ASHISH SHASHIKANT CHOKSI,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 6(2), MUMBAI, MUMBAI

2.1 For the assessment year under consideration, the assessee filed 2.1 For the assessment year under consideration, the assessee filed 2.1 For the assessment year under consideration, the assessee filed his return of income on 30.08.2019 declaring a total income of his return of income on 30.08.2019 declaring a total income of his return of income on 30.08.2019 declaring a total income of ₹4,08,55,690/-, after claiming deduction of , after claiming deduction of ₹13,25,908/ 13,25,908/- under Chapter VI-A of the Act. Subsequently, the assessee revised the A of the Act. Subsequently, the assessee revised the A of the Act. Subsequently, the assessee revised the return under Section 139(5) of the Act on 31.07.2020, retaining the return under Section 139(5) of the Act on 31.07.2020, retaining the return under Section 139(5) of the Act on 31.07.2020, retaining the same figure of total income. In the said return, the assessee, inter same figure of total income. In the said return, the assessee, inter same figure of total income. In the said return, the assessee, inter alia, disclosed the sum of alia, disclosed the sum of ₹70,00,000/-, being the amount seized , being the amount seized during search, under the head ‘Income from Other Sources’. during search, under the head ‘Income from Other Sources’. during search, under the head ‘Income from Other Sources’.

2.2 The return of income was selected for scrutiny and due 2.2 The return of income was selected for scrutiny and due 2.2 The return of income was selected for scrutiny and due statutory notices were issued, to which the assessee duly statutory notices were issued, to which the assessee duly statutory notices were issued, to which the assessee duly responded. During the course of assessment proceedings, the responded. During the course of assessment proceedin responded. During the course of assessment proceedin Assessing Officer called upon the assessee to explain the nature Assessing Officer called upon the assessee to explain the nature Assessing Officer called upon the assessee to explain the nature and source of the cash seized amounting to and source of the cash seized amounting to ₹70,00,000/ 70,00,000/- and also the balance cash of ₹ ₹2,81,900/- found but not seized. The assessee found but not seized. The assessee submitted that the seized sum of submitted that the seized sum of ₹70,00,000/- had a had already been offered to tax under the head ‘Income from Other Sources’. With offered to tax under the head ‘Income from Other Sources’. With offered to tax under the head ‘Income from Other Sources’. With respect to the balance cash of respect to the balance cash of ₹2,81,900/-, it was explained that , it was explained that the same represented cash in hand available as on 31.03.2018 as the same represented cash in hand available as on 31.03.2018 as the same represented cash in hand available as on 31.03.2018 as well as withdrawals made between 01.04.2018 and the date of well as withdrawals made between 01.04.2018 and th well as withdrawals made between 01.04.2018 and th search i.e. 24.08.2018, by the assessee himself, Shri Ashish search i.e. 24.08.2018, by the assessee himself, Shri Ashish search i.e. 24.08.2018, by the assessee himself, Shri Ashish Choksi, and his brother, Shri Vishwas Choksi. It was contended Choksi, and his brother, Shri Vishwas Choksi. It was contended Choksi, and his brother, Shri Vishwas Choksi. It was contended that both these persons collectively had a cash balance of that both these persons collectively had a cash balance of that both these persons collectively had a cash balance of ₹14,00,000/- as on the date of search and therefore, the cash of as on the date of search and therefore, the cash of as on the date of search and therefore, the cash of ₹2,81,900/- stood fully explained. stood fully explained.

2.3 The Assessing Officer, however, was not satisfied with the 2.3 The Assessing Officer, however, was not satisfied with the 2.3 The Assessing Officer, however, was not satisfied with the explanation furnished by the assessee and, while framing explanation furnished by the assessee and, while framing explanation furnished by the assessee and, while framing assessment under Section 143(3) read assessment under Section 143(3) read with Section 153A of the Act with Section 153A of the Act vide vide vide order order order dated dated dated 01.06.2021, 01.06.2021, 01.06.2021, treated treated treated the the the entire entire entire cash cash cash of of of ₹72,81,900/- comprising both the seized and the unseized portions, comprising both the seized and the unseized portions, comprising both the seized and the unseized portions, as unexplained money under Section 69A of the Act, thereby as unexplained money under Section 69A of the Act, thereby as unexplained money under Section 69A of the Act, thereby making addition of the said amount to the tot making addition of the said amount to the total income of the al income of the assessee.

