TaxTMI 
TaxTMI 
2025 (4) TMI 2107
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....sessee has failed to explain source of cash during the search proceedings as well as during the assessment proceedings? 2. Whether on facts and in circumstances of the case, the CIT(A) is justified in deleting the addition of Rs. 30,00,000/- on account of unaccounted and unexplained cash without appreciating the facts that the assessee has failed to make cash book verified from the necessary evidences as per his submission during statement u/s 132(4) of the Act and the CIT(A) has not called any remand report to verify claim of the assessee from Assessing Officer and further, assessee has not provided the necessary supportive evidences & detail of the expenditure which were to be made from the withdrawn amount to justify his claim? 3. Whether on facts and in circumstances of the case, the CIT(A) is justified in deleting the addition of Rs. 30,00,000/- on account of unaccounted and unexplained cash without appreciating the facts that assessee has not furnished satisfactory explanation that the amount was withdrawn in parts long before the day of search 3 and kept accumulated at residence for business purpose and also failed to substantiate his claim by producing evi....
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....documents found and seized from some persons residence and business premise. The case of the assessee was also covered under search proceeding. Consequent to search action, the case of the assessee was centralized to Central Circle-Kota by the Principal Commissioner of Income-tax, Kota vide his order dated 12.10.2017. 3.1 Assessee is an individual and derives income from salary, business and other sources. For the year under consideration the Assessee had filed his return of income u/s 139 of the Act on 31.10.2018 at the total income of Rs. 26,91,090/-. Statutory notices were issued and served upon the assessee calling for the details and the assessee in response to those notice furnished the details / information / documents / which were examined with respect to claims made in the return of income. 3.2 Ld. AO noted that during the search action u/s 132 of the Act, cash amounting to Rs. 32,75,200/- was found. On being asked during the statements vide Q No. 28 to explain source of cash and to reconcile it with books of accounts, assessee Shri Ajay Bakliwal stated that amount of Rs. 30,00,000/- was withdrawn from bank on various dates and Rs. 2,75,200/- were lying for house hol....
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....of unexplained money u/s 69A of the Act. "6.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under- The AO noted that during the search action cash amounting to Rs. 32.75,200/- was found. On being asked during the statements vide Q No. 28 to explain source of cash and to reconcile it with books of accounts, assessee Shri Ajay Bakliwal stated that amount of Rs. 30,00,000/- was withdrawn from bank on various dates and Rs. 2,75,200/- were lying for house hold expenses. However on considering withdrawn amount from last 20 days to the date of search ie. 07.09.2017 total amount came to Rs. 16,84,295/- Assessee stated that cash found was already disclosed in his books of account and will submit necessary evidence. Further out of cash found of Rs 32,75,200, cash of Rs. 12,75.200/- was seized. The assessee submitted his reply on 17.12.2019 stating that the cash found during search is fully accounted and kept at home considering the various ....
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....ded it is submitted that suspicion however strong can not the place of evidence. The facts of the case are considered. The AO mentioned in the reason for rejecting the claim of the assessee with regard to cash found from residence that the cash was found from the residential premise of the assessee not from the business premise. Therefore contention of the assessee that the cash was kept for various expenditures related to different sites is not found convincing. This argument of the AO is not found to be sustainable. The cash can be kept at residential premise for the security reasons. There is no illegality in such practice. The ITAT Amritsar Bench in the case of Daljit Singh v. Assistant Commissioner of Income-tax [2004] 1 SOT 249 (Amritsar) [30-12-2002] held that when it was clear from facts that claim of assessee was bona fide as cash-in-hand of firm was sufficient to meet out cash found at residential premises of assessee, there was no justification for sustaining any addition. The head note of the decision are as under- "Section 894 of the Income-tax Act, 1961-Unexplained moneys-Block assessment year 1-4-1987 19-10-1997-Dung search cash of Rs. 3 la....
