VENKATA SATYA PADMANABHA RAJU DATLA,KAKINADA vs. ACIT, CENTRAL CIRCLE-1(2), HYDERABAD

Briefly stated relevant facts are that the assessee is an individual. A search and seizure operation was carried out in the residence of the assessee on 09/02/2021. During the course of the search proceedings, cash of Rs. 10,49,960/- was found out of which an amount of Rs. 10,00,000/- was seized. For the year under consideration, the assessee filed his return of income on 28/12/2021, admitting total income of Rs. 56,61,490/-. Being the year of search, the return was selected for scrutiny and the assessment was completed under section 143(3) of the Income Tax Act, 1961 (for short “the Act”) by making addition of Rs. 10,00,000/- as ‘un- explained money’ under section 69A of the Act being cash found and seized during the course of search and thereby assessing the income of the assessee at Rs. 66,61,490/-.

Aggrieved by the said order of the learned Assessing Officer, the assessee filed an appeal before the CIT(A). 4. Learned CIT(A) after considering the submissions of the assessee, upheld the action of the learned Assessing Officer in making the addition of Rs. 10,00,000/- as ‘unexplained money’ under section 69A of the Act and dismissed the appeal of the assessee, since the assessee failed to furnish sources for the cash found and seized during the search proceedings. 5. Aggrieved by such an action of the learned CIT(A), the assessee is in appeal before us. 6. Learned AR argued before the Bench that the learned CIT(A) has erred in treating Rs. 10,00,000/- as unexplained money and ought to have considered the fact and explanation submitted by the assessee. Learned AR also reiterated that the learned CIT(A) failed to appreciate the fact that the amount of Rs. 5,00,000/- belongs to M/s. HES Infra Pvt. Ltd., where assessee is a Director, Rs. 2,40,000/- amounts received from relatives through gifts, Rs. 1,90,000/- from sale of car and Rs. 40,000/- kept for donation and finally prayed to delete addition made.

Per contra, learned DR vehemently relied upon the decision of the authorities below.

We have heard the rival submissions and perused the material available on record. The assessee had given the explanation that an amount of Rs. 40,000/- was kept for donation for Kashi Vishwanath Temple. Therefore, we accept the explanation given by the assessee that he had kept an amount of Rs. 40,000/- for giving donation to Kashi Vishwanath temple and in our view, the assessee had rightly explained the said amount of Rs. 40,000/-. Accordingly, the assessee gets the relief of this amount. 8.1. As far as the addition of Rs. 1,90,000/- is concerned, the assessee had explained that the cash was received on account of the sale of Santro car for which, the assessee had also produced the registration certificate and had also given the name of the purchaser. The learned Assessing Officer/ the ld.CIT(A) had sustained the addition on the pretext that the money was not received through the banking channel. However, it was acknowledged that the registration of the car had taken place. In our opinion, once the registration of immoveable asset i.e., Santro car is done then, it cannot happen without receipt of the consideration. Further, merely because the amount has not been received through the banking channel cannot be a ground for dis-believing the version of the assessee that the he had received the cash on account of the sale of car. Hence, the assessee has explained with the cogent evidence the amount of Rs. 1,90,000/- is properly explained. Accordingly, the same is deleted.

8.2. As far as the addition of Rs. 2.40 lakhs and the pin money of Rs. 79,690/- are concerned, the ld.CIT(A) had brushed aside the explanation of the assessee on the pretext that the same being general in nature. The assessee is a Director of M/s. HES Infra Pvt. Ltd., and has filed the return of income declaring the taxable income of Rs. 56,61,490/-. Considering the status of the assessee, it is befeating to keep the amount of Rs. 2.40 lakhs towards the saving for the children and Rs. 79,690/- as an amount towards day-to-day expenses and requirement of the family in case of medical emergency etc. Therefore, we are of the opinion that the assessee has been able to explain the amount of Rs. 2.40 lakhs and Rs. 79,690/- and, therefore, the addition is required to be deleted and we delete the same. 8.3. As far as the addition of Rs. 5 lakhs is concerned, the assessee in his submissions before the lower authorities submitted that the said amount was kept by the assessee with the assessee’s father-in-law and the assessee had produced the cash book of M/s. HES Infra Private Ltd., for a period of 01/02/2021 to 07/02/2021 showing a cash balance of Rs. 11,88,737/-. The learned Assessing Officer had pointed out that there was no entries in the cash book suggesting that Rs. 5 lakhs was received from the assessee in the accounts of M/s. HES Infra Private Ltd., and, therefore, the amount was sustained by the lower authorities. Before us, it was submitted that the assessee was keeping the amount belonging to his father-in-law, who is the Chairman of the company. However, the above said submission is contrary to the fact as the assessee had produced the cash book of the company, suggesting that the money belongs to the company. In both the situations, the assessee was to explain the availability of cash either in the hands of the father-in-law or in the hands of the company. It is unbelievable why the cash of the company was kept in the premises of the assessee from where it was recovered more particularly when the assessee was merely a Director of the company. Further, the perusal of the cash book, does not show that the cash was entered in the cash book in the name of the assessee. Similarly, no evidence was filed before us or before the learned CIT(A) or learned Assessing Officer justifying the availability of the cash with the father-in-law. In our view, the onus is always on the assessee to prove the availability of cash seized from his premises with the cogent evidence, to the satisfaction of the learned Assessing Officer, in the absence of producing any rebuttable and reliable evidence, the cash found in the premises of the assessee, would deem to be the cash of the assessee. For these purposes, we may rely upon the provisions of section 292C of the Income Tax Act, which provides that if any document, books of account, bullion, money are found during the course of search, then the same shall be presumed to be belonging to the said person. In the present case, no evidence has been filed or produced before the lower authorities or before us rebutting the presumption under section 292C of the Act. Hence, ld.CIT(A) in our opinion is right in upholding the addition of Rs. 5 lakhs.