Unexplained credit rebutted by contemporaneous bank and ledger evidence, leading to addition under section 68 being set aside.

The note addresses whether an addition under section 68 for alleged accommodation entries was sustainable; the dominant legal principle applied is that contemporaneous documentary evidence can rebut the presumption of unexplained credits. The author records that the assessee produced bank statements, ledger and contra entries, repayment particulars showing interest, company bank records and source certificates; on that factual basis the addition was held unsustainable and set aside. The operative point: credible contemporaneous banking and ledger evidence establishing receipt and repayment of loans rebuts unexplained-credit treatment.

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Issues: (i) Whether the addition of Rs. 1,00,00,252/- made under section 68 of the Income-tax Act, 1961 on the ground of alleged accommodation entries is sustainable.

Analysis: The Tribunal examined the documentary material produced by the assessee pertaining to the loan receipts and repayments from DSR Impex Pvt. Ltd. and M.A. Financial Services Pvt. Ltd., including bank statements, ledger entries, contra entries, repayment details showing interest, company bank statements and source certificates. The Tribunal evaluated whether the evidence was sufficient to establish the genuineness of the transactions and the repayment of loans so as to rebut the addition under section 68 of the Income-tax Act, 1961.

Conclusion: The addition of Rs. 1,00,00,252/- under section 68 is not sustainable and is set aside; the appeal is allowed in favour of the assessee.

Final Conclusion: The Tribunal allowed the assessee's appeal by accepting the evidence of receipt and repayment of loans and disallowing the addition confirmed by the lower authorities.

Ratio Decidendi: Where an assessee furnishes contemporaneous bank evidence, ledger entries, contra entries, repayment particulars including interest and supporting bank statements and source certificates, such documentation, if credible, rebuts the presumption of unexplained credits under section 68 and the addition cannot be sustained.

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