India

ITAT Upholds Deletion of ₹11.73 Cr Unexplained Cash Credit Addition Citing AO’s Reliance on Unverified STR Information [Read Order]

Posted on by Minakshi




Income Tax Appellate Tribunal (ITAT) Relieves Taxpayer in ₹11.73 Crore Case



ITAT Upholds Deletion of ₹11.73 Crore Cash Credit Addition

In a significant ruling, the Income Tax Appellate Tribunal (ITAT) has sided with a taxpayer, deleting an addition of ₹11.73 crore that had been treated as unexplained cash credit under Section 68 of the Income Tax Act.

The Case: Unverified STR Information at the Forefront

The core of the dispute revolved around the Assessing Officer’s (AO) decision to add ₹11.73 crore based on information received from a Suspicious Transaction Report (STR). The AO considered this to be an unexplained cash credit, attracting tax liabilities for the assessee. However, the ITAT found the AO’s reliance on this information to be flawed.

ITAT’s Ruling: Insufficient Basis for Addition

The ITAT bench observed that the AO had failed to adequately verify the information contained in the STR. The Tribunal emphasized that mere suspicion, without proper investigation and corroboration, cannot be the sole basis for making an addition under Section 68. The ITAT concluded that the AO’s action was not justified given the lack of concrete evidence.

  • The Tribunal noted the importance of independent verification when relying on information from external sources like STRs.
  • A detailed examination of the source and reliability of the information is crucial before making adverse tax assessments.

This ruling serves as a reminder of the importance of due diligence and evidence-based assessments in tax matters.

Summary:

  • ITAT deleted a ₹11.73 crore addition related to unexplained cash credit.
  • The decision hinged on the AO’s reliance on unverified Suspicious Transaction Report (STR) data.
  • Tribunal stressed the need for independent verification before making additions under Section 68.
Key Takeaways:

  • Taxpayers can challenge additions made solely based on unverified STR information.
  • The ITAT emphasizes the responsibility of Assessing Officers to conduct thorough investigations.
  • This ruling reinforces the principles of fairness and due process in tax assessments.
  • The burden of proof remains on the revenue authorities to substantiate additions with credible evidence.