The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the unexplained cash credit addition of ₹2.85 lakh under section 68 of Income Tax Act,1961,due to the Assessing Officer’s (AO) failure to verify the broker documents.

Darius Sam Motashaw,appellant-assessee, challenged the order dated 27.02.2025 passed by the National Faceless Appeal Centre (NFAC) for the assessment year 2011-12. The issue was the confirmation of ₹2,85,600 as unexplained cash credits under section 68 by the AO, which was upheld by the Commissioner of Income Tax(Appeals)[ CIT(A)].

The assessee counsel said the amount was received through the banking channel from the broker, M/s. Sykes and Ray Equities, on 24.11.2010. The assessee had regularly dealt with this broker and made payments for investments, including ₹21,27,595 through the banking channel.

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The counsel argued that the authorities wrongly added this amount under section 68. However, the Departmental Representative (DR) said the assessee could not prove the source of the amount, so the addition was correctly made and upheld by the authorities.

A single member bench of Sandeep Gosain (Judicial Member) heard the counsels of both parties, reviewed the materials on record, and examined the orders passed by the authorities.

After considering the facts, the tribunal noted that the amount of ₹2,85,600 was undisputedly received by the assessee from the broker through a cheque. The assessee had submitted the bank statement and the broker’s ledger as evidence. However, the authorities rejected these documents solely because they were not signed or authenticated.

The appellate tribunal observed that the AO did not verify or investigate these documents further. As an adjudicator and investigator, the AO was expected to issue summons or notices to the broker to verify the documents but failed to do so. Therefore, making the addition on this ground alone was unjustified.

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The bench also noted that the assessee had transferred ₹21,27,595 to the broker, which was not disputed. Given these circumstances, the assessee had discharged the burden of proof, and no addition under section 68 could be made for the amount of ₹2,85,600 received through the broker.

The tribunal directed the AO to delete the addition as it lacked any foundation. Accordingly, this ground raised by the assessee was allowed.

Since the assessee did not press any other grounds, the appeal was partly allowed.

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