Section 68 addition fails when banking records and books prove source of funds and Revenue brings no contrary material.

An addition under section 68 cannot be sustained where the assessee substantiates the source and movement of funds through land purchase records, bank statements and ledger entries, and the Revenue fails to rebut that material with contrary evidence. On the land purchase issue, the payments were shown to have been made through banking channels and the cash component was limited to incidental expenses, so the addition was deleted. On the term loan repayment issue, sanction letters, loan accounts and banking records established the repayment trail, and the addition was likewise deleted.

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Issues: (i) Whether the addition made as unexplained cash credit on account of purchase of land was sustainable. (ii) Whether the addition made as unexplained cash credit in respect of repayment of term loan was sustainable.

Issue (i): Whether the addition made as unexplained cash credit on account of purchase of land was sustainable.

Analysis: The assessee produced the land purchase details, bank statements and ledger entries to show that the consideration was paid through banking channels and that the cash component related only to stamp paper, registration and advocate fees. The first appellate authority accepted that the Assessing Officer had proceeded on an incorrect factual premise regarding the source and nature of the payment and had not brought material to show any unexplained money or unexplained deposit used for the purchase.

Conclusion: The addition on account of purchase of land was rightly deleted and the issue is decided against the Revenue.

Issue (ii): Whether the addition made as unexplained cash credit in respect of repayment of term loan was sustainable.

Analysis: The assessee furnished the sanction letters, loan accounts, bank statements and ledger records to establish the origin of the loan and the repayment trail. The first appellate authority found that the repayments had been made through banking channels and that the Assessing Officer had not carried out any effective enquiry into the fund flow or disproved the source of repayment.

Conclusion: The addition in respect of repayment of term loan was rightly deleted and the issue is decided against the Revenue.

Final Conclusion: The appellate order sustaining deletion of the additions was upheld, and the Revenue's challenge failed in full.

Ratio Decidendi: An addition under section 68 cannot be sustained where the assessee substantiates the source and movement of funds through books and banking records and the Revenue fails to rebut that evidence by proper enquiry or contrary material.

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