Addition Deleted Due to Proof of Creditworthiness & Genuineness of Bank Transfers

Smt. Ravikumar Jeeva Kalaivani Vs ITO (ITAT Chennai)

The appeal before the Tribunal concerned additions made under Section 69A of the Income Tax Act, 1961 for Assessment Year 2019–20, relating to unexplained money credited in the bank account of a housewife assessee. The Assessing Officer (AO) reopened the assessment based on information regarding time deposits of ₹1.59 crore and interest income. While the AO accepted the explanation for time deposits, certain bank credits amounting to ₹18,99,904 were treated as unexplained. On appeal, the Commissioner (Appeals) partly deleted ₹7,44,904 but sustained an addition of ₹11,55,000 relating to amounts received from two individuals.

Before the Tribunal, the assessee challenged the sustained addition, arguing inconsistency in the findings of the Commissioner (Appeals). It was pointed out that while the Commissioner accepted the genuineness of funds received from the assessee’s brother, similar funds transferred by his wife were rejected without justification. Evidence showed that the wife had sufficient bank balance, largely sourced from transfers from her husband’s NRE account, and had transferred ₹5 lakh to the assessee. The Tribunal observed that her bank statements reflected adequate funds, including significant credits and transfers, establishing her creditworthiness.

Regarding the amount of ₹6,55,000 received from another individual, it was noted that he was employed abroad, earning salary income and maintaining a bank account with substantial deposits. Bank records showed multiple transfers to the assessee, and his financial position indicated sufficient capacity to make such payments. The assessee had furnished supporting documents, including salary details and bank statements, to establish identity, creditworthiness, and genuineness of the transactions.

The Tribunal found that the assessee had discharged the burden of proof by substantiating the nature and source of the credits. It further noted that the revenue authorities failed to rebut this evidence. The rejection of creditworthiness by the Commissioner (Appeals) was held to be unsupported by material on record.

Accordingly, the Tribunal held that the addition of ₹11,55,000 was not justified and directed its deletion. The appeal was allowed in favour of the assessee.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 14.08.2025 for the Assessment Year (hereinafter referred to as “AY”) 2019-20.

2. The main grievance of the assessee is against the action of the Ld.CIT(A) upholding the following addition made by the AO u/s.69A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) as unexplained money received by assessee from following persons:-

3. The brief facts of the case are that the assessee is a resident individual and a housewife; and her income mainly consists of interest from Fixed Deposits, but, she didn’t file her Return of Income (RoI). The AO reopened the assessment for the relevant AY based on the following information received by him:

a. Time Deposits made by the Assessee to the tune of ₹1,59,40,000/-; and

b. Interest received from Axis Bank amounting to ₹8,09,179/-.

4. The assessee in response to the notice u/s.148 of the Act, filed her RoI disclosing interest receipts on bank deposits of ₹9,04,280/-. The AO after going through the materials/explanation called for from assessee with regard to the time deposits made by the assessee to the tune of ₹1,59,40,000/-, accepted the same. However, the AO treated the credits appearing in her bank account maintained with the Axis Bank amounting to ₹18,99,904/-, (which were not interest or proceeds from maturity of time deposit, which assessee claimed to have been received from four parties), as unexplained money u/s.69A of the Act. Aggrieved by the aforesaid action of the AO, the AO preferred an appeal before the Ld.CIT(A), who partly deleted the addition of Rs 7, by accepting the claim of assessee to have been received from two parties, as detailed hereunder:

5. Thus the Ld.CIT(A) confirmed the addition of ₹11,55,000/- i.e. amounts claimed by assessee to have been received from the following persons: –

