Reassessment proceedings were challenged regarding unexplained ...

Tribunal upheld genuineness of loan transaction backed by documents; authorities erred in rejecting evidence without verification.

Case Laws     Income Tax

July 19, 2024

Reassessment proceedings were challenged regarding unexplained cash credit u/s 68 for an unsecured loan. The loan was treated as bogus based on a statement by Mukesh Banka. However, the appellant submitted supporting documents, including bank statements, proving the genuineness of the loan transaction. The authorities rejected these documents without proper verification, relying solely on assumptions and probabilities. The Tribunal held that documents cannot be discarded without examining their genuineness, especially when they clearly demonstrate a genuine transaction through banking channels. The loan was duly repaid, and no transaction occurred with Mukesh Banka or his group. The Tribunal concluded that the assessee successfully disclosed the source of income, and the reopening notice was invalid as there was no basis for believing income had escaped assessment, mere suspicion being insufficient.

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