SUDESH KUMAR ANAND,DELHI vs. DCIT, CENTRAL CIRCLE-6, DELHI

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ITA 8246/DEL/2025Status: DisposedITAT Delhi07 August 2026AY 2021-227 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the cash was recorded in the assessee's books of account and an explanation was provided, Section 69A was not applicable. Consequently, Section 115BBE, which applies to income deemed unexplained under Section 69A, was also not applicable.

What were the facts?

During a search, cash of Rs. 1.34 crore was found, with Rs. 1.30 crore seized. The assessee claimed this cash was from business activities, including speculative transactions in agricultural products, and offered it as business income. The Assessing Officer treated it as unexplained money under Section 69A and applied Section 115BBE.

What were the issues?

Whether cash found during a search, which is recorded in books of account and explained by the assessee, can be treated as unexplained money under Section 69A and taxed under Section 115BBE.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 132,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI

For Appellant: Shri Amit Goel, CA &, Shri Pranav Yadav, Adv
For Respondent: Shri K. Hauthang, CIT- DR
Hearing: 23/07/2026Pronounced: 07/08/2026

PER MANISH AGARWAL, AM:

This appeal is filed by the assessee against order of Ld. Commissioner of Income Tax (Appeals)-24, New Delhi dated 15.12.2025 u/s 250 of the Income Tax Act, 1961 (“the Act” in short) for Assessment Year 2021-22 arising out of the assessment order passed u/s 143(3) of the Act dated 29.03.2022.

2.

Brief facts of the case are that assesse has originally filed its return of income on 13.12.2021 declaring total income of Rs.1,48,95,750/-. A search and seizure action u/s 132 of the Act was carried out in the Khemka Group of cases on 14.01.2021 and residential premises of the assessee was also searched. Thereafter,

2 ITA No.8246/Del/2025 Sudesh Kumar Anand vs. DCIT case of the assessee was centralized with the Central Circle-6, Delhi. After filing the return of income, the case was selected for scrutiny by issue of notice u/s 143(2) of the Act. During the course of search, cash of Rs. 1,34,00,000/- was found, out of which Rs.1,30,00,000/- were seized. The assessee has stated that the said cash was generated out of the income earned out of his regular business activities. However, the same was not accepted and the cash was seized. In the return of income declaring total income of Rs.1,48,95,750/- which inter alia includes the business income of Rs.1,30,00,000/- earned from the speculative transactions of agricultural products which was treated as unexplained money u/s 69A of the Act and accordingly, total income was assessed at the return of income, however, nomenclature of income of Rs.1,30,00,000/- (being representing the cash seized during the search) has been changed from Business income to unexplained money u/s 69A of the Act. The AO further invoked the provisions of section 115BBE for charging special rates of tax.

3.

Aggrieved by the said order, the assessee filed an appeal before the Ld. CIT(A) who in terms of the order dated 05.12.2025 has confirmed the findings of the AO.

4.

Aggrieved by the first appellate order, the assessee is in appeal before the Tribunal by taking various grounds of appeal as stated in the appeal memo.

5.

Before, us the submissions was made with respect to the solitary ground of appeal No.1 and remaining grounds of appeal were not pressed, thus, they are dismissed being not pressed.

3 ITA No.8246/Del/2025 Sudesh Kumar Anand vs. DCIT 6. With respect to the ground of appeal No.1, the Ld. AR for the assessee submits that the assessee since the date of search stated that the cash found was accumulated out of the income offered in IDS 2014 as business income from the commission activity in Real estate and further out of the speculative trading of agricultural products and had included the same in the total income under the head ‘Income from business’. The Ld.AR further submits that from the course of search in the statements recorded u/s 132 assessee has admitted the facts that this cash was earned out of the regular business activity carried out of brokerage business in Real Estate and further claimed that part of the cash found was out of the business income declared under IDS-2014 of Rs.7,00,00,000/-. Since the assessee was not able to substantiate the claim, therefore, the cash so found in his possession was claimed as earned out of the speculation business of agricultural activity and included the same in the total income as business income. Ld. AR submits that in the books of account all the entries with respect to such speculative business were duly recorded and also the cash received from the sale of such produce was duly recorded the cash book maintained. He therefore, submits that income should not be re-characterized as unexplained money u/s 69A of the Act and should be hold as business income.

6.1. It is further submitted by Ld. AR that the assessee has duly disclosed said income in the return of income and before us, copy of the cash book alongwith the respective bills for sale were also filed, therefore, once the same is recorded in the books of account, provisions of section 69A of the Act cannot be applied. The Ld. AR submits that section 69A of the Act applies where assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or valuable article or thing is not recorded in the books

4 ITA No.8246/Del/2025 Sudesh Kumar Anand vs. DCIT of accounts maintained and no explanation was offered about the nature and source of the acquisition of the same to the satisfaction of the AO. The Ld. AR submits that in the instant case, the income with respect to the cash found during the course of search of Rs.1,30,00,000/- was duly recorded in the books of account and assessee has tendered the explanation alongwith the evidences and, therefore, the income offered cannot be held as unexplained money u/s 69A of the Act. For this reliance is placed on the judgment of the Co-ordinate Bench of Tribunal in the case of DCIT vs. Tapesh Tyagi, in ITA No.1344/Del/2021 order dated 27.10.2023.

