Humnabad Mohammed Omer Vs DCIT (ITAT Chennai)
Chennai ITAT Deletes ₹76.45 Lakh Addition; Once Source of Cash Is Proved, Revenue Cannot Rely on Suspicion About Its Temporary Utilisation
The Chennai ITAT held that once an assessee establishes the original source of cash through credible documentary evidence, the Revenue cannot invoke section 69 merely because it finds the assessee’s explanation regarding the interim use or retention of such cash improbable. In the present case, the assessee demonstrated that the cash deposits of ₹76.45 lakh originated from the cash sale proceeds of an immovable property received on dissolution of a partnership firm, supported by registered sale deeds, and the Revenue did not dispute either the sale transaction or receipt of consideration in cash. The Tribunal observed that the Assessing Officer focused only on the assessee’s explanation that the cash was temporarily advanced as interest-free financial assistance to economically weaker members of the Jamaat, rejecting it on the basis of perceived human improbability, without producing any evidence that the cash had actually been diverted, spent or invested elsewhere. It held that suspicion, however strong, cannot replace legal proof, and that the Department cannot reject a plausible explanation merely because it considers the assessee’s conduct commercially imprudent or unusual. Relying on Sreelekha Banerjee (SC), S.R. Venkata Ratnam (Karnataka HC), Smt. P. Padmavathi (Karnataka HC), Jaya Aggarwal (Delhi HC) and its own earlier decision in Ganapathy Panneerselvam, the Tribunal held that once the assessee discharged the initial burden by proving the source and nexus of the cash, the burden shifted to the Revenue to establish that the money had ceased to be available, which it failed to do. Accordingly, the Tribunal deleted the addition of ₹76.45 lakh made under section 69 read with section 115BBE.
