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2011 (11) TMI 160 - AT - Income TaxUnexplained cash credits determined to the tune of unsecured loan outstanding – Opening balance of such unsecured loans also taken as addition - Difference in G.P. Rate taken as addition – notional interest on unsecured loans applied – Held that:- Section 68 refers to the cash credit found in the books of account of assessee in the year under consideration. A.O. made an arbitrary addition by including the loan taken in the preceding year and adding the so called interest income presumably under section 68 of the Act which is unsustainable in the eyes of law. Only fresh loans during the year/ addition to the loan are to be considered. In respect of addition on ground of difference in G.P. - There was marginal variation of 1% in the gross profit. A.O., has wrongly noted higher gross profit rate, which was the rate adopted after taking into consideration the DEPB income also, which is not in accordance with law. In respect of sundry creditors – where sufficient material was brought on record to highlight that all the payments were through bank account and the creditor has sufficient creditworthiness, there no addition is made and in cases of failure to furnish such records addition made in those repect is confirmed. Decided partly in favor of assessee.
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