Loading judgment…
Facts
During a search, cash of Rs. 20,00,000/- was seized from the assessee's residence. The Assessing Officer (AO) treated it as unexplained money, adding it to the assessee's income. The assessee contended the cash belonged to M/s. Umbrella Hospitality Pvt. Ltd., where his sons were directors, not him. This was confirmed by the CIT(A).
Held
The Tribunal held that the AO failed to conduct adequate enquiry. The AO should have investigated the matter by recording statements from the assessee's sons and examining the source of cash sales of the company. The addition was deleted due to lack of proper enquiry.
Key Issues
Whether the addition of unexplained cash seized from the assessee's residence is justified without proper enquiry by the AO, especially when the assessee claims it belongs to a company where his sons are directors.
Sections Cited
69A, 132, 143(1), 143(2), 143(3), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
(Assessment Year: 2019-20) Vikram Sajanlal Choksi Assistant Commissioner of Income 68, Mangalik Presidency Society, Tax, Central Circle 6(2), Mumbai JVPO Scheme, 7th N. S. Road, Vile Vs. Parle West, Mumbai – 400049. PAN/GIR No. ADKPC8062F (Appellant) : (Respondent) Assessee by : Shri Ajay R. Singh/Akshay Pawar Respondent by : Shri Vivek Perampurna (CIT-DR) Date of Hearing : 01.07.2025 Date of Pronouncement : 29.09.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) 54, Mumbai (‘ld. CIT(A)’ for short), passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2019-20.
The assessee has raised the following grounds of appeal:
1. On the facts, circumstances of the case and in law, the learned CIT (A) erred in confirming the order of learned assessing officer (hereinafter referred as "Ld. AO") thereby confirming the addition of Rs. 20,00,000/-made under section 69A of Income Tax Act, 1961 (hereinafter referred as the Act) by treating the cash seized at the appellants residence as unexplained money. The Ld. AO erred in making such addition by treating the assesse as director of Mis. Umbrella Hospitality Pvt Ltd (hereinafter referred as the Company) wherein the appellant was never a director of the said company. It is submitted that the Ld. AO was duly explained that the cash (A.Y. 2019-20) Vikram Sajanlal Choksi found in the premises of appellant belongs to the said company in which appellant's two sons were director. The Ld. AO has erred in making such addition without appreciating the facts of the case and the submission during the course of assessment proceedings. Further it is submitted that the above addition is made on the basis of conjecture, surmises. presumption and assumptions. Therefore, it is prayed before your honour to delete such arbitrary addition and necessary directions should be given in this regards.”
Brief facts of the case are that the assessee is an individual and having income under the head income from other source and capital gain. The assessee had filed his return of income dated 30.08.2019, declaring total income at Rs. 2,32,88,730/- after claiming deduction under chapter VI-A amounting to Rs.1,88,955/- and the same was processed u/s. 143(1) of the Act. Pursuant to a search action carried out at Hindustan Platinum Pvt Ltd dated 24.08.2018 and also in the assessee’s premises, assessee’s case was selected for scrutiny and notices u/s. 143(2) and 143(1) of the Act were duly issued and served upon the assessee. The learned Assessing Officer ('ld. A.O.' for short) sought for explanation as to the source of the cash amount to Rs. 20,00,000/- which was found and seized at his residence during the search proceeding carried on u/s. 132 dated 24.08.2018 at his residential premises. After duly considering the submissions of the assessee, the ld. AO passed the assessment order u/s. 143(3) of the Act dated 19.05.2021, determining total income at Rs. 2,52,88,728/-, where the ld. AO made an addition of Rs. 20,00,000/- as unexplained money u/s. 69A of the Act, for the reason that the assessee has failed to substantiate the contention that the cash belonged to M/s. Umbrella Hospitality Private Limited in which the assessee was not the director and only his two sons viz. Rushabh Choksi and Shri Vardhaman Choksi were the directors who were also residing along with the assessee at his residence.
(A.Y. 2019-20) Vikram Sajanlal Choksi 4. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 07.01.2025 upheld the addition made by the ld. AO on the ground that the assessee has failed to prove with evidence that the cash pertains to M/s. Umbrella Hospitality Private Limited and not that of the assessee.
