VISHAL JAIN,HYDERABAD vs. ACIT., CENTRAL CIRCLE-3(4), HYDERABAD

PER MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER:

This appeal is filed by Shri Vishal Jain (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), Hyderabad-11, (“Ld. CIT(A)”) dated 10.03.2025 for the A.Y. 2019-20.

ITA No.1147/Hyd/2025 Vishal Jain :: 2 :: medical condition, the assessee could not file the appeal within the prescribed period.

It was further submitted that the delay was neither deliberate nor attributable to any

mala fide intention, and therefore, a prayer has been made for condonation of the

delay.

objections on condonation of the delay.

on record. Having regard to the explanation furnished by the assessee, duly

supported by an affidavit, we are satisfied that the assessee was prevented by

sufficient cause from filing the appeal within the prescribed period. The delay is only

41 days, and there is nothing on record to suggest that the same was intentional or

occasioned by any mala fide motive. It is well settled that when substantial justice

and technical considerations are pitted against each other, the cause of substantial

justice deserves to be preferred. Accordingly, in the interest of justice, we condone

the delay of 41 days in filing the present appeal and admit the appeal for adjudication

on merits.

1) Ground 1. That on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in confirming the addition of Rs. 11,83,000/- made by the Assessing Officer (AO) under Section 69A of the Income-tax Act, 1961, as unexplained money, without appreciating the nature of the appellant's business and the circumstances of cash accumulation. The learned CIT(A) failed to consider that the appellant's business primarily involved cash transactions and collections, and that the seized

ITA No.1147/Hyd/2025 Vishal Jain :: 3 ::

cash represented legitimate business receipts accumulated during the course of business, which does not take the character of income envisaged under Section 69A. 2) Ground 2. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the assessment order passed by the AO, which resulted in double taxation of income. The learned AO made an addition of Rs. 11,83,000/- as unexplained money under Section 69A, over and above the declared total income of Rs. 13,51,680/-. It is submitted that the declared income of Rs. 13,51,680/- already included income from the business activities from which the seized cash was generated. Therefore, taxing the entire Rs. 11,83,000/- again as unexplained income amounts to taxing the same income twice, which is contrary to the principles of natural justice and established tax jurisprudence. 3) Ground 3. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the application of Section 115BBE of the Income-tax Act, 1961, to the entire addition of Rs. 11,83,000/-. Without prejudice to Ground No. 1 & 2, it is submitted that for the sake of argument, if any part of the income were to be considered unexplained, the application of Section 115BBE to the entire amount, especially when it was voluntarily offered as business income and the nature of the business involved cash transactions, is not justified. 4) Ground 4. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not appreciating that the appellant had voluntarily offered a substantial portion of the seized cash (Rs. 1,80,000/- as business income and Rs. 10,03,000/- as additional income) as income to buy peace and avoid prolonged litigation. The learned CIT(A) should have considered this gesture as a bona fide attempt to regularize the income, and the entire amount should not have been subjected to the stringent provisions of Section 69A and 115BBE, particularly when the appellant had already paid taxes on the declared income. 5) Ground 5. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the AO's stand regarding the non-applicability of notice under Section 153A of the Income-tax Act, 1961. While the

ITA No.1147/Hyd/2025 Vishal Jain :: 4 ::

requisition was made in AY 2019-20, the principles governing search assessments and the scope of Section 153A, particularly in relation to the year of search/requisition, require a more nuanced interpretation, and the addition made under Section 69A without a proper search assessment framework is debatable. 6) Ground 6. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not considering the relevant books and papers physically submitted by the appellant during the appellate proceedings, thereby failing to appreciate the true facts of the case and the explanations provided. 7) Ground 7. That the appellant craves leave to add, alter, amend, OR withdraw any of the above grounds of appeal at OR before the time of hearing.

the business of trading in plastic bags under the proprietary concern M/s. Shri Polypack Plastic. On 12.03.2019, cash amounting to ₹11,83,000/- was found by the

