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Issues: (i) Whether the addition of Rs. 3,50,000 as alleged cash payment to or on behalf of Ms. Jwala Gutta could be sustained under section 69A of the Income-tax Act, 1961; (ii) Whether the addition of Rs. 53,00,000 as alleged cash expenditure on the marriage event of the assessee's niece could be sustained under section 69A of the Income-tax Act, 1961.
Issue (i): Whether the addition of Rs. 3,50,000 as alleged cash payment to or on behalf of Ms. Jwala Gutta could be sustained under section 69A of the Income-tax Act, 1961.
Analysis: The addition was founded on search-related digital material and the assessee's post-search statement, but the material did not establish that the assessee had actually made the cash payment. The ledger reflected cheque payments, no confirmation was obtained from the recipient, and the material recovered from a third party's premises could not, by itself, justify an addition in the assessee's hands without proper enquiry or corroboration. The finding rested on presumption rather than proven cash outflow from undisclosed sources.
Conclusion: The addition of Rs. 3,50,000 was not sustainable and was deleted in favour of the assessee.
Issue (ii): Whether the addition of Rs. 53,00,000 as alleged cash expenditure on the marriage event of the assessee's niece could be sustained under section 69A of the Income-tax Act, 1961.
Analysis: The addition was based on WhatsApp/chat references and the fact that part of the event payments had been made through banking channels. The record did not establish that the assessee alone incurred the disputed cash expenditure, nor did the Assessing Officer verify the position with the event manager or identify the source of the alleged cash settlement. The possibility of marriage gifts and contributions from family members was not investigated, and the addition was made on inference rather than concrete evidence of unexplained expenditure by the assessee.
Conclusion: The addition of Rs. 53,00,000 was not sustainable and was deleted in favour of the assessee.
Final Conclusion: The common order set aside both impugned additions, holding that the Revenue had proceeded on presumption without sufficient corroborative material to fasten the alleged cash payments on the assessee.
Ratio Decidendi: An addition under section 69A cannot be sustained merely on presumption, digital references, or third-party material unless the Revenue establishes by corroborative evidence that the assessee actually made unexplained cash payments or incurred unexplained expenditure.
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