ask for reasons and compliance reg source and genuineness of the transaction.

in case of non compliance / non co-operation, the AO has right to disallow.

Agree wid U S SHARMA bt also section 269SS/269T will come in to play......for which penalty is  amt of loan accepted (for accepting a loan above 20000 rs in cash............)

You may refer the case law

"BALAJI TRADERS vs DCIT [2001] 73 TTJ 246 (ITAT, PUNE)/ 78 ITD 368"

Under this case, there were many grounds which were in favour of assessee, "not having a bank account" is one of them.