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.... It is also observed that during the course of search proceedings also the assessee was asked to explain the source of cash of Rs. 32,75,200/- found during search. The relevant question put to the assessee in a statement under section 132(4) is question No. 28. It was replied by the assessee that out of Rs. 32,75,200/- a sum of Rs. 30,00,000/- was from withdralws from the bank and remaining cash of Rs. 2,75,200/- was accumulated savings kept at home for house hold purposes. The assessee has maintained his stand and the AO has not disproved this claim of the assessee. In these facts, the addition made by the AO is not found to be sustainable and deleted. This ground of appeal is treated as allowed. The addition of Rs. 49,85,873/- on account of unexplained expenditure u/s 69C of the Act. 7.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The AO noted that during the search action many incriminating documents wer....
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.... Site Exp. Cash 91 08.08.2017 1,00,000,00 Labour Exp. Cash yu 25.07.2017 1,00,000.00 Doorlabour Exp. Cash 89 11.08.2017 4,98,270.00 Site Exp. Cash 87 21.07.2017 25,000.00 Tiles exp. Cash 86 21.07.2017 1,40,000.00 Site Exp. Cash 85 21.07.2017 25,000.00 Site Exp. Cash 83 21.07.2017 75,000.00 Cottage Site Exp. Cash 82 21.07.2017 30,000.00 Tiles exp. Cash 81 21.07.2017 30,000.00 Cottage Site Exp. Cash 80 21.07.2017 35,325.00 Site Exp. Cash 78 06.08.2017 25,000.00 Tiles exp. Cash 77 06.08.2017 25,000.00 Tiles exp. Cash 76 06.08.2017 1,80,000.00 Site Exp. (Kapasia Builders) Cash 74 06.08.2017 25,000.00 Cottage Site Exp. Cash 73 06.08.2017 25,000.00 Cottage Site Exp. Cash 72 06.08.2017 60,000.00 Cottage Site Exp. Cash 70 11.08.2017 1,11,400.00 Site Exp. Cash Total 49,85,873.00 It was claimed that perusal of the table reveals that against each entry the assessee is giving Number of relevant ....
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....ry evidence as per the assessee's submission during the statement recorded under Section 132(4) of the Act? * Whether, on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of 30,00,000/- without calling for a remand report from the AO to verify the assessee's claim and without sufficient supportive evidence to justify the alleged withdrawals for business expenditure. * Whether, on the facts and circumstances of the case, the Ld. CIT(A) was justified in accepting the explanation of the assessee without appreciating that the withdrawals claimed were made in parts, long before the date of the search, and no evidence was provided to substantiate the claim that the cash was accumulated at the residence for business-related expenses? 2. Unaccounted Expenses of 49,85,873/- * Whether, on the facts and circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of 49,85,873/- on account of unaccounted expenses, by accepting the assessee's claim that these expenses were accounted for in the regular books of accounts, without appreciating the fact that the assessee failed to substantiate t....
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....nsider these observations holistically. 2. Unreliable Cash Book: * The AO identified material discrepancies in the cash book, supported by seized documents. * As held in Sumati Dayal v. CIT [(1995) 214 ITR 801 (SC)], evidence must be corroborated with surrounding circumstances and human probabilities. 3. Unsubstantiated Withdrawals: * The assessee failed to substantiate that 30,00,000/- was withdrawn specifically for business expenses or retained as claimed. * Judicial precedents (P Mohanakala v. CIT [(2007) 291 ITR 278 (SC)]) establish that unexplained cash or transactions must be substantiated with credible evidence. 4. Applicability of Section 69A: * As per Section 69A, unexplained cash is deemed income. The AO rightly taxed the addition under Section 115BBE. 5. Incomplete Explanation: * The assessee claimed that 30,00,000/- was withdrawn over time, but no evidence was provided to corroborate this accumulation practice. * Judicial precedents like CIT v. Durga Prasad More [(1971) 82 ITR 540 (SC)] highlight the importance of substance over form in evaluating claims. 2. Groun....
