Unexplained cash credit test: documentary evidence of land-sale receipt displaced the section 68 addition.

Cash receipt received in connection with an agreement to sell agricultural land was held not to be an unexplained cash credit where the assessee produced the agreement to sell, the buyer's civil suit, audited accounts of the payer, the assessee's cash book and books of account, and evidence that an earlier advance had been paid through banking channels. On that documentary trail, the assessee discharged the initial onus by showing the identity of the payer, the genuineness of the transaction and supporting records. The burden then shifted to the Revenue to produce positive material disproving the explanation, and no such material was brought. The addition under section 68 was therefore deleted.

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Issues: Whether the cash receipt of Rs. 75,00,000 received in connection with an agreement to sell agricultural land was correctly treated as unexplained cash credit under section 68 of the Income-tax Act, 1961.

Analysis: The receipt was supported by the agreement to sell, the buyer's civil suit, the audited accounts of the buyer, the cash book and books of account of the assessee, and the fact that an earlier advance had been received through banking channels. The record also showed that the dispute relating to the transaction was pending in civil proceedings and that the payment was specifically referred to therein. In these circumstances, the assessee discharged the initial onus by establishing the identity of the payer, the genuineness of the transaction and the supporting documentary trail. Once such explanation was furnished, the burden shifted to the Revenue to bring positive material to disprove it, which was not done.

Conclusion: The addition under section 68 was not sustainable and was deleted.

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