6.1 The learned counsel for the assessee submitted that the The learned counsel for the assessee submitted that the The learned counsel for the assessee submitted that the provisions of Section 69A of the Act are not attracted in the present provisions of Section 69A of the Act are not attracted in the present provisions of Section 69A of the Act are not attracted in the present case. He contended that the section contemplates two cumulative case. He contended that the section contemplates two cumulative case. He contended that the section contemplates two cumulative conditions: a. The assessee is found to be owner of any money, bullion, jewellery ssee is found to be owner of any money, bullion, jewellery ssee is found to be owner of any money, bullion, jewellery or valuable article which is not recorded in the books of account and or valuable article which is not recorded in the books of account and or valuable article which is not recorded in the books of account and b. The assessee offers no explanation about the nature and source of b. The assessee offers no explanation about the nature and source of b. The assessee offers no explanation about the nature and source of such any money, bullion, jewellery or valuable such any money, bullion, jewellery or valuable article.” .” 6.2 The learned counsel further drew our attention to the The learned counsel further drew our attention to the The learned counsel further drew our attention to the provisions of Section 44AB of the Act, which prescribe the provisions of Section 44AB of the Act, which prescribe the provisions of Section 44AB of the Act, which prescribe the requirement of maintenance of books of account by certain persons requirement of maintenance of books of account by certain persons requirement of maintenance of books of account by certain persons engaged in business or profession. It was contended that in the engaged in business or profession. It was contended that in the engaged in business or profession. It was contended that in the present case, the assessee was not carrying on any business or se, the assessee was not carrying on any business or se, the assessee was not carrying on any business or profession; his income was derived solely from salary and other profession; his income was derived solely from salary and other profession; his income was derived solely from salary and other heads. Accordingly, there was no statutory obligation upon him to heads. Accordingly, there was no statutory obligation upon him to heads. Accordingly, there was no statutory obligation upon him to maintain books of account. In such circumstances, the primary maintain books of account. In such circumstances, the primary maintain books of account. In such circumstances, the primary condition under Section 69A, namely, that the asset in question is nder Section 69A, namely, that the asset in question is nder Section 69A, namely, that the asset in question is “not recorded in the books of account,” does not stand attracted. “not recorded in the books of account,” does not stand attracted. “not recorded in the books of account,” does not stand attracted. Hence, it was urged that the invocation of Section 69A in the Hence, it was urged that the invocation of Section 69A in the Hence, it was urged that the invocation of Section 69A in the present facts is wholly misconceived. present facts is wholly misconceived.

With respect to the balance cash of ₹2,81,900/ 6.3 With respect to the balance cash of 2,81,900/-, the assessee explained that it represented cash in hand as on 31.03.2018 explained that it represented cash in hand as on 31.03.2018 explained that it represented cash in hand as on 31.03.2018 together with cash withdrawals made up to the date of search, both together with cash withdrawals made up to the date of search, both together with cash withdrawals made up to the date of search, both by the assessee and his brother, Shri Vishwas Choksi. According to by the assessee and his brother, Shri Vishwas Choksi. According to by the assessee and his brother, Shri Vishwas Choksi. According to him, both persons had an aggregate cash balance of ₹14,00,000/- him, both persons had an aggregate cash balance of him, both persons had an aggregate cash balance of as on the date of search, as duly reflected in the wealth disclosure as on the date of search, as duly reflected in the wealth disclosure as on the date of search, as duly reflected in the wealth disclosure and substantiated by bank withdrawals, and therefore the cash of and substantiated by bank withdrawals, and therefore the cash of and substantiated by bank withdrawals, and therefore the cash of ₹2,81,900/- stood fully explained. stood fully explained. The relevant submission The relevant submission of the assessee is reproduced as under: assessee is reproduced as under:

