JAYESH KISHINDAS VORA,MUMBAI vs. ITO - 32(1), MUMBAI

Ground Nos. 1 to 4 raised by the assessee relates to challenging the order of the Ld. CIT(A) in confirming the addition of Rs.1,98,000/- under Section 69A read with Section 115BBE of the Act. Therefore, we have decided to

The Ld. AR appearing on behalf of the assessee reiterated the same arguments as were raised before the Revenue Authorities and also relied upon the written submissions filed before us. On the other hand, the Ld. DR appearing on behalf of the Revenue relied upon the orders passed by the Revenue Authorities.

We have heard the counsel for both the parties, perused the material placed on record, the judgments cited before us, and the orders passed by the Revenue Authorities. From the records, we noticed that the assessee is an individual and, for the year under consideration, had filed his return of income under Section 139(1) of the Act. Subsequently, upon information received by the Department through the Insight Portal, it emerged from a search action conducted under Section 132 of the Act on 05.07.2022 in the case of Ashwin Kumar Mali. During the course of the search, a statement of the said Ashwin Kumar Mali was recorded under Section 132(4) of the Act, in which he admitted to running and controlling various concerns for the purpose of providing accommodation entries in the nature of bogus sales and purchases and unsecured loans in lieu of cash. One of the concerns controlled by him was Ambika Trading Company, with

The Ld. AR specifically submitted that the assessee had duly responded to all show cause notices issued by the Department and, in response thereto, categorically submitted the ledger accounts and explained that the transactions appearing during the year with Ambika Trading Company represented only repayment of loans taken in earlier years and were duly recorded in the regular books of account. It was further submitted that no fresh loan was taken during the relevant year and that all transactions were genuine and carried out through banking channels.

However, the AO, while framing the assessment order, made an addition under Section 69A read with Section 115BBE of the Act on account of unexplained money on the premise that the assessee had availed accommodation entries amounting to Rs.1,98,000/-. The said order was challenged before the Ld. CIT(A), but the same was upheld.

Now, both the parties have argued at length. After considering the entire material placed on record, we find that during the course of assessment proceedings, the assessee had submitted the ledger accounts of Ambika Trading Company as appearing in his books for FY 2018– 19, 2019–20, and subsequent years. The said ledger clearly

The assessee had also placed on record Form 16A evidencing deduction and deposit of tax at source under Section 194A in respect of the said interest payment, thereby establishing the genuineness of the transaction and its proper recording in the regular books of account.

We also noticed that the payments and repayments were entirely made through proper banking channels, and there is no finding in the assessment order that the money was received back in cash or that the assessee had introduced his unaccounted money. Moreover, the additions in the present case were made solely on the basis of general statements recorded from Ashwin Kumar Mali during the search proceedings, without bringing any material on record to demonstrate that the specific transactions of the assessee were non-genuine.

Further, no incriminating material relating to the assessee has been referred to in the assessment order. Also, no opportunity for cross-examination of the said

Section 69A, in our view, applies where the assessee is found to be the owner of unexplained money not recorded in the books of account. However, in the present case, the transactions are fully recorded in the books, therefore, the very foundation for invoking the provisions of Section 69A of the Act is absent.

We are further of the view that the assessee had discharged his primary onus by furnishing basic documentary evidence such as ledger accounts, bank details, and TDS certificates, and demonstrated that the transactions represented repayment and interest on earlier loans. Once such documentary evidence was furnished, the burden shifted upon the Department to establish, with cogent and convincing evidence, that the transactions were sham. No such independent inquiry or verification has been carried out, and the additions have been sustained merely on assumptions and general observations regarding the alleged activities of Ashwin Kumar Mali, without establishing any nexus with the assessee’s specific transactions.

It is also pertinent to mention here that the addition of Rs.1,98,000/- represents only the interest component and not any unexplained money found in the possession of the assessee. Therefore, treating the same as unexplained money under Section 69A read with Section 115BBE is not legally sustainable and is contrary to the facts on record. In this proposition, reliance has been placed on following judicial precedents:

Considering the totality of the facts and circumstances of the case, and in view of the discussion made above, we hold that no addition under Section 69A read with Section 115BBE is warranted in the present case. Accordingly, we direct the AO to delete the same.

In the result, the appeal filed by the assessee stands allowed with no order as to cost. Order pronounced in the open court on 29.04.2026 Sd/- Sd/- (BIJAYANANDA PRUSETH) (SANDEEP GOSAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER