Accommodation entries and unexplained income: assessee's bank records disproved alleged transaction, addition deleted on appeal.

Assessee contested an addition for unexplained income alleged as an accommodation entry from a third party, arguing the transaction did not appear in its sole bank account and the assessment relied on a third party confirmation without corroborative documents. ITAT found the assessee produced its bank statement showing no such receipt and concluded the assessment arose from mistaken identity due to similar names; the assessee had discharged its obligation to adduce negative evidence by documentary proof. Consequentially the addition sustained by CIT(A) was deleted and the appeal allowed in favour of the assessee.

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Issues: Whether the addition of Rs. 20,00,055/- as unexplained income under Section 68 of the Income-tax Act, 1961 arising from alleged accommodation entry by Anubhav Commosale Private Limited should be sustained against the assessee where the assessee denies the transaction and places bank statements and corroborative evidence showing no receipt of the amount.

Analysis: The issue was examined on the basis of documentary material on record including bank statements and bank confirmations. Evidence showed that two of the three payments alleged by the revenue related to a different similarly named company (Blue Chip Financial Consultants Private Limited) and corresponding bank records from the Central Bank of India corroborated that the transactions of Rs. 25,00,000/- and Rs. 20,00,055/- (totaling Rs. 45,00,000/-) related to that other entity; the assessee placed its bank statement showing no receipt of the impugned amounts in its sole bank account. For the remaining sum of Rs. 20,00,055/-, the appellate authority had relied on a bank statement showing payment to "M/s. Blue Chip Private Limited", but the assessee demonstrated absence of any such banking entry in its account and highlighted the likelihood of mistaken identity given the similarity of names. The assessee provided corroborative documentary evidence sufficient to rebut the addition, and the revenue was unable to produce contrary bank evidence specifically linking the payment to the assessee.

Conclusion: Addition of Rs. 20,00,055/- as unexplained income under Section 68 of the Income-tax Act, 1961 is deleted; the appeal is allowed in respect of this amount in favour of the assessee.

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