Police from the possession of the assessee. Subsequently, the said cash was seized

by the Income-tax Department. Subsequently, the assessee filed his return of

income for the Assessment Year 2019-20 on 30.08.2019, declaring a total income of ₹13,51,680/-. While filing the return of income, the assessee included the aforesaid seized cash of ₹11,83,000/- in the computation of income. The case of the assessee

was selected for scrutiny and accordingly notice under section 143(2) of the Income-

tax Act, 1961 (“the Act”) was issued by the Learned Assessing Officer (“Ld. AO”)

on 04.02.2021. During the course of the assessment proceedings, the Ld. AO observed that though the assessee had offered the amount of ₹11,83,000/- in the

return of income, the assessee had failed to establish that the said cash represented

ITA No.1147/Hyd/2025 Vishal Jain :: 5 :: business receipts. Accordingly, the Ld. AO treated the said amount as unexplained money under section 69A of the Act and subjected the same to tax at the special rate prescribed under section 115BBE of the Act. Consequently, the assessment was completed by the Ld. AO under section 143(3) of the Act dated 22.06.2021. 7. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), after considering the submissions of the assessee, upheld the action of the Ld. AO and dismissed the appeal of the assessee. 8. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal. The Learned Authorised Representative (“Ld. AR”) submitted that the only issue arising out of the appeal of the assessee for consideration is whether the amount of ₹11,83,000/- could be treated as unexplained money under section 69A of the Act and taxed under section 115BBE of the Act instead of being chargeable to tax at the normal rates. Inviting our attention to the computation of income placed at page no. 2 of the paper book, the Ld. AR submitted that while filing the return of income, the assessee had voluntarily disclosed the entire seized cash of ₹11,83,000/- while filing the return of income. Out of the said amount, the assessee had offered ₹1,80,000/- as additional profit under the head “Profits and Gains of Business or Profession” and ₹10,03,000/- under the head “Income from Other Sources.” She further submitted that at the time of seizure itself the assessee had explained before the Revenue authorities that the source of the cash was the sale proceeds arising from the business of trading in plastic bags. It was argued that the entire cash was related to the business activities of the assessee and since the same had already been offered

ITA No.1147/Hyd/2025 Vishal Jain :: 6 :: to tax in the return of income, there was no justification for invoking the provisions of section 69A of the Act and consequently section 115BBE of the Act. In support of their submissions, reliance was placed on the decision of this Tribunal in the case of Mulchand Sejmal Jain & Others Vs. DCIT in ITA Nos.1499 & 1502/Hyd/2025 dated 17.04.2026. 9. Per contra, the Ld. DR strongly relied upon the orders of the lower authorities. Inviting our attention to the computation of income placed at page no. 2 of the paper book, the Ld. DR submitted that the assessee had not offered the impugned amount as business receipts arising from the regular business carried on by him. On the contrary, the assessee had shown ₹1,80,000/- merely as “additional profit” under the business head and ₹10,03,000/- under the head “Income from Other Sources”, without furnishing any explanation regarding the nature and source thereof. He further invited our attention to the Trading Account, Profit & Loss Account and Balance Sheet of the proprietary concern M/s. Shri Polypack Plastic placed at page no. 3 of the paper book and submitted that the regular business of the assessee had generated only the normal business profit reflected therein. According to him, the amount of ₹11,83,000/- had not arisen from the regular business activity of the assessee and had not been substantiated by any documentary evidence. It was therefore submitted that the Ld. AO had rightly treated the impugned amount as unexplained money under section 69A of the Act and taxed the same under section 115BBE of the Act.

ITA No.1147/Hyd/2025 Vishal Jain :: 7 :: 10. We have heard the rival submissions, and perused the material available on

record including the case law relied upon. The solitary issue arising for our consideration is whether the amount of ₹11,83,000/- offered by the assessee in the

return of income is liable to be assessed as unexplained money under section 69A of the Act and consequently taxed under section 115BBE of the Act or whether the

same should be assessed at the normal rates. In this regard, we have gone through the Trading Account, Profit & Loss Account and Balance Sheet of the assessee’s

proprietary concern M/s. Shri Polypack Plastic, placed at page no. 3 of the paper book, which is to the following effect:

ITA No.1147/Hyd/2025 Vishal Jain :: 8 :: 11. On perusal of above, we find that the assessee has earned a net profit of only ₹1,76,056.74 from his regular business activities during the relevant previous year. We have also examined the computation of income of the assessee placed at page no. 2 of the paper book, which is to the following effect:

ITA No.1147/Hyd/2025 Vishal Jain :: 9 :: business carried on by the assessee has generated a net profit of only ₹1,76,056.74.

