Burden of proof in unexplained cash credit matters shifts to Revenue once identity and genuineness are shown

Where an assessee substantiates a cash credit with the lender's confirmation, PAN and address, bank records showing cheque-based receipt, and supporting recovery proceedings, the primary burden under sections 68 and 69 is discharged. The Tribunal noted that the Revenue did not carry out further enquiry or rebut the documentary evidence, nor establish that the creditor lacked creditworthiness or that the transaction was fictitious. Applying the settled burden-shifting principle, it held that the unexplained cash credit addition was not sustainable and upheld deletion of the addition.

---

---

Issues: Whether the addition made towards unexplained cash credit of Rs. 45,00,000 was sustainable in the hands of the assessee under sections 68 and 69 of the Income-tax Act, 1961.

Analysis: The assessee produced confirmation of the lender, address and PAN particulars, bank entries showing receipt through cheques, legal notice issued by the creditor for non-repayment, and the criminal complaint under section 138 of the Negotiable Instruments Act, 1881. The Revenue did not conduct further enquiry to rebut the documents or establish that the creditor lacked creditworthiness or that the transaction was fictitious. On these facts, the Tribunal applied the settled principle that once the assessee discharges the primary burden by showing the identity of the creditor and the genuineness of the transaction, the onus shifts to the Revenue to prove the contrary.

Conclusion: The addition was not sustainable, and the Revenue's challenge to the deletion failed.

---