Tribunal directs AO to verify cash statement of Director's wife, deletion possible, appeal partly allowed.

The Tribunal directed the AO to verify the statement of the Director regarding the cash kept by his wife. If confirmed, the addition should be deleted. The appeal was partly allowed for statistical purposes.

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Issues Involved:
1. Unexplained cash found during search and seizure operation.
2. CIT (A)'s partial relief and sustaining of balance amount.
3. Assessee's grounds for appeal against CIT (A)'s order.

Summary:

1. Unexplained Cash Found During Search and Seizure Operation: The assessee, engaged in the manufacture and sale of biscuits, was subjected to a search and seizure operation under section 132 of the I.T. Act on 15.11.2018. During this search, Rs.15,57,520/- was found in the office premises, out of which Rs.15 lakhs was seized as the assessee could not explain the sources of the same with supporting evidence. The Assessing Officer (AO) noted that the Accountant of the assessee company was unable to explain the discrepancy of Rs.5,06,125/-. The AO, therefore, treated the entire amount of Rs.15,57,520/- as "unexplained cash" under section 69A of the Act and made an addition to the assessee's income.

2. CIT (A)'s Partial Relief and Sustaining of Balance Amount: On appeal, the CIT (A) deleted Rs.10,51,395/- being the cash balance available in the books of account on the date of search but sustained the balance amount of Rs.5,06,125/-. The CIT (A) observed that the explanation provided by the assessee regarding the cash kept by Mrs. Greeshma Agarwal, wife of the Director, was not furnished during the search operation and appeared illogical and an afterthought. Hence, the addition of Rs.5,06,125/- was upheld as there was no nexus between the cash available with Mrs. Greeshma Agarwal and the excess cash found at the premises.

3. Assessee's Grounds for Appeal Against CIT (A)'s Order: The assessee appealed to the Tribunal, challenging the CIT (A)'s decision to sustain the addition of Rs.5,06,125/-. The assessee argued that the cash was kept in the office for safe custody and not for business purposes, and that Mrs. Greeshma Agarwal had sufficient source of funds, having withdrawn Rs.45 lakhs from Nirmay Constructions LLP. The Tribunal found that the AO made the addition based on the Accountant's statement without verifying if the Director, Mr. Vimal Agarwal, was questioned about the cash. The Tribunal restored the issue to the AO to verify the Director's statement and decide accordingly.

Conclusion: The Tribunal directed the AO to verify the statement of the Director, Mr. Vimal Agarwal, regarding the cash kept by his wife. If the Director confirmed that the cash was kept by his wife, the addition should be deleted. The appeal was partly allowed for statistical purposes.

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