MANOJ NAVEEN PATEL,NASHIK vs. ACIT, CENTRAL CIRCLE 8(2), MUMBAI, MUMBAI

The Assessee has raised the following grounds of appeal:

The brief facts of the case are that a search and seizure under section 132 ts of the case are that a search and seizure under section 132 ts of the case are that a search and seizure under section 132 of the Income-tax Act, 1961 (“the Act”) was conducted in the case of M/s tax Act, 1961 (“the Act”) was conducted in the case of M/s tax Act, 1961 (“the Act”) was conducted in the case of M/s Metropolis Healthcare Ltd. and other associated entities on 16.11.2022. The Metropolis Healthcare Ltd. and other associated entities on 16.11.2022. The Metropolis Healthcare Ltd. and other associated entities on 16.11.2022. The residential premises of the assessee were al residential premises of the assessee were also covered in the course of the so covered in the course of the search. During the search proceedings, a locker held jointly by the assessee and search. During the search proceedings, a locker held jointly by the assessee and search. During the search proceedings, a locker held jointly by the assessee and his wife in Vishwas Sahakari Bank, Nashik, was opened and the Department his wife in Vishwas Sahakari Bank, Nashik, was opened and the Department his wife in Vishwas Sahakari Bank, Nashik, was opened and the Department found cash of Rs.7,00,000/ found cash of Rs.7,00,000/- therein. In the statement recorded on oath therein. In the statement recorded on oath, the assessee admitted that the cash belonged to him and his family but stated that assessee admitted that the cash belonged to him and his family but stated that assessee admitted that the cash belonged to him and his family but stated that documentary evidence in support of the source was not readily available. During documentary evidence in support of the source was not readily available. During documentary evidence in support of the source was not readily available. During the assessment proceedings, the assessee explained that out of the total cash, a the assessment proceedings, the assessee explained that out of the total cash, the assessment proceedings, the assessee explained that out of the total cash, sum of Rs.1,50,000/- belonged to his father belonged to his father-in-law and had been kept for law and had been kept for medical emergencies relating to his mother medical emergencies relating to his mother-in-law, Rs.1,50,000/- were cash gifts were cash gifts received by his grandson during his thread ceremony, and the balance received by his grandson during his thread ceremony, and the balance received by his grandson during his thread ceremony, and the balance Rs.4,00,000/- were accumulated savings and were accumulated savings and cash withdrawn from bank cash withdrawn from bank accounts and keptfor emergencies. The Assessing Officer did not accept the accounts and keptfor emergencies. The Assessing Officer did not accept the accounts and keptfor emergencies. The Assessing Officer did not accept the submissions on the ground that the assessee did not file any supporting evidence submissions on the ground that the assessee did not file any supporting evidence submissions on the ground that the assessee did not file any supporting evidence and thus held that the source of the cash remained unexplained. Accordingly, the and thus held that the source of the cash remained unexplained. Accordingly and thus held that the source of the cash remained unexplained. Accordingly Assessing Officer added the amount of Rs.7,00,000/ Assessing Officer added the amount of Rs.7,00,000/- as income of the assessee as income of the assessee by treating the same as unexplained money under section 69A of the Act and by treating the same as unexplained money under section 69A of the Act and by treating the same as unexplained money under section 69A of the Act and assessing total income at Rs.1,32,02,640/ assessing total income at Rs.1,32,02,640/-.

