Onus can’t be put on assessee to prove that alleged cash transaction did not take place

Assessing Officer was wrong to put the onus on assessee to prove that alleged cash transaction did not taken place – ITAT

ABCAUS Case Law Citation:
ABCAUS 3805 (2023) (09) ITAT

In the instant case, the Income Tax Officer has challenged the order passed by the CIT(A) in deleting the addition made by the Assessing Officer (AO) on account of alleged cash payment.

In this case the assessment was reopened u/s 148 of the Income Tax Act, 1961 (the Act) on the basis of a Tax Evasion Petition (TEP) alongwith copy of an agreement to sell according to which the assessee had made payment cash payment for purchase of a farm house.

On enquiry in this regard, assessee submitted that assessee was not at all party to the document and the same was fabricated document. The assessee denied that such agreement/receipt had ever being signed by any of the party and no payment had exchanged hands either in cash or by cheque.

Considering the submissions of the assessee, AO noted that assessee company filed bank statements to prove that they have not received any payment by way of cheque or through banking channel. Hence, AO dropped the issue of cheque cleared/debited from the bank account but not the addition for cash payment. The AO made the addition upon a finding that assessee has not been able to give proof that such transaction was not taken place.

Assessee can not be ask to prove non-occurring of an event

The CIT (A) deleted the addition by noting that AO has put the onus on assessee to prove that the said cash transaction has not taken place.

According to the CIT(A), the AO was not justified in concluding that the appellant failed to prove that no cash transaction has taken place and that no independent witness or documentary evidence was produced to prove that the cash transaction did not take place.

The CIT(A) opined that it was upon the AO to prove that the cash transactions took place rather than upon the assessee to prove that it did not take place. It was not proper on the part of the AO to ask the appellant was asked to prove with witnesses and documentary evidences, non-occurring of an event.

The Tribunal observed that the document on the basis of which addition was sought to be made was not a cogent document. The same was unsigned photocopy on which the addition was made for the impugned amount. Furthermore, AO instead of proving that cash transaction took place rather put the burden on the assessee to prove that the said transaction did not take place.

The Tribunal held that CIT (A) had passed a correct order which did not require any interference.

Accordingly, the appeal of the Revenue was dismissed.

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