MANJI DEVJI DHANANI,BHUJ vs. DY. COMMR. OF INCOME TAX, CEN.CIR.-2, RAJKOT

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ITA 104/RJT/2018Status: DisposedITAT Rajkot28 February 2020AY 2014-154 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had declared substantial agricultural income and possessed land for agricultural operations, which was not doubted by the authorities. Therefore, sufficient cash was available with the assessee, and it could not be treated as unexplained.

What were the facts?

During a search operation, Rs. 9,47,680/- in cash was found, with Rs. 9 lakhs seized. The assessee claimed the cash arose from agricultural income and bank withdrawals, supported by their cash book. However, the AO and CIT(A) disagreed, deeming it unexplained.

What were the issues?

Whether the cash found during a search can be treated as unexplained income when the assessee claims it originates from declared agricultural income and bank withdrawals.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: SHRI WASEEM AHMED

Hearing: 26/02/2020Pronounced: 28/02/2020

�थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AGSPD1159M (अपीलाथ� /Appellant) (��यथ� / Respondent) अपीलाथ� ओर से / Appellant by : Shri Kalpesh Doshi, A.R ��यथ� क� ओर से/Respondent by : Ms Namita Khurana, Sr. D.R. सुनवाई क� तार�ख / Date of Hearing 26/02/2020 घोषणा क� तार�ख /Date of Pronouncement 28/02/2020 आदेश / O R D E R PER BENCH: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-Ahmedabad [Ld. CIT(A) in short] dated 08/01/2018 arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 23/03/2016 relevant to the Assessment Year (A.Y.) 2014-15.

The assessee has raised the following grounds of appeal:

2 - 1. That the learned CIT9A) has wrongly confirmed addition of Rs.9,00,000/- on account of unexplained cash found during the course of search.

2.

That, the findings of the learned Assessing Officer and CIT(A) are not justified and are bad-in-law. The appellant craves to add, alter, amend or delete any of the above grounds of appeal.

2. The only issue raised by the assessee is that the learned CIT (A) erred in confirming the addition made by the AO for ₹9 lakhs on account of the cash found in the course of search by treating the unexplained income.

3.

The facts in brief are that the assessee is an individual and partner in the partnership firm. There was a search operation under section 132 of the Act at the premises of the assessee dated 30/07/2013. On the date of search cash of Rs. 9,47,680/- was found and out of the said amount, a sum of Rs.9 lakhs was seized. On question, the assessee explained that this cash is arising from the cash book wherein the agriculture income and the withdrawal from the bank has been shown.

3.1 However the AO disagreed with the contention of the assessee by observing that the assessee has failed to justify the source of cash for Rs.9,78,622/- as opening balance based on any documentary evidence 3.2 The AO also observed that the assessee has not explained the source of cash found during the course of search. Accordingly it disregarded the contention of the assessee and treated the sum of Rs.9 lakhs as unexplained cash and added the same to the total income of the assessee.

4.

Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the order of the AO by observing as under:

3 - 4.2 I have carefully considered the submission of the appellant and the assessment order. The only issue is pertaining to cash amounting to Rs. 9,00,000/- belonging to appellant found during the course of search on 30/07/2013 . The appellant had shown opening cash balance of Rs. 9,78,622/- as on 01/07/2013 in the books of account. The AR of the appellant has contended that the cash found is duly reflected in the books of accounts the appellant. However, the appellant has failed to provide the cash books of the previous years to establish the source of the opening balance of cash at the time of search. In absence of any substantive material in support of its claim that cash amounting to Rs. 9,00,000/- is pertaining to the opening balance of cash, I find no merit in the appellant's argument and confirm the addition made by the AO. This ground of appeal is dismissed. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us.

5.

The learned AR before us filed two paper books running from pages 1 to 11 & 1 to 12 and submitted that he has shown opening cash balance as on 1-4-2013 in the cash book amounting to Rs. 31,162.96 and not Rs. 9,78,622/- as alleged by the AO. The AR further claimed that such opening cash balance was shown as on 1 July 2013 which was very much arising from the cash book. The learned AR in support of his contention drawn our attention on the cash book placed on page 5 of the paper book.

5.1 The learned AR also claimed that he has disclosed an income of Rs. 29,45,513/- from agricultural operation for the year under consideration which was duly accepted by the AO in the assessment proceedings. As such the source of cash found on the date of search duly gets explained from the withdrawal of the money from the bank viz a viz from the agricultural activities.

6.

On the other hand, the learned DR vehemently supported the order of the authorities below.

7.

We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the assessee has declared the income for the year under consideration from agricultural activities amounting to 4 - Rs. 29,45,513/- as evident from the statement of income placed on page 1 of the paper book. The assessee was also holding the lands used for agricultural operations as evident from the details in form number 8A/7 and 12 which are placed on pages 2 to 9 of the paper book. Similarly, the assessee has also filed the copies of the sales bills of the agriculture produce which are placed on pages 10-12 of the paper book. All the facts about the agriculture produce have not been doubted by the authorities below.

7.1 Thus from the above income i.e. the agricultural operations, it is transpired that there was sufficient cash available with the assessee which was found at the time of search. Accordingly, we hold that the assessee has duly explained the availability of cash in his hands. Therefore the same cannot be treated as unexplained cash in the given facts and circumstances. The learned DR, at the time of hearing could not controvert the argument of the learned AR for the assessee. Hence, we set aside the order of the learned CIT (A) and direct the AO to delete the addition made by him. Thus the ground of appeal of the assessee is allowed.

8.

In the result, the appeal of the assessee is allowed.

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