ITAT Grants Relief of Rs. 2 Lakh Despite Lack of Complete Supporting Evidence

The assessee filed his return of income for Assessment Year 2018-19 and declared a total income of Rs 5.65 lakh but during the assessment proceedings, the Assessing Officer noticed that the assessee and three other co-purchasers had jointly acquired the property and the stamp duty value led to an addition under Section 56(2)(vii)(b) of the Act. Also, the AO found out about the cash deposits amounting to Rs 4.60 lakh, which the assessee claimed as past savings and gifts received over time. But the AO was not satisfied with the evidence and made additions under Section 56(2)(vii)(b) and Section 68.

The CIT (A) granted relief on the addition made under Section 56(2)(vii)(b) while holding that the variation between stamp duty and purchase consideration is within the permissible limit and upheld the addition under Section 68

The ITAT had to decide if the addition of Rs. 460,000 under Section 68 of the Income Tax Act on account of cash deposits could be sustained when the assessee failed to produce adequate supporting evidence regarding the source of funds. The tribunal decided that the burden of proof lies upon the assessee and can not be proved without documentary evidence but partial relief may be granted on appreciation of evidence on record.

Accordingly, ITAT partly allowed the assessee’s appeal and reduced the addition under Section 68 from Rs 4.60 lakh to Rs 2.60 lakh, holding that while the assessee failed to fully establish the source of the cash deposits, a reasonable cash balance of Rs 2 lakh could be b to be available with him.