ITAT Balances Suspicion with Commercial Reality

In a carefully reasoned decision, the ITAT Delhi addressed the tension between suspicion and substantiation in demonetisation-related cases. 

While the Assessing Officer had treated the entire cash deposit as unexplained under Section 68, and the CIT(A) had deleted the addition in full, the Tribunal chose a middle path. 

Recognising gaps in the assessee’s explanation but also the Revenue’s failure to effectively disprove documentary evidence, the ITAT restricted the addition to ₹8 lakhs on an estimated basis. 

The ruling reinforces proportionality in tax adjudication and reiterates that Section 115BBE cannot be retrospectively applied.