7.

On the other hand, the Ld. CIT-DR vehemently supported the orders of lower authorities and submits that the assessee has changed his stand from the explanation given during the course of search that the cash was related to the commission income whereas in the return of income was shown that the same was earned out of speculative transactions of agricultural products for which no evidence were filed before the AO. Further the offer of income of such cash found/seized during the search was not voluntarily and therefore requested for the confirmation of the orders of the lower authorities.

8.

Heard both the parties and perused the materials available on record. In the instant case, during the course of search carried out u/s 131 of the Act, total cash of Rs.1,34,00,000/- was found out of which Rs.1,30,00,000/- was seized. In the statements recorded u/s 132(4) of the Act when the assessee was confronted about the source of the said cash, it was stated by the assessee that this amount is part of the commission income offered for tax under IDS-2016. Admittedly in the return of income filed for the year under appeal, assessee has declared the income under the head ‘Income from business and profession’ of 1.30 crores being earned from

5 ITA No.8246/Del/2025 Sudesh Kumar Anand vs. DCIT the speculative business transactions of agricultural products and copy of the cash book was submitted before the lower authorities which is placed at pages 6 to 22. It is further observed that the assessee has also filed the confirmation of various parties along with their assessment particulars wherein they have accepted that payment was made in cash to the assessee against the purchases of agricultural products from the assessee and all the necessary details were filed before the lower authorities which have been ignored. Once the assessee has explained the source of cash found as income earned from the business activity during the course of search and had offered the same for tax, there is no reason to hold the said income as unexplained money u/s 69A of the Act.

9.

Before going further, the provisions of section 69A of the Act must be considered which reads as under: “69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.” 9.1. From the perusal of the above, it is clear that provisions of section 69A could be invoked where any sum of money was found in possession of the assessee which is not recorded in the books of accounts maintained and no explanation was offered or the explanation offered was not to the satisfaction of the AO. In the instant case as observed above, the cash found during the course of search was claimed as accumulated out of the income earned from trading of agriculture products and the same have duly been recorded in the books of account maintained by the assessee which fact has not been controverted by the lower authorities,

6 ITA No.8246/Del/2025 Sudesh Kumar Anand vs. DCIT therefore, the provisions of section 69A of the Act cannot be applied. We order accordingly.

10.

With respect to the application of provisions of section 115BBE of the Act, the same are applicable where additions have been made u/s 68, 69, 69A, 69B or 69C of the Act. As observed above, in the instant case the provisions of section 69A could not be invoked on the income declared by the assessee computed as per the entries recorded in regular books of accounts maintained, thus the provisions of section 115BBE of the Act could not be invoked in absence of application of provisions of section 69A of the Act. Under identical circumstances, Co-ordinate Delhi Bench of Tribunal in the case of DCIT vs. Tapesh Tayagi (supra) has held that mere categorization of the income offered by the assessee cannot lead to the invocation of provisions of section 69A of the Act and 115BBE of the Act. The relevant observations as contained in para 8 to 9 of the order are as under: “8. As rightly observed by the learned First Appellate Authority, section 69A uses word "may", which implies that if explanation offered by the assessee regarding source of money, bullion, jewellery or other valuable articles is satisfactory, it cannot be treated as unexplained money under Section 69A of the Act. In the facts of the present appeal, there is nothing on record to suggest that assessee's explanation regarding the source of the income offered has either been doubted or disputed at the time of search and seizure operation or even during the assessment proceedings. Therefore, in our view, the income offered by the assessee cannot be treated as unexplained money under Section 69A of the Act. Therefore, as a natural corollary, section 115BBE of the Act would not be applicable. 9. Having held so, we may further add that a reading of section 115BBE of the Act makes it clear that the special rate of tax provided under the said provisions shall be applicable under two conditions. Firstly, where the total income includes any income referred to insections 68, 69A, 69B, 69C or 69D and reflected in the return of income under Section 139 of the Act. Secondly, if the income determined by the Assessing Officer includes any income referred to, in sections 68, 69, 69A, 69B, 69C or 69D, if such income is not covered under the first condition. In the facts

7 ITA No.8246/Del/2025 Sudesh Kumar Anand vs. DCIT of the present appeal, admittedly, assessee has not offered the income under Section 69A of the Act. Even, the Assessing Officer has not made any separate addition under Section 69A of the Act. He has merely re- characterized the nature of income offered by the assessee. Thus, in our considered opinion, the provisions of sections 115BBE would not be applicable to the facts of the present appeal.” 11. Considering the facts of the case and by respectfully following the judgment of the Co-ordinate Bench stated (supra), we are of the view that provisions of section 69A are not applicable to the facts of the present case where the assessee has declared the income under the head ‘Income from Business or profession’ computed on the basis of the entries recorded in the books of account and, therefore, the provisions of section 115BBE of the Act are not applicable. Accordingly, we allow the ground of appeal No.1 of the assessee.

12.

In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 07.08. 2026.

Sd/- Sd/- (VIMAL KUMAR) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 07.08.2026 *PK, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

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