BASAVANA MATHIKERE CHANNAIAH RAMAKRISHNA ,BANGALORE vs. DCIT, BANGALORE

ITA 1078/BANG/2026Status: DisposedITAT Bangalore24 September 2026AY 2018-20199 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 23,52,000 under Section 68 of the Act was not sustainable. The Tribunal noted that the primary conditions for discharging the burden under Section 68, namely the identity of the lenders, genuineness of the transactions, and creditworthiness of the parties, were met. The loans were received through banking channels, and the assessee provided confirmations and bank details. Crucially, the assessee also demonstrated repayment of the loans through banking channels, with some repayments made even before assessment proceedings. The Tribunal found that the movement of money through banking channels, coupled with confirmations, bank records, and repayment evidence, cumulatively supported the genuineness of the transactions. The Tribunal distinguished the case from situations where verification under Section 133(6) remained incomplete, stating that the other material available on record supported the transactions. The contention that no interest was paid was rejected, as payment of interest is not a mandatory condition for a loan to be genuine. The Tribunal referred to precedents like PCIT vs. Ojas Tarmake Pvt Ltd and Bharath Hi-Tech Builders Pvt. Ltd. v. ACIT. Accordingly, the order of the CIT(A) was set aside, and the AO was directed to delete the addition.

What were the facts?

The assessee, Basavana Mathikere Channaiah Ramakrishna, an individual engaged in the liquor and civil contract business, appealed an order by the Commissioner of Income Tax (Appeals) [CIT(A)] for Assessment Year 2018-2019. The CIT(A) had confirmed an addition of Rs. 23,52,000 under Section 68 of the Income Tax Act, 1961, as unexplained cash credit. The assessee had invested Rs. 43 Lakh in immovable property, claiming the source as business receipts of Rs. 9.48 Lakh and an unsecured loan of Rs. 33.52 Lakh received through banking channels from various individuals. The Assessing Officer (AO) admitted the credit was through banking but noted that only one lender, Shankare Gowda T, confirmed the transaction. Another lender, Ramakrishnaiha, denied the transaction, and two others provided inadequate replies. The AO treated the loan amount, excluding Rs. 10 Lakh from Shankare Gowda T, as unexplained cash credit.

What were the issues?

1. Whether the addition of Rs. 23,52,000 as unexplained cash credit under Section 68 of the Income Tax Act, 1961, is sustainable when the assessee has provided confirmation letters, bank statements, and evidence of repayment through banking channels? Assessee's Contentions: The assessee argued that the loans were received through banking channels and supported by confirmation letters and bank statements. A detailed reply with supporting documents was uploaded to the AO's portal but allegedly not considered. The assessee clarified a mistake in identifying a lender, providing bank statements of the correct lender (H.G. Ramakrishnaiah) and evidence of repayment. For other loans, the assessee submitted bank statements and confirmations from lenders' families, along with evidence of repayment. The assessee also contended that Section 68 could not be invoked as they declared business income on a presumptive basis under Section 44AD and did not maintain regular books of account. Revenue's Contentions: The revenue, represented by the learned DR, supported the orders of the lower authorities. The judgment does not detail the specific arguments made by the revenue beyond this general statement.

Which sections of the Income-tax Act were involved?

Section 68,Section 133(6),Section 44AD,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

PER SHRI WASEEM AHMED, ACCOUNTANT MEMBER:

The assessee has filed the present appeal against the order of the Learned Commissioner of Income Tax (Appeals) under the National Faceless Appeal Centre [hereafter the Ld. CIT(A)], passed under section 250 of the Income Tax Act, 1961 (hereafter the Act) dated 05.01.2026 for the A.Y. 2018-19. 2. The assessee has raised

The order continues below.

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