Unexplained cash payment addition challenged by taxpayer; bank records and confirmation led to addition being deleted on appeal

Issue concerns an addition treated as unexplained cash payment; the revenue relied on search-derived material and an excel sheet to allege cash exchange. The tribunal held that the onus lay on the assessing officer to prove cash payment with cogent evidence, and the assessee discharged contention with written agreement, bank statements, Form 26AS entries and a confirmation affidavit denying cash payment. The AO's allegations remained unsubstantiated and additions could not rest on mere presumptions. Consequence: addition was rejected and the assessee's appeal was allowed.

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Issues: Whether the addition of Rs. 8,00,000 made by the Assessing Officer under section 69 read with section 115BBE, relying on electronic data seized during search and statements under section 132(4), is sustainable where the assessee denies any cash payment and has furnished bank records, Form 26AS entries and confirmation from the seller.

Analysis: The Assessing Officer reopened assessment under section 147/148 based on material recovered from search proceedings and an excel sheet allegedly recording cash payments. The critical question is whether the revenue discharged the requisite onus by adducing cogent evidence proving that cash was actually paid as alleged. The assessee consistently denied cash payment, filed bank statements, produced Form 26AS entries, supplied a confirmation from the seller and filed an affidavit. No opportunity for cross-examination on the electronic evidence was afforded. Where the allegation of undisclosed cash payment rests on electronic data and statements from third parties, the Assessing Officer must establish the link between the data and actual cash receipt with convincing evidence and afford the assessee a chance to test that evidence. Mere presumptions or uncorroborated entries in an excel sheet do not meet the threshold for making an addition under section 69 r.w.s. 115BBE.

Conclusion: The addition of Rs. 8,00,000 is not sustainable and is deleted; the Assessing Officer is directed to recompute the assessee's income after giving effect to this deletion (decision in favour of the assessee).

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