Tribunal Rules Seized Rs. 13 Lakhs Explained, Not Unexplained Money u/s 69A; Appeal Allowed for Assessee.

The ITAT Delhi allowed the appeal of the assessee, ruling that the Rs. 13 lakhs seized should not be treated as unexplained money under section 69A of the Income-tax Act, 1961. The tribunal found that the assessee had adequately explained the cash transfer between branches, with no negative cash balance recorded during the relevant period. The cash reconciliation statement submitted by the assessee was accepted, leading to the acceptance of the grounds raised and the appeal being allowed.

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Issues involved:
The main issue in this case is whether the cash seized of Rs. 13 lakhs should be treated as unexplained money under section 69A read with Section 115BBE of the Income-tax Act, 1961.

Comprehensive Details:

Issue 1: Treatment of seized cash as unexplained money

The appeal in ITA No.1958/Del/2023 for AY 2019-20 pertains to the treatment of cash seized of Rs. 13 lakhs as unexplained money. The search and seizure action under section 132 of the Act was conducted in "Ritika Pvt. Ltd" group, where cash amounting to Rs. 21,26,180/- was found, out of which Rs. 13 lakhs was seized. The assessee claimed that the cash was transferred from the Kolkata office to the Gurgaon office as an inter-branch transfer. The Assessing Officer treated the seized cash as unexplained money under section 69A read with Section 115BBE of the Act, which was upheld by the ld CIT(A) due to the inability of the assessee to explain the movement of cash from Kolkata to Gurgaon.

Issue 2: Submission of cash reconciliation statement

The assessee provided a cash reconciliation statement showing the balance of cash as per books and as found during the search. The statement indicated that the cash balance remained the same after the inter-branch transfer of Rs. 13 lakhs from Kolkata to Gurgaon. The cash transfer was duly recorded in the books of both branches, with entries made on 02.06.2018, even though the transfer occurred before the search on 29.05.2018. The company had sufficient cash balance to explain the seized cash, and the cash book submitted by the assessee was not rejected by the revenue.

Final Decision:

The ITAT Delhi allowed the appeal of the assessee, emphasizing that there was no negative cash balance on any given day during the year, and the cash seized of Rs. 13 lakhs should not be treated as unexplained money. The grounds raised by the assessee were accepted, and the appeal was allowed.

This summary provides a detailed overview of the judgment, focusing on the treatment of the seized cash as unexplained money and the submission of the cash reconciliation statement by the assessee.

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