Section 68 addition for alleged bogus commodity profit deleted after Revenue failed to prove any credited receipt

An addition under section 68 for alleged bogus commodity profit was held unsustainable where the assessee denied any commodity transaction through the named broker and produced bank material showing no corresponding credit. The Revenue relied mainly on third-party investigation information but did not obtain broker records, KYC documents, account details, or other independent evidence to connect any alleged receipt to the assessee. Once the assessee gave a categorical denial and produced material negating receipt, the evidentiary burden shifted to the Revenue to substantiate the credit. In the absence of cogent verification, the addition was directed to be deleted.

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Issues: Whether the addition of alleged bogus profit under section 68 of the Income-tax Act, 1961, was sustainable when the assessee denied any commodity transaction and the Revenue did not bring cogent evidence to establish receipt of the amount.

Analysis: The assessee denied having undertaken any commodity trading through the named broker and relied on bank records showing no corresponding credit. The Revenue relied mainly on third-party investigation information and did not conduct further verification by obtaining broker records, KYC papers, account details, or other supporting material to trace the alleged benefit to the assessee. In these circumstances, the factual burden could not remain on the assessee to prove a negative. Once the assessee gave a categorical denial and produced material negating receipt of the amount, the onus shifted to the Revenue to substantiate the alleged credit with independent evidence. The absence of such evidence rendered the addition unsustainable.

Conclusion: The addition of Rs. 3,96,370/- was not justified and was directed to be deleted.

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