2023 (11) TMI 1310 - AT - Income Tax

Real estate developer fails to identify sources of seized cash receipts, attracts section 69A provisions

DCIT-2 (2), Old CGO Building, Mumbai Versus M/s Madhu Developers

ITAT Mumbai held that undisclosed income from loose papers seized during survey constituted unexplained cash receipts under section 69A. The assessee, ... Undisclosed income appearing in the loose papers impounded during the course of survey at the premises of the assessee - ‘business receipt’ v/s ‘unexplained cash receipt’ liable to be assessed u/s 69A - assessee was engaged in the real estate project namely ‘Platina’ situated in Mira Road, Mumbai. HELD THAT:- DR submitted that as per the mandate of section 69A of the Act, the assessee was required to explain nature and source of such cash receipt. He submitted that though the assessee has explained nature of the same as the business receipt but did not explain the source as from which particular sale of the flat said amount was received. As submitted that purpose of section 69A of the Act is to identify the other leg of the transaction and bring the other leg also to the tax but since assessee has not explained from which flat’s sale, it has received the said receipt of cash and therefore, the said cash receipt is liable to be assessed u/s 69A of the Act, because that assessee has explained only nature and not source of the cash receipt. We agree with the argument of the Ld. DR. For the purpose of considering those cash receipts as the business receipt, the assessee is required mentioning the name of the person from whom such cash was received i.e. the source of the cash receipt, but the assessee has not demonstrated the name and address of those person and therefore, provisions of section 69A are attracted in the case of the assessee. In the interest of the justice, we feel it appropriate to restore this issue back to the file of the Assessing Officer with the direction to the assessee to provide said details of name and address of the parties from whom said cash receipt was received by the assessee. Appeal filed by the Revenue is allowed for statistical purposes. Issues:1. Whether the deletion of addition under section 69A of the Income Tax Act, 1961 by the Ld. CIT (A) was justified.2. Whether the undisclosed income of Rs. 2,26,00,000/- found during a survey at the premises of the assessee should be treated as a business receipt or an unexplained cash receipt under section 69A of the Act.Detailed Analysis:1. The appeal was filed by the Revenue against the order of the Ld. CIT (A) deleting the addition under section 69A of the Income Tax Act, 1961 amounting to Rs. 2,26,00,000/-. The Revenue contended that the Ld. CIT (A) erred in deleting the addition without considering the facts and circumstances of the case and settled position of law. The Ld. CIT (A) had observed that the appellant had admitted the cash receipts as undisclosed income during the survey proceedings and declared it in the return of income, thus there was no failure to produce supporting documents. The Ld. CIT (A) found that the AO's action in adding the income under section 69A was unjustified, and the taxation under section 115BBE was also unwarranted. The Tribunal agreed with the Ld. CIT (A) and allowed the appeal, holding that the AO's action was unjustified.2. The undisclosed income of Rs. 2,26,00,000/- was found during a survey at the premises of the assessee, who was engaged in a real estate project. The assessee admitted that the amount recorded in loose papers as cash receipts was undisclosed income from the sale of flats, not recorded in the books due to a mistake by the accountant. The Revenue argued that the assessee failed to explain the source of the cash receipts as required under section 69A of the Act. The Revenue contended that the assessee did not mention the specific sales from which the cash was received, thereby necessitating assessment under section 69A. The Tribunal agreed with the Revenue's argument and directed the issue to be restored to the Assessing Officer for the assessee to provide details of the parties from whom the cash receipts were received. The Assessing Officer was instructed to decide the matter after giving the assessee a fair opportunity to be heard.In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes, emphasizing the importance of the assessee providing details of the sources of the cash receipts to comply with the requirements of section 69A of the Income Tax Act, 1961.