Forfeiture and unexplained money additions fail when an advance is adjusted later and no evidence rebuts the taxpayer's explanation.

An advance against sale of property received through banking channel and later adjusted in a subsequent sale transaction cannot be taxed as income from other sources on a forfeiture theory where forfeiture is not established, so the addition under section 56(2)(ix) is unsustainable. A cash receipt of the same amount cannot be treated as unexplained money under section 69A merely because the explanation is disbelieved; without enquiry or cogent evidence rebutting the assessee's version that the cash was returned to the purchaser, the addition cannot stand. The overall result is deletion of both additions and complete relief to the assessee.

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Issues: (i) Whether the amount of Rs. 5,00,000 received by banking channel as advance against sale of property, later adjusted in a subsequent sale transaction, could be taxed as income from other sources on the footing of forfeiture; and (ii) whether the cash amount of Rs. 5,00,000 could be sustained as unexplained money under section 69A.

Issue (i): Whether the amount of Rs. 5,00,000 received by banking channel as advance against sale of property, later adjusted in a subsequent sale transaction, could be taxed as income from other sources on the footing of forfeiture.

Analysis: The amount received through banking channel was found to have been adjusted against the later agreement with another purchaser. On those facts, the advance was not forfeited. Since forfeiture is the basis for bringing such amount to tax under the relevant provision, the premise for addition failed.

Conclusion: The addition under section 56(2)(ix) of the Income-tax Act, 1961 was not sustainable and was deleted in favour of the assessee.

Issue (ii): Whether the cash amount of Rs. 5,00,000 could be sustained as unexplained money under section 69A.

Analysis: The assessee's explanation that the cash amount had been returned to the purchaser was rejected by the lower authorities without any enquiry or cogent supporting material. In the absence of such enquiry or evidence, the addition could not be sustained merely on disbelief of the explanation.

Conclusion: The addition under section 69A of the Income-tax Act, 1961 was deleted in favour of the assessee.

Final Conclusion: The taxable additions made on account of the alleged forfeited advance and unexplained cash receipt were removed, resulting in complete relief to the assessee.

Ratio Decidendi: Where an advance sale consideration is shown to have been adjusted in a later transaction, forfeiture cannot be presumed for taxing it as income from other sources, and an addition for unexplained money cannot be sustained without enquiry or cogent evidence rebutting the assessee's explanation.

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