TaxTMI 
TaxTMI 
2023 (6) TMI 433
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....n both facts & law by confirming an addition of Rs. 10,50,000.00 u/s 69A in an arbitrary manner, and entire additions is made on presumptions and conjectures. 5. That, the assessment is based on mere presumptions and conjectures. 6. The appellant craves leave to add, amend, modify, withdraw any ground of appeal at the time of hearing and before the appeal is disposed off." 2. Briefly the facts as per record are that the assessee has filed his return of income u/s 139(1) of the Act Rs. 6,06,510/- dated 13.01.2021. The assessee is engaged in the sole proprietorship business of Electronic Goods under the name and style of firm M/s Fancy Electronics. The AO has stated in the assessment order that on the basis of information received from J&K Police at Srinagar Airport, Srinagar, a cash of Rs. 10,50,000/- was intercepted from Sh. Nasir Ahmad Rangshu S/o Sh. Bashir Ahmad Rangshu R/o K.P. Road Anantnag. Since, the assessee was not able to explain the source of cash and also did not submit the proof of source, therefore, requisition under section 132A of the I. T. Act, 1961 was made with the Station House Officer, Police Station, Humhama, Srinagar on 05.09.2019 and cash of Rs. 10,50,0....
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....essee either on 13.07.2019 or the day immediately preceding that. In case, any money is withdrawn by the assessee for personal use, the same should be duly expressed in the books of accounts of the assessee. The assessee has acknowledged that the money was for treatment of mother at Delhi, i.e. for personal use of the assessee so the same should have been duly entered in the cashbook/capital account as drawing in the name of proprietor. From the perusal of cashbook, it is seen that no such drawing has been reflected in the cashbook. All this reveals that the ascribing of the source of cash to the business of the assessee is an afterthought and the same has been used as a ploy to justify the unexplained cash. The AR has also reasoned that the AO did not reject the books of accounts before framing the assessment u/s 143(3). In above regard, it is seen that there is no such compulsion on the AO to reject the books of accounts before applying the provisions of Section 69. It has been held by the Hon'ble High Court of Kolkata in the case of Unit Construction Co. Ltd. vs. Jt. CIT [2003] 260 ITR 189 (Cal.) that "for applying section 69 and 69B, it is not necessary that the books of ac....
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....case. The party must succeed by the strength of his own right and the clearness of his own proof. The ratio laid down by Hon'ble Apex Court in case of Sumati Dayal vs. CIT (1995) 214 ITR 801 is squarely applicable in this case. The tax authorities are entitled to look into the surrounding circumstances to find out the realities and the matter has to be considered by applying test of human probabilities as enunciated r Hon'ble Apex Court. Reliance is also placed on judgement of Hon'ble Apex Court in McDowell & Co. Ltd (1985) 154 ITR 148 where it was observed that "Colorable devices cannot be part of tax planning and it was wrong to encourage or entertain the belief that is honorable to avoid the payment of tax by resorting to dubious methods'. Every person is entitled to so arrange his affairs as to avoid taxation but the arrangement must be real and genuine and not sham and make believe. Thus, the documents submitted as evidences serve as smoke screen to cover up the true nature of transactions. Thus in accordance with the ratio laid by the Hon'ble Apex Court in Sumati Dayal Vs Commissioner Of Income-Tax, 214 ITR 801 (SC), that "the apparent must be considered the real un....
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.... no explanation about "the nature and source of the acquisition of such money. On a reading of section 69A (supra), it is clear that the onus is upon the AO to find the assessee to be the owner of any money, bullion, jewellery or valuable article and such money, bullion, jewellery or valuable article was not recorded in the books of account, if any, maintained by the assessee for any source of income. Only on those circumstances, the AO can resort to making an addition under section 69A of the Act only in respect of such monies / assets / articles or things which are not recorded in the assessee's books of account. The Hon'ble ITAT Bench- Mumbai in the case of DCIT Vs. Karthik Construction Co. in ITA No.2292 Mum/2016 dated 23.02.2018, wherein the Bench at para 6 thereof has held that addition under section 69A of the Act cannot be made in respect of those assets / monies / entries which are recorded in the assessee's books of account. Kind attention is invited torads recent judegment in case of Ramachandar Kanu Mendadkur Vs CIT (A) In ITA No. 163/Mum/2023- ITAT - ITAT (Mumbai) clarifies that addition under Section 69A of the Income Tax Act can only be made if the ....
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....dearly showed the said entry duly marked in cash book to AO and also to CIT (A) during assessment and appeal proceedings, the CIT(A) affixed the cash book upto 14/07/2019 in the assessment order only to confirm the addition, which is not an approach expected from quasi judicial authority, when the said entry is duly shown in the cash book on 15/07/2019, which is a normal practice in small business. Under the income tax Act, income is to be computed not of the basis of accounting treatment but on the well-established principle of the law interpreted by the courts on the basis of law of income tax. [CIT vs Sahara Investment India Ltd. (2004) 136 Taxman 61 (All)] Treatment as income bv the assessee is not conclusive: A receipt which is law cannot be regarded as income cannot become so merely because the assessee ha erroneously credited it to the profit and loss account. [CIT v Stewarts & Lloyds of India. (1987) 165 ITR (Cal); CIT v India Discount Co. Ltd. (1970) 75 ITR 191 (SC)] It is further submitted that the Ld. CIT (A), has made his own analysis and concluded, that on the basis of circumstantial evidences, that appellate has cash from unexplained sources, when appellate prod....
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....vious days. He, further contended that the purpose of the withdrawal of cash, has been for the treatment of mother illness, however, he has not produced any documents relating to the either mother illness or her treatment in Medanta Hospital. Thus, the appellant-assessee has failed to explain the source of cash of Rs. 10,50,000/- seized and accordingly it is rightly treated as undisclosed income u/s 69A of the I.T. Act by the AO and accordingly confirmed by the ld. CIT(A) as per the law. He pleaded that the impugned order may be sustained. 6. Heard rival contentions, perused the material on record, impugned order, written submission and case law cited before us. It is undisputed facts on record that cash amounting to Rs. 10,50,000/- was found and seized from the appellant assessee by the department in lieu of interception by the Airport Authorities. It is evident from the record that the appellant had made contradictory statement before the department in explaining the disputed cash seized to the extent of Rs. 10,50,000/- being carried for the treatment of her ill mother in Medanta, Gurgaon. Initially, the source of the aforesaid cash was stated out of business income and personal....