ITAT Dismisses Rs. 6.80 Cr Addition u/s 69A as Finds Transactions Duly Recorded and Explained by Assessee [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal and upheld the deletion of a Rs. 6.80 crore addition made under Section 69A of the Income Tax Act, 1961, by noting that the assessee had sufficiently explained the transactions, which were duly recorded in his books of account, and the Department failed to disprove the evidence provided.

Coming to the facts of the case, Raman Bhai Jagbhai, the assessee, had filed his income tax returns. The department observed high-value transactions in the assessee’s bank account during the demonetization period in November 2016. The Assessing Officer (AO) had alleged that Rs. 6.80 crore credited and debited from the account constituted unexplained income under Section 69A.

However, the assessee contended that the amounts were linked to legitimate land transactions and loan repayments. He submitted detailed documentation, including registered agreements (Banakhat), ledger accounts, bank statements, and confirmations from parties like M/s. Ashtavinayak Realty Pvt. Ltd. and M/s. Green City Farms Pvt. Ltd.

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The Commissioner of Income Tax (Appeals) [CIT(A)] had deleted the addition, noting that the assessee had discharged his burden of proof by providing evidence of the nature and source of the funds. The ITAT noted that Section 69A applies only to unaccounted money or assets not recorded in books. Here, the transactions were properly documented, and the revenue did not conduct independent inquiries to counter the assessee’s claims. The bench also noted that the AO failed to issue notices or summonses to verify the transactions, despite having access to all supporting documents.

Regarding the Rs. 1.90 crore received from Agarwal Enterprise, the bench accepted the assessee’s explanation that it was a repayment of an advance, supported by ledger entries, confirmations, and the lender’s income tax returns. The Tribunal observed that refunds of advances cannot be taxed as income under Section 68 or 69A of the Income Tax Act.

The ITAT held that “by keeping in view the settled principle that refund of money from earlier

advances cannot be added under Section 68 of the Act, we find no infirmity

in the order of Ld. CIT (Appeals) so as to call for any interference.”

The ITAT comprising Siddhartha Nautiyal (Judicial Member) and B.R.R. Kumar (Technical Member) dismissed the revenue’s appeal.

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