TaxTMI 
TaxTMI 
2026 (4) TMI 400
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....ng the fact that the amount of Rs. 35,00,000 was duly recorded in the books of account and was appearing as an asset in the balance sheet of the assessee under the heading" amount withheld by the Income Tax Department ". Ground No.4 The learned Commissioner of Income Tax (Appeals) 12, Hyderabad erred in not considering the books of account stating that the same are self prepared information, since the books of account are always prepared by the assessee. Ground No.5 The learned Commissioner of Income Tax (Appeals) 12, Hyderabad erred in not considering the withdrawals from banks, duly supported by the statements of account from the bank. Ground No.6 The learned Commissioner of Income Tax (Appeals) 12, Hyderabad erred in not accepting the fact of return of advances from the employees. Ground No.7 The learned Commissioner of Income Tax (Appeals) 12, Hyderabad erred in alleging that the operations in Kerala are not backed by local books and information, as the assessee does not maintain such records in Kerala but maintained such records only at its head office in Hyderabad. Ground No.8 The learne....
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....ee firm has filed its return of income on 06.04.2024 admitting total income of Rs. 56,41,390/-. Based on the statement recorded u/sec.131 of the Act of Sri Muralidhar Reddy admitting the cash belongs to the assessee firm, the Assessing Officer made addition of the said amount of Rs. 35 lakhs u/sec.69A of the Act. The assessee challenged the action of the Assessing Officer before the learned CIT(A) but could not succeed. 5. The learned CIT(A) has reproduced the submissions of the assessee in Para no.5.1 of the impugned order as under: "5.1. During the appeal proceeding, appellant filed written submission which is reproduced below: "Brief Facts of the case Assessee is a firm doing the business of trading in liquor. During the current year, assessee had such business in Kerala. Assessee had to engage employees to carry out business operations at Kerala. However, since such business is not permanent, assessee did not chose having banking facilities at the place of business. 2. During the current year, on 24th October, 2021 a search was conducted by the Railway Protection Force, at the Railway Station, Palakkad, Kerala. An amount of Rs. 35,00,000 w....
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....ud was also show as receipt, whereas many other withdrawals of Raju Goud and Sai Krishna are not accounted for in the cash book. * Books of account were not furnished. Cash book was not submitted. Submissions 9. Assessee maintained proper books of account. However, since the assessee is not covered under tax audit, such financials were not audited. During the assessment proceedings, assessee submitted profit and loss account and balance sheet. Such documents indicate that the assessee was maintaining proper books of account. 10. The balance sheet as at 31st March, 2022 submitted during the assessment proceedings disclosed a cash balance of Rs. 20,61,085. Further, it is also disclosed that Rs 35,00,000 is with the Revenue Authorities, which is nothing but the cash seized and kept by the Income tax Department, consequent to the search operations conducted by Railway Police mentioned above. 11. The summary of cash during the year is as under. Opening Balance Rs. 94,788 Add: Withdrawals from Banks Rs. 33,66,297 Return of advances given to employees Rs 21,00,000 Rs. 54,66,297 ....
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....see submitted bank statements and the details of cash receipts during the assessment along with balance sheet. Assessee was under bonafide impression that the sources have been explained through such submission. However, the books of account and cash book are available. Cash book is being submitted as mentioned above, which recorded all the transactions alleged by the Assessing Officer that the same were not accounted for. Hence, this reason for treating the amount as unexplained may kindly be disregarded. PRAYER The amount of Rs. 35,00,000 cash was duly accounted for in the books of account of the assessee. Such an amount is having valid source of cash being withdrawn from banks in earlier periods. Bank statements were already submitted in evidence for the cash withdrawals Cash book is being submitted now, which discloses the recording of the amount of Rs. 35,00,000. Hence, it is humbly prayed that the addition of Rs. 35,00,000 made in the assessment be deleted and oblige." 5.1. Thus, it is clear that the assessee has explained the cash of Rs. 35 lakhs as withdrawn from the bank and return of advances given to the e....
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....eption. The asserted Kerala operations are also not backed by local books, vouchers, salary registers, rent/utility proofs, trade licences/registrations, or a Kerala bank account. Further, by the appellant's own showing, the field personnel were under the direct control/supervision of Tilaknagar Industries, which is inconsistent with the necessity of transporting substantial cash physically. There is, in addition, no partner authorization, cash-in-transit memo, or movement register evidencing lawful carriage of cash. 6.4.3. In these circumstances, the mere claim of prior bank withdrawals, without a reconciled, verifiable cash-flow culminating in the impugned amount on 24.10.2021 does not discharge the onus under section 69A to prove both recording and source. Further, the appellant has not substantiated the specific claim of withdrawals of Rs. 33,66,297/- with any documentary evidence such bank statements highlighting such withdrawals. The explanation that a fully operational firm, engaged under a trade arrangement with Tilaknagar Industries Ltd. and supervising Kerala operations for IML supplies, had no bank account in Kerala and therefore withdrew cash at Hyderabad, ....