“14. It is submitted that search proceedings u/s 132 of the Act It is submitted that search proceedings u/s 132 of the Act It is submitted that search proceedings u/s 132 of the Act conducted at the appellant premises dated 24.08.2018. During conducted at the appellant premises dated 24.08.2018. During conducted at the appellant premises dated 24.08.2018. During the course of the search proceedings, cash amounting to Rs. the course of the search proceedings, cash amounting to Rs. the course of the search proceedings, cash amounting to Rs. 77,81,900/- was found in which was found in which Rs. 5,00,000 has returned to Rs. 5,00,000 has returned to the assesse. Further, it is submitted that after the search the assesse. Further, it is submitted that after the search the assesse. Further, it is submitted that after the search proceedings, your appellant has offered Rs. 70,00,000/ proceedings, your appellant has offered Rs. 70,00,000/ proceedings, your appellant has offered Rs. 70,00,000/- in his return of income under the head income from the other sources return of income under the head income from the other sources return of income under the head income from the other sources dated 31.07.2020. Further, it is submitte dated 31.07.2020. Further, it is submitted that your appellant d that your appellant had paid the advance tax amounting to Rs. 72,81,000/ had paid the advance tax amounting to Rs. 72,81,000/ had paid the advance tax amounting to Rs. 72,81,000/- which is clearly evident from the income tax return filed on is clearly evident from the income tax return filed on is clearly evident from the income tax return filed on 31.07.2020. It is further submitted that the balance amount of 31.07.2020. It is further submitted that the balance amount of 31.07.2020. It is further submitted that the balance amount of Rs.2,81,900/ Rs.2,81,900/- is out of the cash balance as on 31.03.201 is out of the cash balance as on 31.03.2018 which was Rs. 200,000/ which was Rs. 200,000/- each in the case of assessee and his each in the case of assessee and his brother Vishwas Choksi and out of the cash withdrawals brother Vishwas Choksi and out of the cash withdrawals brother Vishwas Choksi and out of the cash withdrawals made till the date of search. In this regard We are enclosing made till the date of search. In this regard We are enclosing made till the date of search. In this regard We are enclosing the copies of Income Tax Return wherein in Schedule AL, your the copies of Income Tax Return wherein in Schedule AL, your the copies of Income Tax Return wherein in Schedule AL, your honour will fin honour will find the cash balance disclosed as on 31.03.2018 d the cash balance disclosed as on 31.03.2018 in both cases was Rs. 200,000/ in both cases was Rs. 200,000/- each. Further the department each. Further the department has confirmed in the statement dated 25.08.2018 recorded on has confirmed in the statement dated 25.08.2018 recorded on has confirmed in the statement dated 25.08.2018 recorded on the date of search that the cash withdrawal in both these the date of search that the cash withdrawal in both these the date of search that the cash withdrawal in both these cases was Rs. 500,000/ cases was Rs. 500,000/- each from 01.04.2018 till date of om 01.04.2018 till date of search. So the summary is tabulated here below: search. So the summary is tabulated here below: Particulars Total Rs. Cash in hand as Cash withdrawals Total Rs. on 31.03.2018 from 01.04.2018 to (Rs.) 24.08.2018 (date of search) (Rs.) Ashish Choksi 200,000 500,000 700,000 700,000 Choksi 200,000 500,000 700,000 Vishwas Choksi 700,000 Total 14,00,000 14,00,000 In view of the above discussion the balance amount of Rs. In view of the above discussion the balance amount of Rs. In view of the above discussion the balance amount of Rs. 281,900/- is out of the above cash balance of Rs.14,00,000 is out of the above cash balance of Rs.14,00,000 is out of the above cash balance of Rs.14,00,000 and therefore the additions made shall be deleted. and therefore the additions made shall be deleted.” 6.4 The learned Departmental The learned Departmental Representative, on the other hand, Representative, on the other hand, strongly supported the orders of the authorities below. He strongly supported the orders of the authorities below. He strongly supported the orders of the authorities below. He submitted that the assessee has misinterpreted the provisions of submitted that the assessee has misinterpreted the provisions of submitted that the assessee has misinterpreted the provisions of Section 69A. The phrase “not recorded in the books of account, if Section 69A. The phrase “not recorded in the books of account, if Section 69A. The phrase “not recorded in the books of account, if any” clearly signifies that eve any” clearly signifies that even in a case where no books are n in a case where no books are maintained, the assessee must discharge the onus of satisfactorily maintained, the assessee must discharge the onus of satisfactorily maintained, the assessee must discharge the onus of satisfactorily explaining the nature and source of the cash found. The absence of explaining the nature and source of the cash found. The absence of explaining the nature and source of the cash found. The absence of books of account cannot confer immunity upon the assessee from books of account cannot confer immunity upon the assessee from books of account cannot confer immunity upon the assessee from the operation of Section 69A the operation of Section 69A. It was accordingly contended that the . It was accordingly contended that the action of the Assessing Officer in taxing the seized cash as action of the Assessing Officer in taxing the seized cash as action of the Assessing Officer in taxing the seized cash as unexplained money was fully justified. unexplained money was fully justified.

