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2020 (11) TMI 223 - AT - Income TaxUnsecured loan received from the directors - Additions u/s 68 - HELD THAT:- In respect of the loans taken from the Directors of the Company, the assessee has submitted the relevant documentary evidences to establish the genuineness, creditworthiness and capacity of these loanee. Section 68 is applicable in the case where the assessee offers no explanation about the nature and source therewith or the explanation offered by him is not in the opinion of the AO satisfactory in respect of the sum so credited which may be charged to income tax. In the present case, the AO failed to record his opinion and satisfaction as to why the sum credited in the books of account of the assessee is coming under the purview of Section 68. The explanation offered by the assessee that the bank account and the capacity of the creditor who have given the loan amount was proved through ITR details of the said parties along with bank statements and confirmations which clearly shows the proper balance in their respective bank accounts and their capacity to loan the amount to any other party as well. Thus, all these factor were ignored by the CIT(A) as well as the AO - CIT (A) was not right in dismissing the plea of the assessee and sustaining the addition. Hence, appeal of the assessee is allowed.
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