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Facts
The assessee filed an appeal against an order that confirmed an addition of Rs. 2,85,600/- as unexplained cash credits under section 68 of the Act. The assessee claimed the amount was received through banking channels from a broker, supported by bank statements and the broker's ledger. However, these documents were rejected by the revenue authorities for not being signed or authenticated.
Held
The Tribunal held that the Assessing Officer (AO) failed to conduct proper verification or issue summons to the broker to ascertain the genuineness of the documents. The AO, acting as an investigator, should have dug deeper before making additions solely based on the documents not being authenticated. The AO was directed to delete the addition.
Key Issues
Whether the revenue authorities were justified in making an addition for unexplained cash credits under section 68 of the Act when the assessee provided bank statements and broker's ledger, and the AO failed to conduct proper verification?
Sections Cited
68, 250
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Income Tax Appellate Tribunal, “SMC” BENCH MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN
Date of Hearing 26.06.2025 Date of Pronouncement 04.08.2025 आदेश / ORDER
PER SANDEEP GOSAIN, JM:
The present appeal has been filed by the assessee challenging the impugned order dt. 27.02.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2011-12.
The only ground raised by the assessee is ground No. 1 which relates to challenging the order of Ld. CIT(A) in confirming of Rs. 2,85,600/- as unexplained cash credits u/s 68 of the Act mad by A.O.
In this regard Ld. AR submitted that the said amount was received by assessee through banking channel from broker of the assessee i.e M/s. Sykes and Ray Equities on 24.11.2010. It was submitted that the assessee had been regularly dealing with the broker and had been making payments for investments and had also made payments of Rs. 21,27,595/- through banking channel through the broker. However the revenue authorities have wrongly added the said amount u/s 68 of the Act.
On the contrary, Ld. DR relied upon the orders passed by the revenue authorities and submitted that assessee could not prove the sources of the said amount therefore addition was rightly made and upheld.
I have heard the counsels of both the parties, perused the material placed on record and also the orders passed by the revenue authorities.
After having gone through the facts of the present case, I noticed that undisputedly the said amount of Rs. 2,85,600/- was received by assessee from its broker through cheque and in this regard the assessee had already placed on record bank statement and the ledger of the broker. However the said documents were negated by the revenue authorities only on the ground that the same are not signed or authenticated. It is strange to note that AO had not carried out any exercise or verification in respect of the documents submitted by the assessee. In my view AO is not only an adjudicator but he is also an investigator, therefore it was all the more duty of the AO to issue summons / notices to the broker in order to ascertain the said documents or he could have dig deeper which was expected from him being the investigator but by not doing so, AO was not entitled to make additions only on this ground alone.
Even it would not be out of place to mention that the assessee had transferred Rs. 21,27,595/- to the broker and the said amount has not been disputed.
Therefore in such a circumstances when once assessee had already discharged its onus therefore no addition could have been made u/s 68 of the Act of the said amount of Rs. 2,85,600/-, which the assessee had received from its broker through cheque. Therefore, I direct the AO to delete the said addition as the same is without any foundation or basis. Thus this ground raised by the assessee stands allowed.
The assessee has not pressed any other ground raised in the grounds of appeal, therefore the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 04.08.2025.