2026 (2) TMI 351 - AT - Income Tax

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. ... Addition u/s 69 r.w.s. 115BBE - onus to prove - assessee has, all along, denied having made any cash payment in the transaction - whole case of AO stem from search action on the seller group coupled with statement of officers recorded therein. Apparently, one excel sheet has been found which allegedly contain details of cash payment on sale transaction - assessee contended that all the payments were made pursuant to written agreement and the payments were through banking channels only. HELD THAT:- The onus was on AO to prove with cogent evidence that cash was exchanged in the transaction. The assessee has furnished all the documentary evidences as available with him to support the contention that all the payments were made through banking channels only. The confirmation of payment has duly been furnished by the assessee from M/s Omaxe Ltd. which is kept on Page No.30 of the paper book. The payments are duly supported by bank statements and the same are reflecting in Form No.26AS of the assessee. The assessee has filed affidavit to the effect that no cash has even been paid to M/s Omaxe Ltd. The assessee could not be asked to prove the negative Assessee has duly discharged its onus whereas the allegations of Ld. AO remain unsubstantiated. It is trite law that no addition could be made on mere presumptions and assumptions. Assessee appeal allowed. 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).