Interest-free loans from family, and savings built up over decades. Does the department have to accept that?
Largely, yes, on evidence. Genuineness cannot be doubted merely because the lenders are relatives, particularly where their own returns are produced. Of the Rs 9 lakh still in dispute before the Tribunal, Rs 8 lakh was deleted and Rs 1 lakh sustained.
Decided by the ITAT (ITAT Panaji Bench — Pavan Kumar Gadale (Judicial Member) and Dr. Manish Borad (Accountant Member)) on 2026-06-30, reported as ITA No. 484/PAN/2025, assessment year 2017-18 (unreported). It bears on section 68, section 69A, section 115BBE of the Income Tax Act 1961, in Cash Credits & Unexplained Money matters.
This is the ordinary salaried household's version of a s.68 case, and it shows what actually persuades a bench: a documented income history over years, and the lender's own return. Not affidavits.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
For assessment year 2017-18 the assessee declared income of Rs 2,65,000 and had deposited Rs 12,91,000 in cash during the demonetisation period. He explained it as a loan of Rs 4,00,000 from his co-brother, a loan of Rs 2,00,000 from his sister-in-law's son, Rs 2,00,000 from his wife's savings and Rs 3,00,000 from his own savings accumulated over the last twenty to twenty-five years. The Assessing Officer added Rs 12,06,000 under s.69A read with s.115BBE. The Commissioner (Appeals) accepted the Rs 2,00,000 attributed to the wife and reduced the addition to Rs 9,00,000, and it was that Rs 9,00,000 that came before the Tribunal. In support the assessee had produced the two lenders' names, addresses, permanent account numbers and income tax returns, and an affidavit stating that he was sixty-five years old and had worked for almost twenty-two years at Bombay Restaurant on Rs 12,500 a month.
The appeal was partly allowed. Although the addition had been made under s.69A, the Tribunal held at para 9 that s.68 was what was triggered, the assessee having claimed interest-free loans from relatives, so that identity, creditworthiness and genuineness had to be established. On the Rs 6,00,000 of loans it found at para 10 that names, addresses, permanent account numbers and returns had been furnished for both lenders, whose gross incomes over three years were Rs 3,30,600, Rs 4,18,707 and Rs 3,98,660 for the co-brother and Rs 1,84,926, Rs 2,08,557 and Rs 2,90,447 for the sister-in-law's son, and it held at para 11 that no addition of Rs 6,00,000 was called for. On the Rs 3,00,000 of accumulated savings it accepted Rs 2,00,000 as credible on the affidavit evidence and sustained Rs 1,00,000 (para 12). Of the Rs 9,00,000 in dispute, Rs 8,00,000 was deleted and Rs 1,00,000 sustained (para 13). Nothing was restored to the Assessing Officer.
The order has now been read from the Tribunal's own text. Its route is evidentiary rather than doctrinal. The Bench first corrected the provision: the addition had been made under s.69A read with s.115BBE, but where the assessee's own explanation is that the money came in as loans, it is s.68 that is triggered and the three-limbed test of identity, creditworthiness and genuineness that applies (para 9). It then applied that test on the material actually filed — names, addresses, permanent account numbers and the lenders' own returns, with three years of gross income for each — and was satisfied (paras 10 and 11). On the accumulated savings it worked from the affidavit of employment history and monthly wage and accepted two-thirds of the figure as credible, sustaining the balance (para 12). What the standard requires when the surrounding circumstances point the other way is set out at High Court level, on the revenue's side of the line, in ACIT v. Agrawal Infrabuild (P.) Ltd. [2025] 178 taxmann.com 374/307 Taxman 153 (Chhattisgarh)/[2026] 484 ITR 558, 4 September 2025: identity, creditworthiness and genuineness must be established cumulatively, and permanent account numbers, returns and bank records are relevant but not conclusive (paras 12 and 13, applying Pr. CIT v. NRA Iron & Steel (P.) Ltd. [2019] 103 taxmann.com 48/262 Taxman 74/412 ITR 161 (SC)).
Out of the addition of Rs.9.00 lakh, Rs.8.00 lakh is deleted.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppLargely, yes, on evidence. Genuineness cannot be doubted merely because the lenders are relatives, particularly where their own returns are produced. Of the Rs 9 lakh still in dispute before the Tribunal, Rs 8 lakh was deleted and Rs 1 lakh sustained. This was decided by the ITAT (ITAT Panaji Bench — Pavan Kumar Gadale (Judicial Member) and Dr. Manish Borad (Accountant Member)) and bears on section 68, section 69A, section 115BBE of the Income Tax Act 1961. It is reported as ITA No. 484/PAN/2025, assessment year 2017-18 (unreported). This is the ordinary salaried household's version of a s.68 case, and it shows what actually persuades a bench: a documented income history over years, and the lender's own return. Not affidavits. If it applies to you, the first step is this: Get each family lender's income tax return for the relevant year, not just a confirmation letter.
