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2025 (2) TMI 706 - AT - Income TaxAddition u/s 69A - unexplained money - Nature of the banking transactions and cheques deposited by the appellant - HELD THAT - The assessee has submitted due evidences to explain that the transaction in the bank statement reflect post dated cheque issued and cross barer cheque against the cheques received. The cheques received were deposited on the same day. On the due date the post dated cheques were being credited. It is a system of obtaining loans by issuing post dated cheques which are encashed within 90 to 110 days for availing credit. With regard to finance obtained from Radhe Corporation Shankar Corporation and Krishna Enterprise the Ld.AR submitted all details such as PAN Bank Statement extract reflecting the finance received substantiating the Genuineness of the said Party ITR Acknowledgement of the return filed by the said Party for AY 2013-14 substantiating the Creditworthiness of the said Party Ledger Confirmation of the said party substantiating the Identity PAN Sample copy of cheques issued to the said Party which are obtained from Bank. The three kay ingredients being Identity Genuineness and Creditworthiness of the said parties being proven the said transactions cannot be said to be bogus. All the documents prove that the assessee have received short term finances and also repaid the amounts. Hence we hold that no addition in this is called for. Appeals of the assessee are allowed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Addition under Section 69A Relevant legal framework and precedents: Section 69A of the Income Tax Act pertains to unexplained money, bullion, jewelry, or other valuable articles not recorded in the books of account and for which the assessee offers no satisfactory explanation. Court's interpretation and reasoning: The Tribunal examined whether the funds credited to the appellant's bank account were unexplained. The Tribunal noted that the appellant provided evidence of post-dated cheques and regular banking transactions, suggesting these were part of financial operations rather than unexplained money. Key evidence and findings: The appellant submitted bank statements, confirmation of account from involved parties, and evidence of transactions with Radhe Corporation, Shankar Corporation, and Krishna Enterprises. The appellant argued these were legitimate financial transactions involving post-dated cheques. Application of law to facts: The Tribunal found that the appellant had sufficiently demonstrated the identity, genuineness, and creditworthiness of the parties involved. The transactions were consistent with regular financial operations, not accommodation entries. Treatment of competing arguments: The appellant's argument was that these transactions were part of a financing arrangement using post-dated cheques, not unexplained money. The Tribunal found this explanation credible and supported by documentary evidence. Conclusions: The Tribunal concluded that the addition under Section 69A was not justified, as the appellant provided sufficient evidence to demonstrate the legitimacy of the transactions. 2. Nature of Banking Transactions Relevant legal framework and precedents: The assessment of banking transactions involves examining the nature and purpose of the transactions to determine if they are genuine or part of an accommodation entry scheme. Court's interpretation and reasoning: The Tribunal considered the appellant's explanation that the transactions were part of a financing arrangement involving post-dated cheques, which is a common practice in business. Key evidence and findings: The appellant provided evidence of post-dated cheques, bank statements, and confirmations from involved parties to substantiate the claim of legitimate financial transactions. Application of law to facts: The Tribunal found that the appellant's explanation was consistent with the evidence provided and reflected a legitimate business practice rather than an attempt to conceal unexplained income. Treatment of competing arguments: The Tribunal considered the revenue's argument that these were accommodation entries but found the appellant's evidence and explanation more compelling. Conclusions: The Tribunal concluded that the nature of the banking transactions was consistent with regular financial operations, not accommodation entries. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: "The three key ingredients being Identity, Genuineness, and Creditworthiness of the said parties being proven, the said transactions cannot be said to be bogus." Core principles established: The Tribunal emphasized the importance of the assessee providing credible evidence to demonstrate the legitimacy of transactions and the necessity of the revenue authorities to consider such evidence before making additions under Section 69A. Final determinations on each issue: The Tribunal allowed the appeals of the assessee, concluding that the transactions were genuine financial operations and not unexplained money under Section 69A.
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