ITAT relief on diary evidence in cash movements case
A recent decision of the Income Tax Appellate Tribunal ITAT has provided relief to a taxpayer who faced a tax demand of ₹33.50 lakh after cash movements were traced in a homemaker’s name through a diary maintained by her father-in-law.
The tribunal held that the mere diary entries could not establish the taxpayer’s income or benami ownership and therefore deleted the addition.
Background: During a search, the department detected cash transactions allegedly connected to the homemaker. The assessing officer added ₹33.50 lakh to the taxpayer’s income based on the diary entries. The ITAT, however, found the evidence insufficient to prove the link to the taxpayer.
- Evidence standard: Diary notes or records kept by a third party require corroboration to be treated as taxable income in the hands of another person.
- Benami and ownership: The decision underscores that benami allegations need independent and direct proof beyond personal diaries.
- Practical impact: Taxpayers facing cash-led narratives should maintain thorough documentation and avoid reliance on informal diary notes alone.
Takeaway: The ruling reinforces caution for tax authorities in relying solely on third‑party diaries and highlights the importance of robust corroborative evidence in cash transaction cases.