For assessment year 2017-18 the assessee declared income of Rs 2,65,000 and had deposited Rs 12,91,000 in cash during the demonetisation period. He explained it as a loan of Rs 4,00,000 from his co-brother, a loan of Rs 2,00,000 from his sister-in-law's son, Rs 2,00,000 from his wife's savings and Rs 3,00,000 from his own savings accumulated over the last twenty to twenty-five years. The Assessing Officer added Rs 12,06,000 under s.69A read with s.115BBE. The Commissioner (Appeals) accepted the Rs 2,00,000 attributed to the wife and reduced the addition to Rs 9,00,000, and it was that Rs 9,00,000 that came before the Tribunal. In support the assessee had produced the two lenders' names, addresses, permanent account numbers and income tax returns, and an affidavit stating that he was sixty-five years old and had worked for almost twenty-two years at Bombay Restaurant on Rs 12,500 a month. The matter was decided on 2026-06-30 by the ITAT (ITAT Panaji Bench — Pavan Kumar Gadale (Judicial Member) and Dr. Manish Borad (Accountant Member)). On those facts the ITAT held as follows. The appeal was partly allowed. Although the addition had been made under s.69A, the Tribunal held at para 9 that s.68 was what was triggered, the assessee having claimed interest-free loans from relatives, so that identity, creditworthiness and genuineness had to be established. On the Rs 6,00,000 of loans it found at para 10 that names, addresses, permanent account numbers and returns had been furnished for both lenders, whose gross incomes over three years were Rs 3,30,600, Rs 4,18,707 and Rs 3,98,660 for the co-brother and Rs 1,84,926, Rs 2,08,557 and Rs 2,90,447 for the sister-in-law's son, and it held at para 11 that no addition of Rs 6,00,000 was called for. On the Rs 3,00,000 of accumulated savings it accepted Rs 2,00,000 as credible on the affidavit evidence and sustained Rs 1,00,000 (para 12). Of the Rs 9,00,000 in dispute, Rs 8,00,000 was deleted and Rs 1,00,000 sustained (para 13). Nothing was restored to the Assessing Officer.
The order has now been read from the Tribunal's own text. Its route is evidentiary rather than doctrinal. The Bench first corrected the provision: the addition had been made under s.69A read with s.115BBE, but where the assessee's own explanation is that the money came in as loans, it is s.68 that is triggered and the three-limbed test of identity, creditworthiness and genuineness that applies (para 9). It then applied that test on the material actually filed — names, addresses, permanent account numbers and the lenders' own returns, with three years of gross income for each — and was satisfied (paras 10 and 11). On the accumulated savings it worked from the affidavit of employment history and monthly wage and accepted two-thirds of the figure as credible, sustaining the balance (para 12). What the standard requires when the surrounding circumstances point the other way is set out at High Court level, on the revenue's side of the line, in ACIT v. Agrawal Infrabuild (P.) Ltd. [2025] 178 taxmann.com 374/307 Taxman 153 (Chhattisgarh)/[2026] 484 ITR 558, 4 September 2025: identity, creditworthiness and genuineness must be established cumulatively, and permanent account numbers, returns and bank records are relevant but not conclusive (paras 12 and 13, applying Pr. CIT v. NRA Iron & Steel (P.) Ltd. [2019] 103 taxmann.com 48/262 Taxman 74/412 ITR 161 (SC)). In the words reproduced by the source cited on this page: "Out of the addition of Rs.9.00 lakh, Rs.8.00 lakh is deleted."
