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Mar 13, 2026
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Relief for taxpayers: Tax additions cannot be based solely on statements recorded during inquiry, says ITAT
A tax addition under Section 68 of the Income-tax Act cannot be sustained merely on the basis of statements recorded during departmental inquiries without allowing the taxpayer an opportunity to cross-examine the witnesses, the Income Tax Appellate Tribunal (ITAT) has held.
In a case involving alleged unexplained cash credits, the tribunal ruled in favour of the taxpayer after finding that the tax department had failed to provide independent evidence to support the additions.
The ruling reinforces an important legal principle that tax authorities must rely on credible and legally admissible evidence rather than suspicion when treating a transaction as unexplained income.
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