2014 (8) TMI 685 - HC - Income Tax

Income from undisclosed sources u/s 68 – Amount advanced through proper channel or not – Held that:- The amounts advanced are not substantial and in most of the cases, the amounts are ranging from 25,000 to 90,000 and in some cases, it is exceeding ₹ 1,50,000 - in some of the cases even the karta of the HUF had produced the cash book and their ledger account before the AO - though u/s 68, the AO is free to show with the help of the enquiry conducted by him into the transaction which has taken place between the creditor and the sub creditor that the transaction between the two were not genuine and that the sub-creditor had no creditworthiness, it will not necessarily mean that loan advanced by the sub-creditor to the creditors was income of the assessee from undisclosed sources unless there is evidence direct or circumstantial, to show that the amount which had been advanced by the sub-creditor to the creditor had actually been received by the sub-creditor from the assessee.

All the cash creditors have affirmed in their examination that they had advanced money to the assessee from their own respective bank accounts - when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, such an addition cannot be sustained – the order of the Tribunal is upheld – Decided against Revenue.