Burden of proof on cash deposits and cash credits is discharged by bank evidence, confirmations, and reconciliations; additions deleted.

An assessee discharges the burden under sections 68 and 69A where it produces bank statements, confirmations, affidavits, agreements, withdrawal abstracts, and reconciliation of deposits and redeposits showing the source and movement of funds. Here, the Tribunal accepted evidence of prior disclosure under the Income Disclosure Scheme, agricultural income, and matching withdrawals against cash deposits, and found no contrary material to reject the explanations. On the unexplained cash credit issue, the payer's confirmation and examination of its managing partner supported genuineness and creditworthiness, so the addition was deleted. The same factual explanation also sustained deletion of agricultural income and later-year cash deposit additions.

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Issues: (i) Whether the deletion of the addition made on account of unexplained cash deposits was justified. (ii) Whether the addition of Rs. 2.35 crores treated as unexplained cash credit was rightly deleted. (iii) Whether the additions relating to agricultural income and cash deposits in the later assessment year were rightly deleted.

Issue (i): Whether the deletion of the addition made on account of unexplained cash deposits was justified.

Analysis: The assessee had furnished bank-wise break-up details, a prior disclosure under the Income Disclosure Scheme, and reconciliation of deposits and withdrawals. The material already placed before the Assessing Officer showed that the deposits were partly explained by declared amounts, agricultural income, internal transfers, and cash withdrawals and redeposits. The appellate finding was based on the same material and on verification of the bank statements, and no failure of opportunity was shown that would justify a remand.

Conclusion: The deletion was upheld and the addition was not sustained.

Issue (ii): Whether the addition of Rs. 2.35 crores treated as unexplained cash credit was rightly deleted.

Analysis: The assessee produced the confirmation of the payer, its managing partner, the affidavit, the development agreement, the supplementary agreement, the bank statement of the firm, and the withdrawal abstract showing availability of funds. The managing partner was examined and confirmed the transaction, and the remand proceedings also supported the assessee's version. On these facts, the assessee discharged the onus of proving the creditworthiness of the payer and the genuineness of the transaction. Non-service of notice on the payer or non-filing of returns by the payer did not dislodge the substantive evidence.

Conclusion: The deletion was upheld and the addition was not sustained.

Issue (iii): Whether the additions relating to agricultural income and cash deposits in the later assessment year were rightly deleted.

Analysis: For the later year, the assessee's declaration under the Income Disclosure Scheme and the return disclosure of agricultural income were borne out by the record, and the Tribunal accepted that the disclosed amount covered the agricultural income component. The cash deposit addition was also explained by matching withdrawals and redeposits reflected in the bank statement, and this factual explanation had been verified in remand proceedings. No contrary material was shown to disturb the appellate findings.

Conclusion: The deletions were upheld and the additions were not sustained.

Final Conclusion: The Revenue failed to establish any error in the appellate findings, while the assessee's explanations were accepted on the available evidence. The tax additions were deleted and the assessee succeeded in the consolidated result.

Ratio Decidendi: When an assessee produces confirmation, affidavit, agreement, and bank evidence showing the source and movement of funds, and the revenue does not rebut that evidence despite opportunity, the burden under sections 68 and 69A stands discharged and the addition cannot be sustained.

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