2025 (2) TMI 492 - AT - Income Tax

Addition u/s 68 - cash deposit made by the assessee during the demonetization period - onus to prove - HELD THAT - DR failed to draw our attention to any document which is contrary to the case made by the assessee or in support of the revenue to substantiate addition with cogent reason. We further find that the assessee has been able to submit the bank statement the details of purchase and sales made during the assessment year 2017-18 the VAT return filed in each quarter in the year under consideration the cash book and sale register maintained by the assessee particularly for the period commencing from 01.10.2016 to 31.12.2016 and also the details of closing stock. Thus the onus upon the assessee has duly been discharged in order to substantiate the sales made by the assessee and furthermore the ld. AO has practically not rejected the books of account prepared by the assessee the addition is found to be not sustainable neither supported by any cogent reason rather found to have been made only on surmises and conjectures. Evidence and explanation so rendered by the assessee cannot be rejected in the absence of any corroborative material on record in the hands of the revenue as is the settle position of law in view of the order passed in the case of Lal Chand Bhagat Ambica Ram 1959 (5) TMI 12 - SUPREME COURT and CIT Vs. Dinesh Jain HUF 2012 (10) TMI 158 - DELHI HIGH COURT - Decided in favour of assessee.

Summary

The appeal before the Appellate Tribunal concerned the addition of Rs.40,02,000 under Section 68 of the Income Tax Act, 1961 for the Assessment Year 2017-18. The assessee, engaged in the business of trading in gold and jewelry, deposited the said amount in cash during the demonetization period. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) (CIT(A)) had upheld the addition, leading to the appeal before the Tribunal.**Issues Presented and Considered:**- Whether the addition under Section 68 of the Act was justified based on the cash deposit made by the assessee during the demonetization period.- Whether the revenue authorities had sufficient evidence to support the addition.**Issue-Wise Detailed Analysis:**1. The assessee's contention was that the addition was made on surmises and conjectures without any concrete evidence contradicting the case presented. The assessee argued that the business activities were not disputed, and there were no discrepancies in the books of accounts.2. The assessee relied on various judicial precedents to support the argument that if the books of accounts were not rejected and there were no discrepancies in stock, sales, and purchases, then the addition based on higher average sales was not justified.3. The Tribunal noted that the assessee had submitted relevant documents, including bank statements, details of purchases and sales, VAT returns, cash book, and sales register. The AO did not reject the books of accounts prepared by the assessee.4. The Tribunal emphasized that the addition lacked a cogent reason and was based solely on surmises and conjectures. The assessee had discharged the onus to substantiate the sales, and the revenue authorities failed to provide contrary evidence.5. The Tribunal referred to legal principles established in previous cases, such as the requirement for the Assessing Officer to act fairly and examine evidence objectively before making conclusions.6. Relying on the settled legal position, the Tribunal concluded that the addition was not sustainable and lacked support from corroborative material. Therefore, the addition of Rs.40,02,000 was deleted, and the appeal of the assessee was allowed.**Significant Holdings:**- "The evidence and explanation so rendered by the assessee cannot be rejected in the absence of any corroborative material on record."- "The addition is found to be not sustainable neither supported by any cogent reason rather found to have been made only on surmises and conjectures."- "The Tribunal observed that where the assessee has filed submissions and placed evidence on record, it is the duty of the AO to act fairly and examine the facts in the light of the available evidence."In conclusion, the Tribunal found that the addition under Section 68 was unjustified as it was based on conjectures and lacked concrete evidence. The assessee's submissions and evidence were considered valid, leading to the deletion of the addition.