2025 (12) TMI 1334 - AT - Income Tax

Seized cash claimed as pooled property-buying funds from 17 relatives was rejected as improbable; s.69A addition upheld

Addition under s.69A for unexplained cash was upheld where the assessee claimed the seized cash belonged to him, allegedly pooled from 17 ... Unexplained cash u/s 69A - Appellant failed to furnish verifiable details (such as bank account numbers, withdrawal dates, confirmations of lenders) - CIT(A) confirmed part addition - AR contended that the Appellant has explained that he had collected a total sum from 17 individuals, most of whom were close family members, including the Appellant's son, brother, mother-in-law, son's mother-in-law, son's brother-in-law, as well as friends, for the specific purpose of purchasing a property in Lucknow, Uttar Pradesh - Assessee argued AO failed to exercise his statutory powers u/s 131 to summon or examine the contributors, even though their names, details, and affidavits were on record - As submitted that under Muslim law, the concept of absolute ownership (mal) permits a Muslim to acquire property by purchase, gift, inheritance, or other lawful means. Further, Muslim law expressly recognizes joint ownership (shirkat al-milk), where property may be purchased collectively, with each co-owner's share determined in proportion to their contribution unless otherwise agreed. The identity of co-owners whether relatives, friends, or strangers is immaterial so long as the transaction is lawful, the consideration genuine, and the shares ascertainable. Upon the death of a co-owner, his or her share devolves strictly in accordance with Muslim law of inheritance, and not by survivorship as under English law. Thus, joint acquisition of property by pooling resources is not only legally permissible but also a well-accepted practice within the Muslim community HELD THAT:- We find that on a secret information, four persons were arrested from whom a contraband ‘brown sugar’ and cash was recovered. They had disclosed to the police that the amount received is proceeds of contraband sold by them. Later on, one of the accused was found to be innocent. While dismissing this claim of the present assessee, the ld. Criminal Court has taken into consideration the plea of the assessee that recovered money belonged to him and he had arranged the same from various relatives to buy land and as the deal did not went through the amount was being taken back. During the hearing of this appeal, we asked AR if the criminal case has culminated and the order dated 24.07.2017 of the Criminal Court had been filed which shows that out of four persons apprehended as suspects, two of them Mujahid, S/o Salim and Shadab, S/o Eitsham were found to be innocent and no charge sheet against them was filed. In regard to two other persons apprehended, namely Taufeek and Deepu Goswami, there is nothing on record to show that after facing trial they have been acquitted. The ld. Counsel has also placed on record a copy of the order dated 02.02.2018 of the said Criminal Court whereby the Investigating Officer had sought directions for deposit of Rs. 68,47,000/- recovered at the time of alleged arrest of four persons with the statement of Indian Bank account of the Income-tax Department. The order dated 02.02.2018 also shows that two accused, Taufeek and Deepu Goswami had filed their replies while the accused Mujahid and Shadab had not filed the reply. Thus, we fail to find any streak of truth in the claim of the assessee that the amounts recovered from these persons belonged to assessee being collected from various relatives for purchase of land which did not fructify. The principles of Muslim law relied with regard to purchase of land by family and its co-ownership have no relevance in the background of circumstances leading to seizure of the cash. Though the assessee is not one of the accused in the said criminal case and no criminality has been attributed to him with regard to dealing in contrabands. However, to accept that as many as 17 persons helped assessee in collecting the amount would be extending the rules of prudence beyond ordinary human conduct. AO has failed to issue notices u/s 131 of the Act to summon and examine the contributors even though their names, details and affidavits were on record, but, it is only once initial onus is sufficiently discharged by the assessee explaining the source that would need rebuttal by the AO by entering into further inquiries about the truthfulness and credibility of the explanation. In cases like the present when natural events and human conduct narrated do not have even meager probability of truth, then ld. AO cannot be faulted to have not made further enquires. We are of the considered opinion that an explanation of source of cash found in possession of individuals, dehors of all human conduct and probability need no rebuttal from revenue. Thus, we find no substance in the contentions raised. The grounds have no substance. The appeal of the assessee is dismissed. Issues: Whether the addition of Rs. 80,42,100/- made as unexplained cash under section 69A of the Income-tax Act, 1961 can be sustained against the assessee, having regard to the explanation and documentary affidavits about contributions from 17 persons and the circumstances of an NDPS-related seizure.Analysis: The Tribunal examined the factual matrix of the seizure, the affidavits and bank statements filed by the assessee alleging contributions from relatives and others for a proposed property purchase, and the orders in the connected criminal/NDPS proceedings. The legal framework involves the concept of initial onus on the assessee to furnish a prima facie explanation of source, the consequent requirement on the Revenue to verify by further inquiry if the explanation is prima facie credible, the relevance of summoning powers to test contributors' affidavits, and the principle of drawing presumptions in light of ordinary human conduct. The Tribunal found that the circumstances of the seizure, the criminal-court records, the absence of verifiable corroboration from contributors, and the improbability of the claimed collective contributions rendered the assessee's explanation not reasonably probable. The Tribunal held that when an explanation lacks even a minimal probability in human conduct, the Revenue is not obliged to undertake further enquiries to sustain that explanation.Conclusion: The addition of Rs. 80,42,100/- as unexplained cash under section 69A is sustainable and the assessee's appeal against that addition is dismissed; the assessee's explanation is rejected as lacking probability and verifiability in the circumstances of the seizure.