Aggrieved by the assessment order, the assessee p Aggrieved by the assessment order, the assessee preferred an appeal referred an appeal before the CIT(Appeals). Before the CIT(Appeals), the assessee reiterated that before the CIT(Appeals). Before the CIT(Appeals), the assessee reiterated that before the CIT(Appeals). Before the CIT(Appeals), the assessee reiterated that Rs.1,50,000/- had been received from his father had been received from his father-in-law, Shri Shantaram law, Shri Shantaram Jagannath Naravane, for medical treatment of the assessee's mother-in-law and Jagannath Naravane, for medical treatment of the assessee's mother Jagannath Naravane, for medical treatment of the assessee's mother filed a confirmation and copy of the bank statement showing withdrawal onfirmation and copy of the bank statement showing withdrawals. The onfirmation and copy of the bank statement showing withdrawal assessee further submitted that Rs.1,50,000/ assessee further submitted that Rs.1,50,000/- were the gifts received by the were the gifts received by the grandson on the occasion of his thread ceremony held on 30.10.2022 and the grandson on the occasion of his thread ceremony held on 30.10.2022 and the grandson on the occasion of his thread ceremony held on 30.10.2022 and the assessee placed reliance on photogra assessee placed reliance on photographs of the ceremony, confirmation from the phs of the ceremony, confirmation from the daughter and her bank statement showing payments for the hall and caterer. daughter and her bank statement showing payments for the hall and caterer. daughter and her bank statement showing payments for the hall and caterer. With respect to the balance cash of Rs.4,00,000/ With respect to the balance cash of Rs.4,00,000/-, the assessee submitted that the , the assessee submitted that the assessee had been declaring substantial income and had assessee had been declaring substantial income and had regularly withdrawn regularly withdrawn cash from bank accounts and retained cash for emergencies. The assessee also cash from bank accounts and retained cash for emergencies. The assessee also cash from bank accounts and retained cash for emergencies. The assessee also contended that the assessee was filing return under section 44ADA of the Act contended that the assessee was filing return under section 44ADA of the Act contended that the assessee was filing return under section 44ADA of the Act (running a pathological laboratory) and was not required to maintain books of (running a pathological laboratory) and was not required to maintain books of (running a pathological laboratory) and was not required to maintain books of account. The assessee submitted that all his income had already been offered to ount. The assessee submitted that all his income had already been offered to ount. The assessee submitted that all his income had already been offered to tax and, therefore, there was no reason to keep unaccounted cash in the locker. tax and, therefore, there was no reason to keep unaccounted cash in the locker. tax and, therefore, there was no reason to keep unaccounted cash in the locker.

The CIT(Appeals), however, dismissed the appeal and upheld the addition The CIT(Appeals), however, dismissed the appeal and upheld the addition The CIT(Appeals), however, dismissed the appeal and upheld the addition made by the Assessing Officer. made by the Assessing Officer.

The assessee is in appeal before us against the order passed by The assessee is in appeal before us against the order passed by The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. CIT(Appeals) dismissing the appeal of the assessee.

We have heard the rival con We have heard the rival contentions and perused the material on record. tentions and perused the material on record. The short controversy involved in the present appeal is whether the cash The short controversy involved in the present appeal is whether the cash The short controversy involved in the present appeal is whether the cash amounting to Rs.7,00,000/ amounting to Rs.7,00,000/- found in the bank locker maintained jointly by the found in the bank locker maintained jointly by the assessee and his wife could be treated as unexplained money assessee and his wife could be treated as unexplained money under section 69A under section 69A of the Act and subjected to tax under section 115BBE of the Act. of the Act and subjected to tax under section 115BBE of the Act.

It is an undisputed fact that during the course of search proceedings It is an undisputed fact that during the course of search proceedings It is an undisputed fact that during the course of search proceedings conducted under section 132, cash of Rs.7,00,000/ conducted under section 132, cash of Rs.7,00,000/- was found in locker No.215 was found in locker No.215 kept with Vishwas Sahakari Bank, Nashik. It is also not in dispute that right akari Bank, Nashik. It is also not in dispute that right akari Bank, Nashik. It is also not in dispute that right from the stage of recording of statement under section 132(4) of the Act till the from the stage of recording of statement under section 132(4) of the Act till the from the stage of recording of statement under section 132(4) of the Act till the assessment proceedings and appellate proceedings, the assessee has consistently assessment proceedings and appellate proceedings, the assessee has consistently assessment proceedings and appellate proceedings, the assessee has consistently taken a stand that the cash belonged taken a stand that the cash belonged to him and his family and had explained the to him and his family and had explained the source thereof. Out of the total cash, Rs.1,50,000/ source thereof. Out of the total cash, Rs.1,50,000/- was received from the father was received from the father- in-law of the assessee for meeting medical emergencies of the assessee's mother law of the assessee for meeting medical emergencies of the assessee's mother- law of the assessee for meeting medical emergencies of the assessee's mother in-law, Rs.1,50,000/- were the cash gifts received were the cash gifts received by the assessee on the by the assessee on the occasion of thread ceremony of the grandson and the balance sum of occasion of thread ceremony of the grandson and the balance sum of occasion of thread ceremony of the grandson and the balance sum of Rs.4,00,000/- were cash withdrawals and savings accumulated by the assessee were cash withdrawals and savings accumulated by the assessee were cash withdrawals and savings accumulated by the assessee and his wife over a period of time. In support of the aforesaid, the assessee and his wife over a period of time. In support of the aforesaid, the assessee and his wife over a period of time. In support of the aforesaid, the assessee furnished confirmation of the father onfirmation of the father-in-law, copy of his bank statement, law, copy of his bank statement, photographs relating to the thread ceremony, confirmation from his daughter photographs relating to the thread ceremony, confirmation from his daughter photographs relating to the thread ceremony, confirmation from his daughter and copy of her bank statement as well as his own bank statements showing and copy of her bank statement as well as his own bank statements showing and copy of her bank statement as well as his own bank statements showing regular cash withdrawals.

