Gujarat HC Sustains Disallowance as Assessee Fails to Substantiate Genuineness of Loan Transaction:

Gujarat HC Sustains Disallowance as Assessee Fails to Substantiate Genuineness of Loan Transaction The Gujarat High Court upheld the order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad, in a case involving Rs 6,77,450 cash credits. During a search at the house of the assessee (Shantilal Khimjibhai Uchadadia), cash of Rs 6,77,450 was found. Out of this amount, the assessee claimed that Rs 5,35,000 belonged to M/s. Ohm Developers and Rs 56,000 belonged to his wife. However, he later changed his statement and said that Rs 1,42,450 belonged to his wife. He said that this amount was given as a loan. However, the assessee did not submit a list confirming the names and addresses of the persons to whom the amounts were given as loans.

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Although the assessee submitted the list of only three persons, none of them confirmed that the loans were taken out by them. Since the assessee had failed to substantiate the genuineness of the transactions, and he made new statements, the AO added Rs 6,77,450 to the income of the assessee on account of cash credits. The Tribunal upheld this decision, noting that there was a change of stand and the assessee failed to substantiate the creditworthiness of the transaction. The court agreed with the tribunal's findings and upheld the addition, rejecting the assessee's appeal.