The AO made an addition u/s. 68 as unexplained cash credit on the grounds that the lender failed to respond to the notices issued u/s. 133(6), and therefore, the genuineness of the transaction and the creditworthiness of the lender could not be established.

Held that the lender’s financial background was reasonable, the loan was repaid through an account payee cheque, and the source of funds was explained satisfactorily, the assessee had adequately explained the nature and source of the credit in its books. Therefore, the impugned addition u/s. 68 was unjustified and deleted. The failure of the lender to respond to notices u/s. 133(6) did not negate the satisfactory explanation provided by the assessee regarding the loan transaction.(AY. 2016-17)