#Unsecured Loan

The ITAT ruled that an unsecured loan taken and fully repaid within the same financial year cannot be treated as unexplained income under Section 68, provided the assessee furnishes satisfactory documentary evidence. This prevents automatic tax additions on short-term loans and safeguards businesses from unwarranted tax liability.

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.