Relevant assessment year for seized cash governs section 69A addition; later-year adjustment was unsustainable.

Cash seized on 30-03-2019 fell in assessment year 2019-20, so the seized amount had to be examined in that year for tax attribution. The Assessing Officer treated part of the cash as explained by a bank withdrawal and added the balance as unexplained under section 69A in assessment year 2020-21. Since the seizure date fixed the relevant assessment year, an addition relating to that cash could not be sustained in the later year. The addition of Rs. 5,50,000 was deleted.

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Issues: Whether the learned Commissioner of Income Tax (Appeals) was justified in confirming the addition of Rs. 5,50,000 made under section 69A of the Income-tax Act, 1961 in the facts of the case.

Analysis: Cash of Rs. 10,00,000 was seized on 30-03-2019, a date which falls in assessment year 2019-20. The Assessing Officer treated part of the cash (Rs. 4,50,000) as explained by reference to a bank withdrawal and treated the balance (Rs. 5,50,000) as unexplained, making an addition under section 69A in assessment proceedings framed for a later assessment year. The seizure date determines the relevant assessment year for determining income attributable to the seized cash; therefore an addition relating to cash seized on 30-03-2019 cannot properly be sustained by making the addition in assessment year 2020-21.

Conclusion: The addition of Rs. 5,50,000 confirmed by the learned CIT(A) is deleted and the appeal is allowed in favour of the assessee.

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