2025 (2) TMI 1390 - AT - Income Tax

Unexplained credits from close relatives: tribunal accepts identity, genuineness and creditworthiness evidence; relief granted to assessee.

Addition under unexplained credits challenged on basis that assessee failed to prove identity, genuineness and creditworthiness of lenders; tribunal found ... Addition made u/s 69A - amounts received by the assessee from close relatives during the year which were treated as unexplained - As argued onus on the assessee to prove the identity of the creditors, the genuineness of the transactions and their creditworthiness has been fully discharged HELD THAT:- In respect of the three amounts in dispute all the three transactions, the identity, genuineness and creditworthiness of the concerned entities have been established. It is also to be noted that all the transactions have been made with close family members through banking channels. Assessee has sufficiently discharged the onus to establish the key ingredients viz. identity, creditworthiness and genuineness of the lenders, in respect of these credits. Since all three entities are independently assessed to income tax, addition, if any, could only be considered in their individual hands. Appeal of the assessee is allowed. Issues: Whether the addition of Rs. 13,60,000 made under Section 69A of the Income-tax Act, 1961 treating amounts received from close relatives as unexplained receipts was justified.Analysis: The assessee furnished loan confirmations, bank statements, income-tax return acknowledgements and balance sheets to establish identity, genuineness and creditworthiness for amounts received from close relatives. The transactions were routed through banking channels and the lenders concerned were independently assessed to income tax. The material produced during remand proceedings was accepted by the Assessing Officer in his remand report and the documentary evidence pertains to repayment of earlier loans and return of amounts earlier advanced.Conclusion: The addition of Rs. 13,60,000 made under Section 69A of the Income-tax Act, 1961 in respect of the credits from close relatives is not justified and is deleted; the assessee's appeal is allowed.Ratio Decidendi: Where a taxpayer proves identity, genuineness and creditworthiness of creditors with supporting documents and transactions are through banking channels to persons who are independently assessed to tax, additions under Section 69A cannot be made in the assessee's hands; any tax effect, if applicable, must be considered in the hands of the respective creditors.