The addition has been sustained by the Tax authorities below primarily on as been sustained by the Tax authorities below primarily on as been sustained by the Tax authorities below primarily on the ground that the explanations do not satisfy the test of human probabilities the ground that the explanations do not satisfy the test of human probabilities the ground that the explanations do not satisfy the test of human probabilities and the documentary evidence produced is not adequate. However, in our and the documentary evidence produced is not adequate. However, in our and the documentary evidence produced is not adequate. However, in our considered opinion, the approach adopted by t considered opinion, the approach adopted by the Tax authorities is not in he Tax authorities is not in consonance with the settled legal position. consonance with the settled legal position.

Section 69A of the Act empowers the Assessing Officer to treat money Section 69A of the Act empowers the Assessing Officer to treat money Section 69A of the Act empowers the Assessing Officer to treat money found in possession of the assessee as unexplained only where the assessee found in possession of the assessee as unexplained only where the assessee found in possession of the assessee as unexplained only where the assessee either offers no explanation regard either offers no explanation regarding the nature and source thereof or where the ing the nature and source thereof or where the explanation offered is not satisfactory. Thus, the section does not contemplate explanation offered is not satisfactory. Thus, the section does not contemplate explanation offered is not satisfactory. Thus, the section does not contemplate proof to a mathematical certainty and once the assessee furnishes a plausible proof to a mathematical certainty and once the assessee furnishes a plausible proof to a mathematical certainty and once the assessee furnishes a plausible explanation supported by surrounding circumstances explanation supported by surrounding circumstances and supporting material, and supporting material, the burden shifts upon the Revenue to establish that the explanation is false or the burden shifts upon the Revenue to establish that the explanation is false or the burden shifts upon the Revenue to establish that the explanation is false or inherently improbable.

In the present case, no material whatsoever has been brought on record by In the present case, no material whatsoever has been brought on record by In the present case, no material whatsoever has been brought on record by the Revenue to demonstrate that the confirmation the Revenue to demonstrate that the confirmations furnished by the father s furnished by the father-in-law and daughter are false or fabricated. Further, the existence of the thread and daughter are false or fabricated. Further, the existence of the thread and daughter are false or fabricated. Further, the existence of the thread ceremony itself stands corroborated by photographs and expenditure incurred ceremony itself stands corroborated by photographs and expenditure incurred ceremony itself stands corroborated by photographs and expenditure incurred through banking channels to organize the same. The Tax authorities have merely through banking channels to organize the same. The Tax authorities have through banking channels to organize the same. The Tax authorities have doubted the explanation on the basis of conjectures and assumptions. In our doubted the explanation on the basis of conjectures and assumptions. In our doubted the explanation on the basis of conjectures and assumptions. In our considered opinion, suspicion, however strong, cannot take the place of considered opinion, suspicion, however strong, cannot take the place of considered opinion, suspicion, however strong, cannot take the place of evidence.