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....lete these additions is inconsistent with the evidence, judicial precedents, and the law. Prayer The Revenue respectfully prays that the Hon'ble ITAT: 1. Reverse the deletion of additions made by the Ld. CIT(A). 2. Uphold the findings of the AO as reflected in the assessment order. 3. Grant any other relief deemed appropriate in the interest of justice." 6. Ld. DR in addition to the written submission vehemently argued that the explanation given by the assessee for the cash found that it was out of withdrawal made from the bank. In the assessment proceeding ld. AO observed that last 20 days withdrawal comes to Rs. 16,84,295/- far below of Rs. 30 lac. The material recovered shows receipt of unexplained cash transactions and therefore, the addition is required to be sustained because ld. CIT(A) deleted that addition only considering the explanation given by way of cash book by the assessee, which was found defective. For that view of the matter she relied upon the decision on preponderance of probability. As regards the other addition which was claimed to be recorded in that rejected cash book and the addition were deleted by ld. CI....
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....planation with regard to cash of Rs. 30,00,000/- found and a table indicating there in the relevant voucher numbers of all the expenses of Rs. 49,85,873/- stated to be not recorded in the regular books, was given. The Ld.AO did not call for any further clarification. Therefore, the assessee was given to believe that the AO is satisfied with the reply of the assessee. In the assessment order, he went on to make the addition on both the counts. Further, even in his statements, the assessee had stated the same facts before the Authorized officer regarding the source of the cash found and had deposed that the necessary evidence would be produced. The learned AO has got no material to controvert the statement of the assessee. It is not the case of the learned AO that withdrawals had not been made form Bank. The cash balance as per cash book of Nav Bharat Nirman Co.(the proprietory concern of the assessee) was Rs. 34,30,751/- which was sufficient to cover the availability of cash found from the assessee. Before the Ld. CIT(A), the copy of the letter filed before the AO during the assessment proceedings along with the relevant cash books was produced, which were duly examined by him and a....
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.... or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewelry or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewelry or other valuable article may be deemed to be the income of the assessee for such financial year" The perusal of provisions of section 69A reveals that these are applicable only in a case where the money found is not recorded in the Books of Accounts. In this case the entire cash which was withdrawn from the bank stood accounted for in the regular cash book of Nav Bharat Nirman Co., maintained by the assessee. Therefore the provisions of sections 69A are not applicable. The additions made was unlawful and rightly deleted by CIT(A) after perusing the cash book and the bank account. 2. Addition of Rs. 49,85,873/- u/s 69C The DR has stated that the AO had given a finding that loose papers seized during search revealed unaccounted cash expenses totaling Rs. 49,85,873/....
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....oucher No. 21 120 15.04.2017 25000.00 Bottom tiles Exps Cash CB Voucher No. 20 118 10.07.2017 320000.00 Site Exps Cash CB Voucher No. 57 114 10.05.2017 36500.00 Grading Exps Cash CB Voucher No. 48 112 10.05.2017 30000.00 Bottom tiles Exps Cash CB Voucher No. 47 111 10.05.2017 40000.00 Outdoor plaster exps Cash CB Voucher No. 46 110 10.05.2017 173700.00 Site exps. Cash CB Voucher No. 56 107 23.05.2017 50000.00 Cottage Site Exps Cash CB Voucher No. 62 106 23.05.2017 32000.00 Salary Exps Cash CB Voucher No. 63 105 10.07.2017 775736..00 Site Expenses Cash CB Voucher No. 63 101 15.06.2017 100000.00 Tiles Exps(Surajmal) Cash CB Voucher No. 35 100 15.06.2017 250000.00 Tiles Exps(Kapasia Builders) Cash CB Voucher No. 34 98 30.06.2017 150000.00 Tiles Exps (Kapasia Builders ) Cash CB Voucher No. 46 94 10.07.2017 231000.00 Site Exps Cash CB Voucher No. 55 92 10.07.2017 57760.00 Site Exps Cash Request for payment 91 08.08.2017 100000.00 ....
