Tribunal Reiterates Higher Burden on Revenue- section 68/section 102
The decision of the Bangalore Bench in [2026] 186 taxmann.com 316 (Bangalore – Trib.) is an important pointer regarding the discharge of onus by both the taxpayer and the AO in the context of Section 102 of the Income-tax Act, 2025, which is parallel to Section 68 of the Income-tax Act, 1961.
This ruling clarifies that while the assessee is required to discharge the initial burden, the AO carries a much more larger onus thereafter. Once the assessee establishes the identity of the creditor with genuineness of the transaction, the burden shifts to the Revenue to disprove them with cogent material.
In the present case, the assessee-wife had taken a loan from her husband and, in support of the transaction, produced the husband’s Income-tax Returns and confirmation letter. This was held sufficient to discharge the initial onus cast upon the assessee. The AO failed to bring any material on record to demonstrate that the transaction is fictitious or that the husband lacked the financial capacity to advance the loan.
The Tribunal held that where the assessee has discharged the initial onus and the Revenue fails to place any contrary material on record, no addition can be sustained as unexplained cash credit. The AO must produce material indicating either that the funds actually emanated from the assessee herself or that the lender lacked financial capacity. This constitutes a substantially higher burden on the Revenue.
The Tribunal further emphasized that the AO is duty-bound to conduct proper enquiries into the overall financial position of the lender. In the absence of such enquiry or supporting evidence, any addition would rest merely on presumption and not on legally sustainable grounds.
