Tribunal directs AO to re-examine issue, granting assessee opportunity to be heard. Appeal allowed for statistical purposes.

The Tribunal allowed the appeal for statistical purposes, directing the AO to re-examine the issue and decide based on facts and law, providing the assessee an opportunity to be heard. The order was pronounced on 25th April 2023.

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Issues Involved:
1. Whether the addition of Rs. 9,05,120/- under section 69A of the Income Tax Act was justified.
2. Whether the cash found during the search was satisfactorily explained by the assessee.

Summary:

Issue 1: Addition of Rs. 9,05,120/- under Section 69A of the Income Tax Act

The assessee appealed against the order of the CIT (A) confirming the addition of Rs. 9,05,120/- made by the Assessing Officer (AO) under section 69A of the Income Tax Act. The AO had made this addition on the grounds that the assessee could not satisfactorily explain the source of cash found during a search operation on 15.11.2018. The CIT (A) deleted Rs. 6,98,473/- but sustained the balance amount of Rs. 9,05,120/-.

Issue 2: Explanation of Cash Found During Search

During the search, cash amounting to Rs. 16,03,550/- was found. The assessee explained that this cash was from the personal books of the directors and their family members. However, the AO was not satisfied with this explanation, noting inconsistencies and lack of substantiation in the records provided by the assessee. The AO added the entire amount as unexplained cash under section 69A.

The Tribunal noted that the AO's addition was primarily based on the statement of the company's Cash Assistant, who could not explain the discrepancy. The Tribunal also observed that it was unclear whether the statements of the directors were recorded or if they were questioned about the cash during the search or assessment proceedings.

The Tribunal referred to a similar case (Ankit Biscuits (P) Ltd) where the issue was remanded to the AO to verify the statements of the directors. Following this precedent, the Tribunal restored the issue to the AO with directions to adjudicate afresh, considering the statements of the directors and the additional income declaration of Rs. 100 crores by Mr. Ramesh Agarwal.

Conclusion:

The Tribunal allowed the appeal for statistical purposes, directing the AO to re-examine the issue, providing the assessee an opportunity to be heard, and to decide the issue based on facts and law. The order was pronounced on 25th April 2023.

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