It was decided by the ITAT on 2026-06-30 and is reported as ITA No. 484/PAN/2025, assessment year 2017-18 (unreported). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 68, section 69A, section 115BBE, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The appeal was partly allowed. Although the addition had been made under s.69A, the Tribunal held at para 9 that s.68 was what was triggered, the assessee having claimed interest-free loans from relatives, so that identity, creditworthiness and genuineness had to be established. On the Rs 6,00,000 of loans it found at para 10 that names, addresses, permanent account numbers and returns had been furnished for both lenders, whose gross incomes over three years were Rs 3,30,600, Rs 4,18,707 and Rs 3,98,660 for the co-brother and Rs 1,84,926, Rs 2,08,557 and Rs 2,90,447 for the sister-in-law's son, and it held at para 11 that no addition of Rs 6,00,000 was called for. On the Rs 3,00,000 of accumulated savings it accepted Rs 2,00,000 as credible on the affidavit evidence and sustained Rs 1,00,000 (para 12). Of the Rs 9,00,000 in dispute, Rs 8,00,000 was deleted and Rs 1,00,000 sustained (para 13). Nothing was restored to the Assessing Officer. It arises in Cash Credits & Unexplained Money matters, on section 68, section 69A, section 115BBE of the Income Tax Act 1961, and was decided by ITAT Panaji Bench — Pavan Kumar Gadale (Judicial Member) and Dr. Manish Borad (Accountant Member). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Build a savings history from Form 16s or past returns — the length of the record is what makes accumulation credible. Accept that a residual amount may be sustained; a partly-won case is still a large reduction.
Searched for later treatment; none was found. That is not the same as a source affirming it. The order has now been read in full from the Tribunal's own text and its particulars are confirmed: ITA No. 484/PAN/2025, assessment year 2017-18, ITAT Panaji, pronounced 30 June 2026 by Pavan Kumar Gadale (Judicial Member) and Dr. Manish Borad (Accountant Member), the appeal partly allowed, Rs 8,00,000 of a Rs 9,00,000 addition deleted and Rs 1,00,000 sustained. What remains unverified is its standing rather than its content: no later decision applying, following or affirming it has been traced, which is unsurprising for an order of this date, and absence of later citation is not good law any more than absence of contrary authority is. The statement previously made here about the successor provision in the Income-tax Act 2025 was not verified and has been removed rather than repeated. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order has now been read from the Tribunal's own text: ITA No. 484/PAN/2025, assessment year 2017-18, ITAT Panaji, heard 20 May 2026 and pronounced 30 June 2026 before Pavan Kumar Gadale (Judicial Member) and Dr. Manish Borad (Accountant Member), the assessee represented by Shri Pramod Vaidhya and the revenue by Smt. Rijula Uniyal. Three figures on this page have been corrected against it. The addition made by the Assessing Officer was Rs 12,06,000 under s.69A read with s.115BBE, not the Rs 12,91,000 deposited; the Commissioner (Appeals) had already reduced it to Rs 9,00,000, and that was the only amount in dispute before the Tribunal. And the employment history in the affidavit is almost twenty-two years at Bombay Restaurant on Rs 12,500 a month, not twenty-four years. It was the Tribunal, not the Assessing Officer, that brought the matter under s.68, at para 9. The order carries no reported citation. A Tribunal decision, decided on its own facts. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was partly allowed. Although the addition had been made under s.69A, the Tribunal held at para 9 that s.68 was what was triggered, the assessee having claimed interest-free loans from relatives, so that identity, creditworthiness and genuineness had to be established. On the Rs 6,00,000 of loans it found at para 10 that names, addresses, permanent account numbers and returns had been furnished for both lenders, whose gross incomes over three years were Rs 3,30,600, Rs 4,18,707 and Rs 3,98,660 for the co-brother and Rs 1,84,926, Rs 2,08,557 and Rs 2,90,447 for the sister-in-law's son, and it held at para 11 that no addition of Rs 6,00,000 was called for. On the Rs 3,00,000 of accumulated savings it accepted Rs 2,00,000 as credible on the affidavit evidence and sustained Rs 1,00,000 (para 12). Of the Rs 9,00,000 in dispute, Rs 8,00,000 was deleted and Rs 1,00,000 sustained (para 13). Nothing was restored to the Assessing Officer.
TaxSphere, “Anilkumar Narayanrao Mudradattu v ITO”, https://taxnotice.vittsphere.com/caselaw/case/anilkumar-mudradattu-v-ito/ (validity last checked 2026-08-19)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
The addition under the s.68 group has been confirmed and I never showed the income in my return. Is there any discretion left to the AO not to levy the s.271AAC penalty?
Is there anything from the Board itself I can put in front of the officer on setting off losses against s.68 or s.69 additions in an old year?
Is there anything from the Board telling the officer he has to establish the section before he makes a deeming addition?
A search threw up unaccounted stock and cash and the Assessing Officer has added it. I have a large brought-forward loss and unabsorbed depreciation sitting there. Can I set them off against the addition?
