Addition under Section 69A for repaid prior-year loan routed

Addition under Section 69A for repaid prior-year loan routed through banking channels is unsustainable.

Issue

Whether an addition under Section 69A can be sustained as unexplained money on account of alleged bogus accommodation entries when the loan was actually received in a preceding assessment year, repaid through banking channels with interest, and fully recorded in the books of account.

Facts

Assessee & Loan Details: The assessee obtained a loan of ₹1.50 crores from Aarohi Creations LLP during Assessment Year 2018–19.
Repayment & Interest: The loan was repaid through regular banking channels along with interest paid at the rate of 9% per annum.
AO’s Action: For Assessment Year 2019–20, the Assessing Officer (AO) reopened the assessment under the mistaken premise that the assessee received a fresh loan during the year.
Addition: The AO made an addition of ₹1.56 crores under Section 69A based on statements recorded under Section 132(4) regarding bogus accommodation entries.
CIT(A) Relief: The CIT(A) deleted the addition after noting that no fresh loan was received in AY 2019–20, the original loan pertained to the preceding year, and all transactions were routed through banking channels and reflected in the assessee’s books and tax returns.

Decision

Absence of Fresh Loan: The tribunal/court affirmed that no fresh loan transaction occurred during the relevant assessment year (AY 2019–20) to warrant an addition under Section 69A [Para 7].
Genuine Banking Transactions: Since the loan originated in the prior year and was repaid via regular banking channels with proper interest disclosures in the books, the addition made by the AO was unsustainable [Para 7].
Outcome: Decided in favor of the assessee; impugned addition deleted [Para 7].

Key Takeaways

No Section 69A Addition Without Current-Year Receipt: Section 69A cannot be invoked for an assessment year in which no fresh loan or money was received by the assessee.
Weight of Banking Channels and Books: Prior-year loans properly accounted for, repaid through banking channels, and accompanied by interest payments cannot be summarily treated as unexplained accommodation entries based solely on generic statements.

IN THE ITAT DELHI BENCH ‘C’

ACIT

Rajiv Sharma^*

Sunil Kumar Singh, Judicial Member
and S.RIFAUR RAHMAN, Accountant Member

IT Appeal No. 379 (Delhi) of 2026
[Assessment year 2019-20]

AUGUST 24, 2026

Piyush Kaushik, Adv. for the Appellant. G.P. Singh, Sr. DR for the Respondent.

ORDER

S. Rifaur Rahman, Accountant Member.- This appeal is filed by the Revenue against the order passed by the ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [for short ‘ld. CIT (A)] dated 19.11.2025for the Assessment Years 2019-20 raising following grounds of appeal :-

On the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the addition amounting to Rs.1,55,91,879/-made on account of unexplained money u/s69A of the Act by ignoring the fact that this was a search related case and main person Shri Lokesh Kumar Khabya and Shri Sourabh Sethi in their statement recorded u/s 132(4) of the Income Tax Act, 1961 has admitted the modus operandi of their working of providing the bogus accommodation entries to various entities through various bank accounts. M/s Aarohi creations LLP is one of the beneficiary entities of the same, which was provided accommodation entry through the assessee.

On the facts and circumstances of the case, the Ld. CIT(A) has erred in ignoring the fact that assessee has not provided complete bank statement of his father and in this part statement certain suspicious transactions were noted. For instance, as on 17.05.2018 the available balance was Rs.5,23,759/- and after this on 31.07.2018 the available balance was Rs.1,02,43,567/- which was very high increase from the previous balance. Same, as on 03.08.2018, the available balance was Rs.71,76,459/- and on 3l.09.2018 the available balance was Rs.33,47,286/-. Further, as on 10.10.20218, the available balance wasRs.2,18,506/- and on 05.11.2018 the available balance was Rs.43,55,877/-, which indicates that assessee has provided the accommodation entries to 447s. Aarohi Creations LLP sourced from unexplained credits.

2. At the time of hearing, Ld DR submitted that Ld CIT(A) had given relief to the assessee without appreciating the detailed findings of AO. He submitted that the addition was made on the basis of modus operandi of Shri Lokesh Kumar Khabya and Shri Sourabh Sethi and their working of providing bogus accommodation entries to various entities through various bank accounts. M/s Aarohi creations LLP is one of the beneficiary entities of the same, which was provided accommodation entry through the assessee. Therefore, he relied on the detailed findings in the assessment order.

3. On the other hand, ld. AR of the assessee submitted that AO has reopened assessment on the basis of fresh loan taken by the assessee in the year under consideration whereas the loan was outstanding during the year under consideration and the loan was taken in the earlier years. In this regard, he brought to our notice detailed findings of the ld. CIT (A) at page 8 of the appellate order and he heavily relied on the above detailed findings.

4. In the rejoinder, ld. DR objected to the above submissions made by the ld. AR and submitted that the issue under consideration may be remitted back to the AO to appreciate the facts on record. In this regard he relied on the decision of Aarohi Creations LLP, Surat v. DCIT order dated 19.11.2025.

5. Considered the rival submissions and material placed on record. We observed that the assessee received loan from Aarohi Creations LLP of Rs.1,50,00,000/- not during the year under consideration. But the above loan was received during the A.Y 2018-19 but not in the current A.Y. under consideration and the assessee also filed details of repayment of the above loan during the current A.Y. Therefore, we observed that the facts stated by the AO are not supported by proper material, hence, the AO lacks jurisdiction to reopen the case. In this regard, we observed that ld. CIT (A) relied on the decision of Hon’ble Supreme Court in the case of CIT, Delhi v. Kelvinator of India Ltd. 320 ITR 561 (SC) wherein it is held that “tangible material should be needed which should have live link with the facts of the case to establish that there was escapement of income”

6. Further we observed from the findings of the ld. CIT (A) that the assessee had taken loan during A.Y 2018-19 from Aarohi Creations LLP and the same was repaid during the current A.Y as under:

Date	Deposit
03.05.2018	48,00,000/-
17.08.2018	32,00,000/-
05.10.2018	15,00,000/-
06.10.2018	5,00,000/-
14.11.2018	5,00,000/-
14.11.2018	15,00,000/-
28.01.2019	15,00,000/-
28.01.2019	5,00,000/-
11.03.2019	10,00,000/-

7. We observed that these repayments were made through the assessee’s bank account held with Standard Chartered Bank, Ac No. 52610808539. Thus, as per the assessee’s submissions the loan was taken during the A.Y 2018-19 and repaid during the current A.Y. We further observed that the assessee had paid interest rate @ 9% p.a on the above loan and last interest also paid of Rs.5,91,679/- on 29.06.2019. Thus, from the facts and circumstances of the case, it is seen that the AO misdirected himself in coming to a conclusion that the above loan is a fictitious loan whereas facts and circumstances clearly indicate that the above loan was taken from banking channels and the same was repaid through the banking channels. Further, we observed that all these transactions were routed through banking channels and reflected in the assessee’s books/returns. Therefore, treating the same as unexplained money is incorrect. We also observed that the AO also did not bring any corroborative material to substantiate the addition. In view of the above, we are inclined not to disturb the findings of the ld. CIT (A) and upheld the same and dismissed the grounds raised by the Revenue.

8. In the result, the appeal of the Revenue is dismissed.