DCIT, CENTRAL CIRCLE-15, NEW DELHI vs. GAURAV CHOUDHARY, NEW DELHI

Brief facts of the case are that on the basis of information received from DIG, CBI, New Delhi a search action u/s 132 was carried out on 03.09.2016 at the residential premises of the assessee and his father Shri Deepak Choudhary and cash of Rs.28,66,100/- DCIT vs. Gaurav Choudhary was found from the possession of his father, out of which Rs.27,00,000/- was seized and statements of assessee were recorded with respect to the source of the same. Thereafter, the notice u/s 143(2) was issued on 05.09.2018 and subsequent notices were issued u/s 142(1) along with questionnaire from time to time which were duly replied. After considering the submissions, AO held that cash found during the course of search is unexplained and made the addition of the same by invoking the provisions of section 68 of the Act r.w.s 115JB of the Act. Against the said order, assessee preferred an appeal before the Ld. CIT(A) who after considering the facts of the case has held that the source of the cash is duly explained in the hands of father of the assessee in whose possession cash was found and deleted the addition.

Aggrieved by the said order, the Revenue is in appeal before the Tribunal.

Since, all the grounds of appeal

On the other hand, the Ld. AR of the assessee submits that the cash was found and seized from the possession of the father of the assessee Sh. Deepak Choudhary during the course of search at his residence 20A, Rajpur Road, Civil Lines, Delhi and the was residing at Magnolias, Sector-42, Gurgaon, therefore, the assessee cannot be made answerable for the cash found. Ld. AR further submits that during the course of search, in the preliminary statements recorded, assessee vary categorically stated that total cash of Rs. 40.00 lacs was withdrawn by the LLPs namely M/s Sterling Infrastructure Pvt. Ltd. (now known as M/s KJS Colonizer LLP) and the said cash was delivered to the father of the assessee for safe custody. It is further submitted by the Ld. AR that in the books of accounts both LLPs this cash was shown as ‘Balance with directors’ in the Balance Sheet prepared much before the date of search. Therefore, the source of said cash as duly explained. Ld. AR further submits that in the case of father of the assessee, Sh. Deepak Choudhry, the source of cash amount to Rs.28,66,100 was accepted as explained and no addition was made in his hands and, therefore, he submits that no addition is required to be made in the hands of the assessee. He prayed accordingly.

Heard both the parties and perused the materials available on record. In the instant case, the additions in the hands of assessee was made towards cash found in possession of assessee’s father Sh. Deepak Choudhary during the course of search as he (Sh. Deepak Choudhary) in his statement stated that the source of this cash will be explained by assessee. The assessee in his statement recorded during the search stated that this cash was belonging to two LLPs where it was withdrawn from bank and was kept with his father for safe custody. In this regard, all the evidence filed before the AO could not be controverted by brining any contrary material. Ld. CIT(A) while deleting the addition, has made following observations in para 5.2 of its order: “5.2 I have considered the facts of the case and submissions of the appellant. The factual observations have been summarized below: i. During the course of search and seizure operation a statement of Sh. Deepak Chaudhary and Sh. Gaurav Chaudhary were recorded on 03.09.2016. ii. In the statement given by Sh. Deepak Chaudhary, he had stated that all the operations of these two LLPs i.e. Sterling Infrastructure Ltd. and KJS Colonizers LLP is executed by his son Sh. Gaurav Chaudhary as he looks after day to day business of these LLPs. Sh. Gaurav Choudhary is not the partner in any of these LLPs. iii. From the copy of ledger account audited balance sheet of M/s Sterling Infrastructure LLP, it has kept cash of Rs. 40,00,000/- as imprest account with Sh. Deepak Choudhary, the partner and as per statement given by Sh. Gaurav Choudhary u/s 131 (1A) of the Act, he had stated that the cash found during the course of search at the residence of Sh. Deepak Choudhary pertains to the LLP which was kept with Sh. Deepak Choudhary as imprest account for safe custody. iv. During the search operation cash of Rs. 28,66,000/- was found out of which Rs. 27,00,000/- was seized. The appellant in his statement had also stated that the registered address of the LLPs is 20A Rajpur Road, Civil Lines, Delhi which is also the residence of Sh. Deepak Choudhary.