6. Aggrieved, the assessee is in appeal before this Tribunal.

7. We have heard both the parties and perused the material available on record, we note that the aforesaid facts are not disputed and therefore the same are not repeated for the sake of brevity. The only grievance of the assessee is against the action of the Ld.CIT(A) confirming the addition of ₹11,55,000/-. In this respect, the Ld.AR of the assessee brought to our notice that on one hand the Ld.CIT(A) has accepted the genuineness of the claim of assessee about the amount of ₹6 lakhs given by her brother i.e. Mr. Chandrasekar Rajendran who was working in Saudi Arabia, but didn’t accept the amount of ₹5 lakhs given/transferred from his wife [Shantha Kumari], without assigning any reasons, which action is arbitrary, illogical, misconceived and unreasonable. The Ld.AR brought to our notice that the credits appearing in Mrs. Chandrasekar [Shantha Kumari] mainly comprises of transfers from her husband’s NRE account [refer Page No.9 PB], and that during the relevant assessment year, he was employed in M/s CIT Holdings, Saudi Arabia; and that out of her bank balance only a sum of ₹5 lakhs was transferred to the assessee [on three dates i.e. on 3^rd & 7^th & 8^th November, 2018] and drew our attention to the Axis bank extract of Mrs. Shantha Kumari placed at Annexure-7 [Page No.83-94 PB]. From perusal of the same, it is noted that there was total credit of ₹38,14,977/- in her bank account the relevant assessment year, who had a opening balance of Rs 2,81,349/-, and had a closing balance of ₹5,22,633/-, and there was transfer of funds of more than Rs 22 lakhs from her husband’s bank account. Thus, we note that Mrs. Shantha Kumari had sufficient balance in her bank account to transmit the amount of ₹5 lakhs to the account of the assessee in the month of November 2018, and when the Ld CIT(A) has accepted the identity, genuineness & genuineness of Mr. Chandrasekar Rajendran, then we find no reason to reject the amount of Rs 5 Lakhs transferred by Mrs Chandrasekar Rajendran [Shantha Kumari]. A bald assertion of Ld CIT(A) that Shantha Kumari doesn’t have creditworthiness cannot be accepted, in light of the discussion, which shows she had enough bank-balance to transfer the funds to assessee and in anyway in this case, the revenue failed to rebut the onus discharged by the assessee by proving the nature & source of the credit of Rs 5 Lakhs. Now, coming to the amount received from Mr. Bikash Kumar, it is noted that Mr. Bikash Kumar is a friend of Mr. Chandrasekar Rajendran, (brother of the assessee), who is noted to be working along with him in the same company [M/s CIT Holdings] and drawing a salary of 6700/- Saudi Riyal [₹1,20,600 approximately, refer copy of the salary certificate and certificate of income earning enclosed at Annexure-8 (Page No.95-98)]. From a perusal of the Annexure-9, which is the bank abstract of ICICI bank account of Mr. Bikash Kumar, it is noted that Mr. Bikash Kumar transferred a sum of ₹6,55,000/- on four occasions in August, 2018 and two occasions in September, 2018. Further, it is noted that Mr. Bikash Kumar had total deposits of ₹33,84,072/- and had a opening balance of Rs 7,71999/- & closing balance of ₹3,85,633/- in his bank account and credited Rs 33,84,072/- in his account. And the bank statement shows that Mr. Bikash Kumar has transferred ₹6,55,000/- to the assessee as noted supra on six occasions. Since assessee has furnished the details of ₹6,55,000/- she received by adducing evidence to show the nature & source viz identity, creditworthiness & genuineness of the transaction in question, assessee is noted to have discharged the burden of proof on her, which has not been rebutted by AO/CIT(A). Hence, we are of the view that the assessee has proved the nature and source of the credits of ₹11,55,000/- [₹6,55,000/- from Mr. Bikash Kumar & ₹5 lakhs from Mrs. Santha Kumari]. Hence, we are of the view that the Ld.CIT(A) erred in holding that Mrs. Santha Kumari & Mr. Bikash Kumar didn’t have the creditworthiness. Therefore, we direct the deletion of ₹11,55,000/- sustained by the Ld.CIT(A).

8. In the result, appeal filed by the assessee is allowed.

Order pronounced on the 08^th day of April, 2026, in Chennai.