7.2 It is only when both these conditions operate cumulatively It is only when both these conditions operate cumulatively It is only when both these conditions operate cumulatively that the Assessing Officer may deem such money, bullion, jewellery that the Assessing Officer may deem such money, bullion, jewellery that the Assessing Officer may deem such money, bullion, jewellery or valuable article to constitute the unexplained income of the or valuable article to constitute the unexplained income of the or valuable article to constitute the unexplained income of the assessee for the relevant assessee for the relevant financial year under Section 69A. The financial year under Section 69A. The legislative intent underlying this provision is to ensure that cash or legislative intent underlying this provision is to ensure that cash or legislative intent underlying this provision is to ensure that cash or valuables found in possession of an assessee are brought to tax valuables found in possession of an assessee are brought to tax valuables found in possession of an assessee are brought to tax unless the assessee is able to satisfactorily establish their nature unless the assessee is able to satisfactorily establish their nature unless the assessee is able to satisfactorily establish their nature and source.

7.3 In the case before us, the controversy essentially relates to the In the case before us, the controversy essentially relates to the In the case before us, the controversy essentially relates to the applicability of the ‘first limb’ of the provision. The learned counsel applicability of the ‘first limb’ of the provision. The learned counsel applicability of the ‘first limb’ of the provision. The learned counsel for the assessee contended that unless the cash in question was for the assessee contended that unless the cash in question was for the assessee contended that unless the cash in question was required to be mandatorily recorded in the books of account, the required to be mandatorily recorded in the books o required to be mandatorily recorded in the books o machinery of Section 69A could not be set in motion. We are unable machinery of Section 69A could not be set in motion. We are unable machinery of Section 69A could not be set in motion. We are unable to agree. The expression to agree. The expression “not recorded in the books of account, if “not recorded in the books of account, if any, maintained” must be read in its entirety. The insertion of the must be read in its entirety. The insertion of the must be read in its entirety. The insertion of the words “if any” makes it abundantly clea makes it abundantly clear that the condition of non r that the condition of non- recording arises only where books are maintained. In cases where recording arises only where books are maintained. In cases where recording arises only where books are maintained. In cases where no books of account are maintained, the provision is not rendered no books of account are maintained, the provision is not rendered no books of account are maintained, the provision is not rendered otiose, for the scope of Section 69A is not contingent upon the otiose, for the scope of Section 69A is not contingent upon the otiose, for the scope of Section 69A is not contingent upon the statutory requirement of maintain statutory requirement of maintaining books of account. ing books of account. The provision proceeds on a different footing and contemplates a provision proceeds on a different footing and contemplates a provision proceeds on a different footing and contemplates a situation where the assessee is found to be in possession of any situation where the assessee is found to be in possession of any situation where the assessee is found to be in possession of any money, bullion, jewellery or other valuable article, which is not money, bullion, jewellery or other valuable article, which is not money, bullion, jewellery or other valuable article, which is not recorded in the books of account, if a recorded in the books of account, if any, maintained by him and for ny, maintained by him and for which no satisfactory explanation is forthcoming. Thus, even in a which no satisfactory explanation is forthcoming. Thus, even in a which no satisfactory explanation is forthcoming. Thus, even in a case where no books are statutorily required to be maintained, the case where no books are statutorily required to be maintained, the case where no books are statutorily required to be maintained, the burden squarely rests upon the assessee to explain the nature and burden squarely rests upon the assessee to explain the nature and burden squarely rests upon the assessee to explain the nature and source of the money found i source of the money found in his possession. The essence of the The essence of the provision is that whenever an assessee is found to be in possession provision is that whenever an assessee is found to be in possession provision is that whenever an assessee is found to be in possession of unexplained money or assets, the burden rests squarely upon of unexplained money or assets, the burden rests squarely upon of unexplained money or assets, the burden rests squarely upon him to satisfactorily explain its nature and source, irrespective of him to satisfactorily explain its nature and source, irrespective of him to satisfactorily explain its nature and source, irrespective of whether books are m whether books are maintained.

