Facts of the Case

The Revenue filed appeals before the Income Tax Appellate Tribunal, Allahabad Bench, against the order of the Commissioner of Income Tax (Appeals) in the case of Smt. Banarsi Devi. The dispute related to additions made by the Assessing Officer on account of certain cash credits treated as unexplained under Section 68 of the Income-tax Act, 1961.

Issues Involved

Whether the additions made under Section 68 on account of alleged unexplained cash credits were justified when the assessee had furnished evidence regarding the identity of creditors, their creditworthiness, and the genuineness of the transactions.

Petitioner’s Arguments (Revenue)

  • The assessee failed to satisfactorily explain the nature and source of the cash credits
  • The creditors’ capacity to advance the amounts was not adequately established
  • Therefore, the Assessing Officer rightly treated the amounts as unexplained income under Section 68

Respondent’s Arguments (Assessee)

  • Complete details of the creditors were furnished
  • Identity of the creditors was established through documentary evidence
  • Transactions were genuine and supported by records
  • Creditworthiness of the creditors stood proved
  • Accordingly, the addition made under Section 68 was unjustified

Court Order / Findings

  • The assessee had discharged the primary burden of proof required under Section 68
  • Identity of the creditors, their creditworthiness, and genuineness of the transactions were adequately demonstrated
  • The Assessing Officer did not bring sufficient material on record to rebut the evidence produced by the assessee

Important Clarification

  • Mere suspicion cannot substitute legal evidence in matters of taxation
  • Once the assessee proves primary facts, the burden shifts to the Revenue
  • Addition under Section 68 cannot be sustained solely on conjectures or doubts

Link to download the order – https://itat.gov.in/public/files/upload/1558338145-BANARSI-204%20&%20205.pdf

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