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2025 (2) TMI 80 - AT - Income TaxUnexplained cash credit - Addition u/s. 69A r/w 115BBE - HELD THAT - So far as the amount withdrawn from the partnership is concerned the same is not in dispute as the copy of capital account of Sai Samarth Plaza is placed. Refund of advances the assessee has furnished list of 17 persons who have sworn on the affidavits stating that they have given the amount in cash to the assessee prior to the demonetization period scheme. Their proof of identity is also furnished. Revenue authorities before declining the claim of the assessee ought to have carried out the verification by way of calling the persons to record the statements u/s. 131 - No such exercise has been carried out. Therefore even if the cash received from those debtors are below Rs. 20, 000/- on each day creates doubt but in absence of any cross verification the claim of the assessee cannot be denied. For recovery of receivables it is an admitted fact that the assessee had not given any bifurcation of the said sum in the income-tax return for A.Y. 2016-17. Even if the assessee falls under the Presumptive Taxation Scheme he has to provide the detail of cash bank stock and receivables etc. In absence of any other concrete evidence and proof of genuineness of sundry debtors the claim of the assessee having received Rs. 3, 14, 500/- as recovery of receivables did not have any merit and the said claim is not allowed. Addition partly allowed.
ISSUES PRESENTED and CONSIDERED
The primary issue considered in this judgment is whether the National Faceless Appeal Centre (NFAC) was justified in confirming the addition of Rs. 11,51,000/- as unexplained cash credit under Section 69A of the Income-tax Act, 1961, during the demonetization period. This involves examining the legitimacy of the sources of cash deposits claimed by the assessee, which include withdrawals from a partnership firm, refunds of advances, and recovery of receivables. ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents The legal framework revolves around Section 69A of the Income-tax Act, which pertains to unexplained money, and Section 115BBE, which deals with taxation of income referred to in Section 69A. The burden of proof lies on the assessee to substantiate the sources of cash deposits, especially when discrepancies arise between declared figures and actual transactions. Court's interpretation and reasoning The Tribunal examined the evidence presented by the assessee, including affidavits and identity proofs from alleged debtors and the capital account details from the partnership firm. The Tribunal emphasized the importance of cross-verification by the Revenue authorities, which was not conducted in this case. Key evidence and findings The assessee provided a breakdown of the Rs. 11,51,000/- cash deposit as follows: Rs. 1,36,500/- from a partnership firm withdrawal, Rs. 7,00,000/- from refunds of advances, and Rs. 3,14,500/- from recovery of receivables. The Tribunal found the withdrawal from the partnership firm to be satisfactorily documented. However, the evidence for the remaining amounts was deemed insufficient due to lack of cross-verification and concrete documentation. Application of law to facts The Tribunal applied Section 69A by assessing the credibility of the evidence provided for each source of cash. The lack of documentation and verification for the Rs. 3,14,500/- claimed as recovery of receivables led to its disallowance. Conversely, the Rs. 7,00,000/- from refunds of advances was accepted due to the absence of contradictory evidence from the Revenue. Treatment of competing arguments The assessee argued that the failure to reflect certain figures in the income tax return was inadvertent and should not be held against them. The Revenue maintained that the discrepancies justified the addition. The Tribunal acknowledged the assessee's explanation but stressed the necessity of evidence and verification, siding partially with the assessee due to the Revenue's lack of cross-verification. Conclusions The Tribunal concluded that the addition of Rs. 3,14,500/- as unexplained cash credit was justified, while the remaining Rs. 8,36,500/- was satisfactorily explained. The appeal was partly allowed, granting partial relief to the assessee. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning The Tribunal noted, "In absence of any cross verification, the claim of the assessee cannot be denied," highlighting the importance of verification in such cases. Core principles established The judgment reinforced the principle that the burden of proof lies with the assessee to substantiate claims of cash deposits, and the Revenue must conduct due diligence in verifying such claims. Final determinations on each issue The Tribunal upheld the addition of Rs. 3,14,500/- as unexplained cash credit while allowing the remaining Rs. 8,36,500/- as satisfactorily explained. The appeal was thus partly allowed, providing partial relief to the assessee.
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