Therefore, the impugned amount cannot be said to have arisen from the regular

business activities of the assessee on the basis of the material placed before us. We

have also considered the reliance placed by the assessee on the decision of this

Tribunal in the case of Mulchand Sejmal Jain & Others Vs. DCIT (supra). In our

considered opinion, the facts of the said case are clearly distinguishable from the

facts of the present appeal. In that case, the cash found during the course of search

had already been duly recorded in the regular books of account maintained by the

assessee prior to the date of seizure. Accordingly, the Tribunal held that the

provisions of section 69A of the Act were not applicable in that case. In the present case, admittedly, the assessee has failed to establish that the cash of ₹11,83,000/-

was duly recorded in the books of account before its seizure. Consequently, the

reliance placed by the assessee on the aforesaid decision is misplaced. We have

further gone through the provisions of section 69A of the Act, which is to the

following effect:

69A. [ Unexplained money, etc. 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 ] [ Substituted by Act 18 of 1992, Section 35, for Explanation 3 (w.e.f. 1.4.1993).][Assessing Officer] [ Substituted by Act 4 of 1988, Section 2, for " Income-tax Officer" (w.e.f. 1.4.1988).][, 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.]

ITA No.1147/Hyd/2025 Vishal Jain :: 10 :: 13. On perusal of the above, it is evident that the provision of Section 69A of the

Act provides that where in any financial year an 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 either offers no

explanation about the nature and source thereof or the explanation offered is not, in

the opinion of the Assessing Officer, satisfactory, the value thereof may be deemed

to be the income of the assessee for such financial year. In the present case, the cash of ₹11,83,000/- has not been established to have arisen from the business activities

of the assessee. Further, the assessee has failed to explain the source of the said

income by producing any cogent documentary evidence. Therefore, in our

considered opinion, the Ld. AO was fully justified in treating the said amount as

unexplained money under section 69A of the Act. We have also examined the

provisions of section 115BBE of the Act, which is to the following effect:

115BBE. [ Tax on income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69D. [(1) Where the total income of an assessee, - a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of – (i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent; and

ITA No.1147/Hyd/2025 Vishal Jain :: 11 :: (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).] (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance [or set off of any loss] [Inserted by Act 28 of 2016, section 53 (w.e.f. 1-4-2017).] shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) [and clause (b)] [Inserted by Finance Act, 2018 (Act No. 13 of 2018), dated 29.3.2018.] of sub-section (1).]

specifically provides that where the total income of an assessee includes any income

referred to in section 69A of the Act, such income shall be chargeable to tax at the

rate prescribed therein. Merely because the assessee has disclosed such income in

the return of income filed under section 139 of the Act would not alter the nature

and character of such income. Once the income is rightly assessed under section 69A

of the Act, the provisions of section 115BBE of the Act automatically become

applicable.

under section 69A of the Act and consequently subjecting the same to tax under

section 115BBE of the Act. Accordingly, we uphold the order of the lower

authorities.

Sd/- Sd/- RAVISH SOOD MADHUSUDAN SAWDIA JUDICIAL MEMBER ACCOUNTANT MEMBER

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Hyderabad Dated: 24th July, 2026 TLN

Copy to:

VISHAL JAIN, 14-3-62, GOSHAMAHAL, JOSHIWADI, HYDERABAD-500012, 1 TELANGANA ACIT., CENTRAL CIRCLE-3(4), O/O ACIT., 2 CENTRAL CIRCLE-3(4), HYDERABAD, TELANGANA 3 THE PCIT / CIT, HYDERABAD 4 THE D.R., ITAT, HYDERABAD BENCH 5 GUARD FILE