2026 (3) TMI 279 - AT - Income Tax

Rotation of funds via bank auto sweep accepted as source; addition under unexplained credits provision deleted on evidentiary review.

Appeal concerns deletion by the CIT(A) of an addition under Section 69A read with Section 115BBE where the appellate authority accepted the assessee's ... Addition u/s 69A r/w section 115BBE - reliance on bank auto-sweep transactions as rotation of funds - Whether the addition made u/s 69A r/w section 115BBE was sustainable in view of the assessee's explanation and supporting material? - CIT(A) deleted addition - HELD THAT:- Tribunal examined the facts considered by the CIT(A) that the assessee is a housewife, that a fixed deposit was made in her name from her husband's retirement benefits, and that the large credits in the savings account were explained by the Auto Sweep/Auto Sweep FD facility which created and liquidated FDs automatically, producing rotating credits and debits. CIT(A) analysed bank statements, retirement benefit documents and the joint nature of accounts and found the transactions to be explainable as rotation of the same funds rather than undisclosed income. Having considered the materials on record and the explanation offered, Tribunal found no infirmity in the CIT(A)'s reasoning or conclusion and agreed that the addition was not justified on the facts. [Paras 3, 7] The deletion of the addition u/s 69A r/w section 115BBE is upheld. Final Conclusion: Tribunal found the CIT(A)'s factual and evidential analysis sustainable: the addition u/s 69A r/w section 115BBE was correctly deleted on the explanation of rotation of funds through the bank's Auto Sweep facility and retirement-benefit/joint-account evidence, and the appellate authority's admission and reliance on those documents did not occasion reversible error - revenue's appeal is dismissed. Issues: (i) Whether the order of the CIT(A) deleting the addition of Rs. 1,55,34,265/- made under Section 69A read with Section 115BBE of the Income-tax Act, 1961, by accepting the explanation of rotation of funds due to the bank's auto sweep facility and retirement benefits as source, is sustainable.Analysis: The appellate authority examined bank statements, documents regarding retirement benefits, and evidence showing joint accounts and recurring debits and credits attributable to an auto sweep/fixed deposit facility. The appellate authority evaluated whether the assessee discharged the evidentiary burden to demonstrate genuineness and source of the credited amounts, and whether the assessing officer had properly analysed and verified the transaction pattern before making additions under the cited provisions. The appellate authority also considered the admissibility and relevance of retirement benefit documents and joint account records in establishing source and nature of transactions.Conclusion: The deletion of the addition is upheld and the addition made under Section 69A read with Section 115BBE of the Income-tax Act, 1961 is not sustained; the assessing officer's order is set aside in respect of the challenged addition.