7.4 Acceptance of the interpretation canvassed by the assessee Acceptance of the interpretation canvassed by the assessee Acceptance of the interpretation canvassed by the assessee would defeat the very object of the provision, for it would lead to the would defeat the very object of the provision, for it would lead to the would defeat the very object of the provision, for it would lead to the anomalous consequence that a person who does not maintain anomalous consequence that a person who does not maintain anomalous consequence that a person who does not maintain books of account could lawfully remain in possession of any books of account could lawfully remain in possession books of account could lawfully remain in possession quantum of cash without accountability. Such a construction would quantum of cash without accountability. Such a construction would quantum of cash without accountability. Such a construction would render Section 69A nugatory. It is precisely to obviate such a render Section 69A nugatory. It is precisely to obviate such a render Section 69A nugatory. It is precisely to obviate such a situation that the legislature consciously inserted the words “if situation that the legislature consciously inserted the words situation that the legislature consciously inserted the words any”, thereby ensuring that even in cases where books , thereby ensuring that even in cases where books are not , thereby ensuring that even in cases where books statutorily required to be kept, the assessee is not absolved from statutorily required to be kept, the assessee is not absolved from statutorily required to be kept, the assessee is not absolved from the obligation of explaining the source of money found in his the obligation of explaining the source of money found in his the obligation of explaining the source of money found in his possession.

7.5 We find support for this view from the decision of the Hon’ble We find support for this view from the decision of the Hon’ble We find support for this view from the decision of the Hon’ble Supreme Court in CIT v. P.K. Noorjahan CIT v. P.K. Noorjahan [(1999) 237 ITR 570 (SC)], [(1999) 237 ITR 570 (SC)], wherein it was held that although the discretion conferred on the wherein it was held that although the discretion conferred on the wherein it was held that although the discretion conferred on the Assessing Officer under Section 69 (and by necessary extension Assessing Officer under Section 69 (and by necessary extension Assessing Officer under Section 69 (and by necessary extension under Section 69A) must be exercised judiciously, the primary onus under Section 69A) must be exercised judiciously, the primary onus under Section 69A) must be exercised judiciously, the primary onus still rests on the assessee to e still rests on the assessee to explain the nature and source of the xplain the nature and source of the money found in his possession. The decision underscores that the money found in his possession. The decision underscores that the money found in his possession. The decision underscores that the burden of explanation cannot be wished away merely by offering the burden of explanation cannot be wished away merely by offering the burden of explanation cannot be wished away merely by offering the sum under a head of income. sum under a head of income.

7.6 We are of opinion We are of opinion that once the assessee is found in that once the assessee is found in possession of unexplained assets, the burden shifts squarely on session of unexplained assets, the burden shifts squarely on session of unexplained assets, the burden shifts squarely on him to establish the source, failing which the deeming fiction under him to establish the source, failing which the deeming fiction under him to establish the source, failing which the deeming fiction under Section 69A squarely applies. Section 69A squarely applies. The mere declaration of cash in the mere declaration of cash in the return under the head ‘income from other sources’ under the head ‘income from other sources’ does not ipso under the head ‘income from other sources’ facto discharge the burden of explanation required under Section facto discharge the burden of explanation required under Section facto discharge the burden of explanation required under Section 69A.

