2025 (1) TMI 1734 - AT - Income Tax

Cash found on taxpayer treated as explained by records, affidavit and withdrawals; not unexplained income u/s69A, s.115BBE levy rejected

Whether cash found on the taxpayer constitutes unexplained income under s.69A and thereby attracts tax at s.115BBE rates: tribunal held that the taxpayer ... Addition u/s 69A - levy of rate of tax u/s 115BBE - assessee is found in possession of cash - surrender of income - assessee argued with a view to buy the peace assessee surrendered that amount for taxation purpose but the source of cash cannot be considered as unexplained - whether the cash fund in the possession of the assessee at Jaipur Airport is though explained to have been sourced out of the withdrawal from the various concerns? HELD THAT:- As is very much clear from the records that the assessee has placed on record the details showing the source of cash found in her possession and the provision of section 69A of the Act mandate that when the assessee offers no explanation about the nature of source acquisition of the money then the money so found may be deemed to be the income of the assessee for such financial year. In this case the assessee has already explained the source of the money so found in her possession. The details of cash sourced along with all the details were placed on record vide submission made by the ld. AR of the assessee. Even vide statement recorded which was available before the Assessing Officer and that of the ld. CIT(A) wherein the assessee confirmed that there is no undisclosed income declared by the assessee even in the statement so recorded wherein she stated that he will give a documentary evidence to support the source of cash fund in her possession. There is no discussion in the orders of the lower authorities about the explanation so offered by the assessee as to why the same is not acceptable. Therefore, when the explanation of the assessee so made is based on the evidence of withdrawal of money and they withdrawal was available with her is also supported by an affidavit. Thus, those evidence cannot be brushed aside and the cash so explained though voluntarily offered as income cannot be considered as unexplained money as per provisions of Section 69A of the Act. But since the income so offered and considered as voluntarily even before us by withdrawing the ground of addition we hold that the same cannot be considered as unexplained money as is supported by statement, evidence placed in the assessment order supporting the proof of cash withdrawal which also get supported by an affidavit. Based on these records already available merely the assessee did not contest the addition on merit the same cannot be considered as unexplained money as liable to be taxed u/s. 69A of the Act and therefore, levy as per provisions of Section 115BBE of the Act is not applicable. Issues: (i) Whether cash of Rs. 24,00,000/- seized from the assessee is unexplained money falling under section 69A of the Income-tax Act, 1961 and thereby attracts taxation at special rates under section 115BBE; and (ii) Whether the assessee's explanation and supporting evidences of withdrawals from various concerns preclude application of sections 69A and 115BBE.Analysis: The material on record includes the assessee's statements, an affidavit and a written submission detailing withdrawals from specified proprietary/partnership concerns and copies of cashbook entries. Section 69A deems money to be income where the assessee offers no explanation about the nature and source of acquisition or the explanation is found unsatisfactory by the assessing authority. Section 115BBE prescribes a higher tax rate on income deemed under specified provisions including section 69A. The assessing officer and the lower appellate authority applied sections 69A and 115BBE on the basis that the cash was not recorded in books and the source was not satisfactorily explained. The tribunal noted that the assessee had placed on record contemporaneous particulars of withdrawals and supporting cashbook entries and an affidavit; those explanations were neither controverted by the revenue nor rebutted in the orders under challenge. The tribunal considered the evidentiary material, the fact that the assessee offered the amount for taxation to avoid prolonged litigation, and that the offer followed specific documentary details of source rather than an absence of explanation.Conclusion: The finding that the cash is unexplained under section 69A and liable to taxation under section 115BBE is not sustained insofar as the assessee furnished uncontroverted contemporaneous particulars and supporting records showing withdrawals from business concerns. The appeal is partly allowed in favour of the assessee; the application of sections 69A and 115BBE is disallowed to the extent indicated and the addition taxed at special rate is set aside on that basis.