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Judgment
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as 'the CIT(A)') dated 10.11.2025, for AY 2017-18.
The assessee in appeal has assailed the order of CIT(A) in confirming addition of Rs.6,38,550/- as unexplained cash credit u/s.68 r.w.s. 115BBE of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). The assessee has further assailed addition of Rs.1,45,483/- under the head 'income from other sources', and confirmed by the CIT(A).
Shri Rajiv S Khandelwal appearing on behalf of the assessee submits that the assessee is a proprietorship concern, engaged in contractual work of data processing. The Assessing Officer (AO) and the CIT(A) have failed to consider the fact that the credits in the bank statement of the assessee are primarily from fixed deposits and the term deposit through sweep in facilities. The credit entries in the bank account of the assessee are merely contra entries between two bank accounts in the name of the assessee and does not represent any fresh in flow of funds from the third party. The CIT(A) and the AO has alleged that the assessee has transactions with Shri S K Aggarwal. The assessee has categorically denied having any transaction whatsoever with Shri S K Aggarwal or any of his concerns. The ld. AR referred to the list of transactions during the relevant period at pages 19 to 23 of the paper book. He pointed that all the transactions are subject to TDS and within different bank accounts of the assessee.
With regard to addition of Rs.1,45,483/-, the ld. AR submits that the said amount represents the interest income disclosed in the return of income. There is difference in the interest income reflected in return of income and as per TDS details. The difference is for the reason that the assessee in return of income has disclosed only interest accrued/received during the relevant Financial Year as per its books. The remaining interest though subject to TDS, pertain to different period and was not receivable in the relevant period. The ld. AR thus prayed for deleting the addition.
Per contra, Shri Manoj Kumar, representing the department vehemently defending the impugned order prayed for dismissing appeal of the assessee.
Both sides heard, orders of the authorities below examined. The assessee in appeals has assailed addition of Rs.6,38,550/-. The said addition has been made by the AO treating it to be an accommodation entry from Shri S. K Aggarwal. The assessee has categorically denied having any transaction with Shri S.K Aggarwal or any of his concern. No independent enquiry was made by the AO after reply of the assessee categorically denying any transaction with Shri S.K Aggarwal. The AO has made addition merely on the basis of information received from Investigation Wing. The credit entries in the bank statement are stated to be contra entries from the bank account of the assessee. Considering entire facts and documents on record, I find merit in submissions of the assessee. A perusal of bank statement available on record shows that the amount credited in the bank account of the assessee are sweep in/redemption of the amounts. Hence, addition of Rs.6,38,550/- is directed to be deleted.
As regards the addition of Rs.1,45,483/-, the said amount is stated to be the interest earned/accrued during the relevant period and reflected in the return of income by the assessee. This amount is part of total amount of interest income on which TDS has been already deducted and reflected in the TDS details. Hence, no addition of the aforesaid amount is warranted. Accordingly, addition of Rs.1,45,483/- is directed to be deleted.
In the result, appeal of the assessee is allowed.