#creditworthiness

ITAT Delhi ruled that share premium received from investors cannot be taxed as undisclosed income under Section 68 if the assessee establishes investor identity, creditworthiness, and genuineness of transactions. The tribunal deleted a Rs. 45 lakh addition, reinforcing that valuation methods like Net Asset Value (Rule 11UA) suffice when documentation is uncontroverted.

ITAT Mumbai reiterated that under Section 68 of the Income Tax Act, the assessee must establish the lender's identity, genuineness of the transaction, and creditworthiness. Failure to prove any of these three cumulative conditions justifies addition to income, setting aside the CIT(A)'s order that overlooked proper verification of the lender's financial capacity.

ITAT Surat rules that unsecured loans cannot be treated as unexplained cash credits under Section 68 merely due to the donor's fund source, unless directly linked to the assessee. The tribunal deleted a Rs. 30 lakh addition, emphasizing that creditworthiness is established through identity, genuineness, and bank transactions, not the origin of the donor's funds.

ITAT Ahmedabad rules that for unsecured loans under Section 68, establishing the lender’s identity, creditworthiness via bank statements/ITR, and repayment through banking channels is adequate to avoid additions-even without tracing the origin of funds. This simplifies compliance for taxpayers and narrows the scope of scrutiny for revenue authorities.

ITAT Pune rules that unsecured loans from family members under Section 68 of the Income Tax Act are valid if identity, genuineness, and creditworthiness up to ₹2.5 lakh are established through bank statements and affidavits. This sets a precedent for taxpayers to defend cash credits from close relatives without tax additions, provided documentary evidence is furnished.

ITAT Pune holds that loan source credibility cannot be rejected solely on declared income; bank statements and consistent filing establish legitimacy under Section 69A.

ITAT Delhi holds that unexplained investment additions require verification of fund source and lender's creditworthiness; mere lack of business capability doesn't invalidate genuine transactions.