Section 69A additions deleted as unexplained advances properly recorded with bank statements and party confirmations

ITAT Mumbai upheld CIT(A)'s deletion of additions under Section 69A regarding unexplained advances. Despite date punching errors in books, loan transactions were properly recorded with bank statements and party confirmations. Court held Section 69A provisions not satisfied as assessee wasn't owner of unrecorded assets. Additionally, ITAT confirmed deletion of Rs.1.70 crores addition relating to transactions with supplier company, finding it part of previously decided Rs.2 crores transaction and constituted double addition by AO. Revenue's appeal dismissed.

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Issues Involved:
1. Deletion of addition of Rs. 2,00,00,000 under Section 69A of the Income Tax Act for A.Y. 2015-16.
2. Deletion of addition of Rs. 57,131 under Section 69A of the Income Tax Act for A.Y. 2015-16.
3. Deletion of addition of Rs. 1,70,00,000 under Section 69A of the Income Tax Act for A.Y. 2016-17.

Detailed Analysis:

1. Deletion of Addition of Rs. 2,00,00,000 under Section 69A for A.Y. 2015-16:
The assessee filed its return for A.Y. 2015-16 on 29th September 2015, which was processed without scrutiny. A notice under Section 148 was issued on 31st March 2021 based on findings that the assessee was involved in providing accommodation entries to Outstrip Suppliers Pvt. Ltd. The Assessing Officer (AO) noted a transaction of Rs. 2 crores on 5th March 2015, which was not recorded in the assessee's books. The assessee explained that this transaction was erroneously recorded on 5th April 2015 instead of 5th March 2015. The AO did not accept this explanation and made an addition under Section 69A of Rs. 2 crores.

The CIT (A) deleted the addition, noting that the AO's conclusion was based on an incomplete investigation and that the assessee provided sufficient documentary evidence, including bank statements and confirmations from VVF (India) Ltd. The CIT (A) emphasized that the transaction was duly recorded in the books and that the funds were repaid, thus not satisfying the conditions for invoking Section 69A. The Tribunal upheld the CIT (A)'s decision, agreeing that the AO's selective approach was not justified and that the provisions of Section 69A were not applicable as the assessee was not found to be the owner of any unexplained money.

2. Deletion of Addition of Rs. 57,131 under Section 69A for A.Y. 2015-16:
The AO also noted a discrepancy of Rs. 57,131 in the closing balance of the bank account, which was added to the assessee's income under Section 69A. The CIT (A) deleted this addition as well, considering it consequential to the primary addition of Rs. 2 crores. The Tribunal agreed with the CIT (A) that the discrepancy was minor and did not warrant a separate addition under Section 69A.

3. Deletion of Addition of Rs. 1,70,00,000 under Section 69A for A.Y. 2016-17:
For A.Y. 2016-17, the AO made an addition of Rs. 1.70 crores, which was part of the Rs. 2 crores transaction from A.Y. 2015-16. The CIT (A) deleted this addition, noting that it was part of the same transaction already addressed in A.Y. 2015-16. The Tribunal upheld this decision, confirming that the addition amounted to double counting and was not justified.

Conclusion:
The Tribunal dismissed the appeals of the AO for both A.Y. 2015-16 and 2016-17, upholding the CIT (A)'s deletion of the additions under Section 69A. The Tribunal found that the transactions were duly recorded and explained, and the AO's selective approach and incomplete investigation did not justify the additions. The provisions of Section 69A were not applicable as the assessee was not found to be the owner of any unexplained money.

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