7.7 Accordingly, we reject the contention of the Ld. counsel for the Accordingly, we reject the contention of the Ld. counsel for the Accordingly, we reject the contention of the Ld. counsel for the assessee and hold that even if the said money of Rs.70,00,000/- assessee and hold that even if the said money of Rs.70,00,000/ assessee and hold that even if the said money of Rs.70,00,000/ was not recorded in the books of accounts, the assessee was was not recorded in the books of accounts, the assessee was was not recorded in the books of accounts, the assessee was required to explain the nature and source of such money found and required to explain the nature and source of such money found required to explain the nature and source of such money found by way of merely including the said cash under the head ‘income y way of merely including the said cash under the head ‘income y way of merely including the said cash under the head ‘income from other sources’, the assessee cannot escape his responsibility of from other sources’, the assessee cannot escape his responsibility of from other sources’, the assessee cannot escape his responsibility of explaining nature and source explaining nature and source.

7.8 In the present case, although the assessee has offered the In the present case, although the assessee has offered the In the present case, although the assessee has offered the seized cash of ₹72,00,000/ 72,00,000/– under the head “Income from Other “Income from Other Sources”, he has failed to discharge the foundational burden of , he has failed to discharge the foundational burden of , he has failed to discharge the foundational burden of establishing its nature and source. A mere declaration of cash for establishing its nature and source. A mere declaration of cash for establishing its nature and source. A mere declaration of cash for taxation does not, by itself, prove its genuineness or origin. Section taxation does not, by itself, prove its genuineness or origin. Section taxation does not, by itself, prove its genuineness or origin. Section 69A requires the asse 69A requires the assessee to demonstrate the source, capacity, and ssee to demonstrate the source, capacity, and identity of the person from whom such cash was derived. In the identity of the person from whom such cash was derived. In the identity of the person from whom such cash was derived. In the absence of any cogent or satisfactory explanation, the seized sum absence of any cogent or satisfactory explanation, the seized sum absence of any cogent or satisfactory explanation, the seized sum has rightly been treated as unexplained money and brought to tax has rightly been treated as unexplained money and brought to tax has rightly been treated as unexplained money and brought to tax under Section 69A of the Act, with consequential application of A of the Act, with consequential application of A of the Act, with consequential application of Section 115BBE. As regards the balance cash of ₹2,81,900/-, we find merit in 7.9 As regards the balance cash of , we find merit in the explanation offered by the assessee. The material placed on the explanation offered by the assessee. The material placed on the explanation offered by the assessee. The material placed on record demonstrates that both the assessee and his brother had record demonstrates that both the assessee and his brother had record demonstrates that both the assessee and his brother had cash in hand as on 31.03.2018 and had further made withdrawals cash in hand as on 31.03.2018 and had further made withdrawals cash in hand as on 31.03.2018 and had further made withdrawals aggregating to ₹10,00,000/ 10,00,000/- during the relevant period. The during the relevant period. The availability of cash of approximately ₹14,00,000/- as on the date of availability of cash of approximately as on the date of search, out of which ₹2,81,900/- was found, stands reasonably search, out of which was found, stands reasonably explained. The addition made on this count is, therefore, plained. The addition made on this count is, therefore, plained. The addition made on this count is, therefore, unsustainable and deserves to be deleted. unsustainable and deserves to be deleted.

7.10 In light of the foregoing discussion, we uphold the addition of In light of the foregoing discussion, we uphold the addition of In light of the foregoing discussion, we uphold the addition of ₹72,00,000/- made under Section 69A of the Act, as the assessee made under Section 69A of the Act, as the assessee made under Section 69A of the Act, as the assessee has failed to satisfactor has failed to satisfactorily explain the nature and source of the said ily explain the nature and source of the said sum. However, we direct deletion of the addition of ₹2,81,900/- sum. However, we direct deletion of the addition of sum. However, we direct deletion of the addition of inasmuch as the explanation furnished in respect thereof stands inasmuch as the explanation furnished in respect thereof stands inasmuch as the explanation furnished in respect thereof stands substantiated.

Order pronounced in the open Court on ounced in the open Court on 26/09/2025. /09/2025.