TaxTMI 
TaxTMI 
2026 (7) TMI 1892
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....6, Sector-50, Noida. During the course of search operations, cash of INR 2,69,98,000/- alongwith some loose papers were found/seized from the Locker of Shri Ankit Verma and INR 30,00,000/- was found/seized from Shri Mohit Singh. In their statements recorded u/s 133A of the Act, both the persons have admitted that the said cash belonged to the assessee company of whom they are employees and accordingly, proceedings u/s 148 of the Act were initiated in the case of the assessee company after recording the satisfaction on dated 01.11.2023 and approved by Ld. PCIT, Central, Kanpur. Thereafter, re-assessment proceedings were completed wherein AO has held the entire cash found from the Lockers totaling to INR 2,69,98,000/- as unexplained money u/s 69A of the Act and made the addition for the same and further invoked the provision of section 115BBE of the Act for charging special rate of tax. 3. Against the said order, the assessee preferred an appeal before Ld. CIT(A) wherein it was claimed that the entire cash was accumulated out of the sale proceeds of left over material available at working side and was sold during the year and cash was kept in the Lockers by the employees for safe ....
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.... claimed to have been undertaken for disposal of leftover materials. The enquiries conducted under section 133(6) revealed that only two out of three alleged buyers responded, and all the buyers were found to be nonlocals, contrary to the assessee s own claim. The Ld. CIT(A) failed to consider that this contradiction materially affects the liability of the assessee's explanation. 8) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has further erred in ignoring that the assessee did not produce any supporting documentary evidence such as weighment slips, delivery challans, transportation bills, gate passes, e way bills, OR any digital footprints to substantiate the alleged movement OR sale of leftover materials. In the absence of such primary evidence, the AO rightly concluded that the narrative put forth by the assessee was fabricated OR an afterthought, and that the assessee had failed to discharge the burden of proof cast upon him under the Income tax Act 9) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to uphold the well-reasoned conclusion of the Assessing Officer that the assessee's expla....
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....ch as correspondence with the buyers, their ITRs, reasons for cash payments, labour receipts, transportation bills etc. and further filed copy of GST return filed. Ld.AR submits that the assessee has disclosed the sales in the books of accounts as part of the sales and profit thereon was disclosed which have not been doubted by the Revenue. He submits that once sales have been accepted and profits thereon have been assessed, again holding the said cash as unexplained amounts to double taxation of an income. In this regard, reliance is placed on the judgement of Hon'ble Gujarat High Court in the case of CIT vs Vishal Exports Overseas Ltd. reported in [2012] (7) TMI 1110 (Guj.). 7. Further with respect to the arguments that where books of accounts are not disturbed and sales shown as disposal of opening stock could not be treated as unexplained income. Reliance is placed on the judgement of Hon'ble Delhi High Court in the case of PCIT vs Akshit Kumar reported in [2020] (11) TMI 873 (Del). Ld.AR further submits that AO has issued summons u/s 133(6) of the Act to all the buyers which were duly served upon them and necessary replies were also filed by those parties confirming the tra....
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....ted the additions by making following observations in para 6 of its order:- 6. "In the light of the above submissions and documents filed by the AR during the course of appellate proceedings and findings of the AO in the assessment order, the various grounds of appeal are adjudicated as below: 6.1 Grounds of Appeal Nos. 1 to 3: In the said grounds of appeal, the appellant has challenged the addition made by the AO on account of unexplained cash found from the locker of the employees. During the course of appellate proceedings, the appellant has raised grounds of appeal challenging the addition of Rs.2,99,98,000/- u/s 69A and levy of interest u/s 234B, inter alia on the grounds that: 1. The AO erred in treating cash seized from lockers as unexplained money. 2. The cash was duly sourced from the sale of leftover construction material during F.Y. 2021-22, which was duly recorded in the audited books. 3. Documentary evidences in the form of invoices, ledgers, cash book, and confirmations from buyers were filed and ignored by the AO. 4. AO failed to appreciate that buyers responded to notices u/s 133(6). The order of the AO ....
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....al statements of the appellant shows that the assessee company had an opening stock of Rs. 12.90 crores at the beginning of the year which on account of sales made during the year was reduced to Rs. 10.39 crores at the year end. The cost of goods sold has been debited to the profit & loss account. The relevant page of the audited financial statement is reproduced below for ready reference wherein, the reduction in the inventory is clearly reflected: As per appellant, even after taking out the sum of Rs. 2,99,98,000/- seized by the department, the assessee is left with a cash balance of Rs. 60,68,985/-. The appellant has further stated that the balance is regularly maintained in the cashbook of the appellant and verifiable from the financial statement placed on record. It is further observed that the AO has referred to the enquiries conducted u/s 133(6) with the alleged buyers and as per AO, the information received has been placed on record. No adverse inference has been drawn by the AO on the basis of said enquiry u/s 133(6). Finally, Section 69A operates where any sum of money, bullion, jewellery or other valuable article is found in the possession of the assess....
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.... of Appeal No. 5 has not been argued by the AR during the course of appellate proceedings." 9. Before us, Revenue has failed to controvert the findings given by Ld. CIT(A) by placing any contrary material or evidence through which the observations of ld. CIT(A) could be rebutted. It is observed that Ld. CIT(A) has very categorically observed that goods were sold and was duly recorded in the books of accounts and further GST collected on the said payments was also deposited in due course as per law. When the entire transactions of sales of goods is duly backed by the stock and was recorded in the books of accounts which have been accepted without raising any doubts, the provision of section 69A of the Act could not be invoked. The Hon'ble Jurisdictional High Court in the case of Pr. CIT vs Akshit Kumar (supra) has held as under:- "Treatment of sales as unexplained income-Weight of post-closure physical verification under Section 133B-Acceptance of trading account and stock in earlier scrutiny assessments - Whether the additions treating sales as unexplained income could be sustained in AY 2014-15 in view of earlier years' acceptance of trading account and a post-clos....
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....nue are thus, dismissed. 11. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open court on 27.07.2026. ============= Document 1 Gardenia Shelters Private Limited, AY 2022-23 Appeal No. CIT (A), Noida-3/10163/2021-22 Gardenia Shelters Private Limited NOTE 13. CHANGE IN INVENTORIES OF WIP/ F.Y. 2021-2. Particulars FINISHED GOOD/ STOCK IN TRADE .(Amount in hundreds) Inventories at the beginning Year Ending March 31, 2022 Year Ending March 31, 2021 Construction work in progress 1,290,012 11 1.290,012 Inventories at the closing Construction work As certified by management in progress Total 109/ 1,290,012 250,120 NOTE 14. FINANCE COSTS Particulars Year Ending March 31, 2022 Year Ending March 31, 2021 Bank Charges 236 1 Total 236 1 NOTE 15. EMPLOYEE BENEFIT EXPENSES Particulars Year Ending March 31, 2022 Year Ending March 31, 2021 Salanes & Incentives 2,280 Director Remuneration 1,200 Staff Welfare 36 Total 3,516 NOTE 16. ADMINISTRATION AND OTHER EXPENSES Particulars Year Ending March 31, 2022 Year Ending March 31, 2021 Audit Fees 1,180 1,223 Interest on Service Tax 509 Legal & professional charges 165 242 Misc Exp. 96....