AO made S.68 addition based on the Third Party Statement, Discrediting Evidence: ITAT deletes addition

The Income Tax Appellate Tribunal (ITAT) in Mumbai deleted an addition made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, which was based solely on third-party statements. The AO had added the amount to the assessee’s income, relying on statements from third parties without considering the assessee’s submissions and evidence. The ITAT held that additions under Section 68 should not be made solely on the basis of third-party statements, especially when the assessee has provided credible evidence to support their case. The tribunal emphasized the need for a thorough examination of all evidence before making such additions. This ruling highlights the importance of fair assessment practices and ensures that taxpayers are not unfairly penalized based on unverified third-party statements.