The assessee is in appeal before us, challenging the impugned additions.
We have heard the rival submissions and perused the materials available on record. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee was unaware of the cash that was kept at the residence and further the lower authorities have failed to consider the assessee’s submissions that the said money pertains to M/s. Umbrella Hospitality Pvt. Ltd. in which the assessee’s two sons were the directors. The ld. AR further stated that inspite of the specifying the same, the ld. AO has not recorded the statement of both the assessee’s sons during the course of search/survey proceeding. The ld. AR also argued despite giving various details such as the cash sales, cash withdrawals and cash expenses of M/s. Umbrella Hospitality Pvt. Ltd. during the assessment proceeding the same was not considered by neither the ld. AO nor the ld. CIT(A). Further, the lower authorities have failed to consider the fact that the assessee was not the director of the M/s. Umbrella Hospitality Pvt. Ltd. and had given a wrong finding which was contrary to the same. The ld. AR prayed that impugned addition made in the hands of the assessee be deleted.
The learned Departmental Representative ('ld. DR' for short) for the revenue on the other hand controverted the said fact and stated that the assessee has failed to discharge the onus casted upon him to explain the source of the cash that was seized from his (A.Y. 2019-20) Vikram Sajanlal Choksi residence during search/survey proceeding. The ld. DR further contended that the assessee has not given any documentary evidence to show that the cash belongs to M/s. Umbrella Hospitality Pvt. Ltd. and not that of the assessee. The ld. DR relied on the order of the lower authorities.
On perusal of the rival contentions, it is observed that during the course of search proceeding, a cash of Rs. 26,47,000/- was found and seized which source according to the revenue, the assessee was unable to explain. The ld. AO made an addition of Rs. 20,00,000/- as unexplained money u/s. 69A of the Act and the same was upheld by the ld. CIT(A). It is observed that the statement of the assessee recorded by the ld. AO revealed that the cash withdrawn from the bank from 01.04.2018 till the date of search i.e., 24.08.2018 aggregates to Rs. 53.25 lacs. Further, the assessee’s contention that the same belong to M/s. Umbrella Hospitality Pvt. Ltd. in which only assessee’s two sons and not the assessee was a director was also not considered by the ld. AO, in which case the ld. AO ought to have recorded the statement of the director of M/s. Umbrella Hospitality Pvt. Ltd. which is alleged to be owner of the cash seized during the search proceeding. Further, it is also observed that the assessee during the assessment proceeding has stated that the assessee has withdrawn cash from his account as well as his family members account and he has also stated that the same pertains to M/s. Umbrella Hospitality Pvt. Ltd. which according to the ld. AO was contradictory. The ld. AO has also given the finding that the assessee was the director of M/s. Umbrella Hospitality Pvt. Ltd. which fact was denied by the assessee by stating that the only his sons are the director of M/s. Umbrella Hospitality Pvt. Ltd. and not the assessee. The (A.Y. 2019-20) Vikram Sajanlal Choksi ld. AO has also given a finding that one of the employees of M/s. Umbrella Hospitality Pvt. Ltd. has admitted that it has indulged in recording the bogus cash sales and the said statement is also reproduced in the assessment order.
From the above, it is evident that there is a link between M/s. Umbrella Hospitality Pvt. Ltd. with that of the cash seized at the residence of the assessee and also the directors of M/s. Umbrella Hospitality Pvt. Ltd. are none but the sons of the assessee residing at the same residence, in which case the ld. AO ought to have made enquiry independently with the sons of the assessee as well as to the nature and source of the cash sales during the search. This exercise was not carried on by the ld. AO inspite of the assessee stating that the same belongs to M/s. Umbrella Hospitality Pvt. Ltd. We are also justified that the assessee’s contention that there was a considerable amount of withdrawal from the bank account of the assessee as well as the family members which was also not denied by the ld. AO.
From the above factual matrix, in our considered opinion, we deem it fit to delete the addition made in the hands of the assessee for lack of enquiry by the ld. AO and therefore hold that the addition in the hands of the assessee ought to be deleted on the said observation.