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....on, it is prayed that the order of CIT(A) providing relief to the assessee after carrying out thorough examination of the books, may kindly be upheld." 8. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the ld. AO made the addition based on the contradictory finding that the cash book was unreliable due to discrepancies, as noted in para-6 of the assessment order and he considered only last 20 days withdrawal far below the claim of Rs. 30,00,000/-. Whatever loose papers found during the search reflected unrecorded transactions, further discrediting the cash book ld. AO made the addition. He further noted that the cash was found from the residential premises of the assessee and not from the business premises, therefore contention of the assessee that the cash was kept for expenditure related to different sites was not found convincing to him. Ld. AR of the assessee stated that the office and residential premises are in the same building. Assessee use ground floor for office and other part as residence of the assessee. The cash was kept at residence for security reasons. During the course of search, many incriminating document....
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....and the assessee in response to those notice furnished the details / information / documents / which were examined with respect to claims made in the return of income. 10. As is evident that for the year under consideration there was search action u/s 132 of the Act wherein cash amounting to Rs. 32,75,200/- were found. In the statement so recorded as per provision of section 132(4) of the Act, Vide Q No. 28 the assessee was asked to explain the source of cash and was asked to reconcile it with books of accounts. Assessee Shri Ajay Bakliwal in reply stated that amount of Rs. 30,00,000/- was withdrawn from bank on various dates and Rs. 2,75,200/- were lying for household expenses. Assessee stated that cash found was already disclosed in his books of account and assured to submit necessary evidence. Further out of cash found of 32,75,200/-, cash of 12,75,200/- was seized this itself show that the explanation of the assessee was found prima facie correct. During the assessment proceeding, the assessee was asked to show cause vide notice dated 15.12.2019 to submit his response in this regard. The assessee submitted his reply on 17.12.2019 stating that the cash found during search is ....
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.... incurred on the various sites of construction going on. That specific reply was also filed in the assessment proceeding vide letter dated 12.12.2019 contending that the cash found during search is fully accounted and kept at home considering the various expenditures on different sites. Ld. AO did not considered that reply of the assessee merely on the reasons that cash was found from the residence of the assessee and thereby the contention which is supported by filling the copy of cash book was rejected. We note that as explained that the ground floor is office and other part used as residence and therefore, effectively the cash was available in the same premises. Thus, merely the contention that the cash was found at the residence being in the same premises, the cash which is reflected in the cash book cannot be denied. The bench also noted that the assessee was asked a specific question as to the withdrawal of last 20 days is only 18,84,295/- and thereby while dealing with the question for seizure of cash for an amount of Rs. 12,75,200/- the assessee contended that the same is already disclosed in the books of accounts and assured to produce the proof of the same. We also not....
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....or in the cash book. While search action the statement of the assessee was recorded u/s 132(4) of the Act wherein in reply to Q.No.18, assessee submitted that these expenses pertain to construction carried out by Nav Bharat Nirman Co. He even said that the muster roll of the persons to whom the consolidated payment exceeding Rs. 20,000/- had been made was in possession of his Accountant or the respective person in whose name the voucher was made and would be made available later. At the time of assessment, the assessee had explained all the entries totaling to Rs. 49,85,873/- in tabulated form, before the AO, mentioning Voucher no. of the relevant expense, along with the letter dated 12.12.2019. Books were also produced before him, as has been acknowledged by him in his order. The ld. AO has not verified that contention of the assessee. As the assessee has not produced anything new before the ld. CIT(A) there is requirement to call for the remand report and even before us the assessee submitted a tabulated reply giving reference to the cash book vouchers no and the list of the expenditure considered alleged to have unexplained in fact was recorded in the cash book so filed. The lis....