The Income Tax Appellate Tribunal (ITAT) Mumbai has upheld the deletion of an addition of Rs 60.03 crore under Section 68 holding that the assessee had successfully established the genuineness of the contribution. 


The Income Tax Appellate Tribunal (ITAT) Mumbai observed that once these essential requirements are fulfilled through credible documentary evidence, a mere suspicion regarding the source of the fixed deposits cannot sustain an addition under <a target="_blank" rel="noopener noreferrer" href="https://studycafe.in/mere-difference-in-trade-creditor-closing-balance-cannot-justify-section-68-addition-when-purchases-are-accepted-rules-itat-425700.html">Section 68.</a>[related id="425700"]The Revenue preferred an appeal against the order of the CIT(A) who had deleted an addition of Rs 6,003,939,666 made by the AO under Section 68 of the Income Tax Act. The addition was made on the ground that the assessee trust had failed to explain the nature and source of a corpus contribution received from its settlor, Mrs Anu Wadhawan. During assessment proceedings under <a target="_blank" rel="noopener noreferrer" href="https://studycafe.in/itat-debatable-pf-esi-disallowance-cannot-be-adjusted-under-section-1431-425109.html">Sections 143(2), 142(1) and 143(3), </a>the AO questioned the original source from which those deposits had been created.The CIT(A), after examining the documentary evidence and remand report, found that the settlor had capital exceeding Rs 249 crore, the contribution had been made through banking channels, and even the source of the fixed deposits was properly explained. Accordingly, the addition was deleted.[related id="425688"]The Tribunal observed that the assessee had furnished complete documentary evidence, including the settlor's PAN, Aadhaar, Income Tax Return, bank statements, ledger confirmation and trust deed, which establishes the identity of the contributor, her financial capacity and the genuineness of the transaction. The Tribunal further noted that the AO had never questioned either the identity of the settlor or the genuineness of the transaction. The movement of funds through banking channels and the redemption of fixed deposits were also accepted.[related id="425679"]The Tribunal observed that conditions prescribed under Section 68 are fully satisfied and that mere suspicion regarding the origin of the fixed deposits, without any material evidence, could not justify the addition. Consequently, the deletion of the addition of Rs 60.03 crore was upheld and the Revenue's appeal was dismissed.&nbsp;

 ITAT Rules Mere Suspicion over "Source of Income" Cannot Justify Addition Under Section 68  

The Income Tax Appellate Tribunal (ITAT) Mumbai has upheld the deletion of an addition of Rs 60.03 crore under Section 68 holding that the assessee had successfully established the genuineness of the contribution.

ITAT Rules Mere Suspicion over "Source of Income" Cannot Justify Addition Under Section 68

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