We further find merit in the contention of the learned counsel that the We further find merit in the contention of the learned counsel that the We further find merit in the contention of the learned counsel that the assessee has been regularly filing returns of income and for the year under been regularly filing returns of income and for the year under been regularly filing returns of income and for the year under consideration itself has disclosed total income of Rs.1,25,02,640/-. The bank consideration itself has disclosed total income of Rs.1,25,02,640/ consideration itself has disclosed total income of Rs.1,25,02,640/ statements placed on record show regular withdrawals of cash. Therefore, the statements placed on record show regular withdrawals of cash. Therefore, the statements placed on record show regular withdrawals of cash. Therefore, the explanation regarding availability of explanation regarding availability of cash savings to the extent of Rs.4,00,000/ cash savings to the extent of Rs.4,00,000/- cannot be brushed aside merely because the same was found in a locker. cannot be brushed aside merely because the same was found in a locker. cannot be brushed aside merely because the same was found in a locker.

The Hon'ble Supreme Court in the case of The Hon'ble Supreme Court in the case of CIT v. Daulat Ram CIT v. Daulat Ram Rawatmull (1973) 87 ITR 349 (SC) Rawatmull (1973) 87 ITR 349 (SC) held that the apparent state of affairs must held that the apparent state of affairs must be presumed to be real unless proved otherwise and the burden of proving be presumed to be real unless proved otherwise and the burden of proving be presumed to be real unless proved otherwise and the burden of proving otherwise lies upon the person who alleges it. The Hon'ble Supreme Court made otherwise lies upon the person who alleges it. The Hon'ble Supreme Court made otherwise lies upon the person who alleges it. The Hon'ble Supreme Court made the following observations: the following observations:

In Umacharan Shaw & Bros. v. CIT (1959) 37 ITR 271 (SC) Umacharan Shaw & Bros. v. CIT (1959) 37 ITR 271 (SC), Hon'ble Umacharan Shaw & Bros. v. CIT (1959) 37 ITR 271 (SC) Supreme Court held that suspicion, however grave, cannot substitute legal proof. Supreme Court held that suspicion, however grave, cannot substitute legal proof. Supreme Court held that suspicion, however grave, cannot substitute legal proof. In Omar Salay Mohamed Sait Omar Salay Mohamed Sait v. CIT (1959) 37 ITR 151 (SC) v. CIT (1959) 37 ITR 151 (SC), the Hon'ble Supreme Court observed that conclusions reached by the Revenue authorities Supreme Court observed that conclusions reached by the Revenue authorities Supreme Court observed that conclusions reached by the Revenue authorities should be based on evidence and not on suspicion and surmises. Further, in CIT should be based on evidence and not on suspicion and surmises. Further, in should be based on evidence and not on suspicion and surmises. Further, in v. P.K. Noorjahan (1999) 237 ITR 570 (SC) v. P.K. Noorjahan (1999) 237 ITR 570 (SC), the Hon'ble Supreme Court held eme Court held that even where the conditions of section 69 of the Act are satisfied, the that even where the conditions of section 69 of the Act are satisfied, the that even where the conditions of section 69 of the Act are satisfied, the deeming provision is discretionary and must be applied judiciously having deeming provision is discretionary and must be applied judiciously having deeming provision is discretionary and must be applied judiciously having regard to the facts and circumstances of the case. regard to the facts and circumstances of the case.

Considering the entirety of facts a Considering the entirety of facts and circumstances and having regard to nd circumstances and having regard to the material brought on record, we are of the considered view that the assessee the material brought on record, we are of the considered view that the assessee the material brought on record, we are of the considered view that the assessee has satisfactorily explained the source of the cash found in the locker and the has satisfactorily explained the source of the cash found in the locker and the has satisfactorily explained the source of the cash found in the locker and the Revenue has failed to bring any cogent material to rebut t Revenue has failed to bring any cogent material to rebut the explanation he explanation furnished by the assessee. Accordingly, the addition of Rs.7,00,000/- made furnished by the assessee. Accordingly, the addition of Rs.7,00,000/ furnished by the assessee. Accordingly, the addition of Rs.7,00,000/ under section 69A of the Act is directed to be deleted. under section 69A of the Act is directed to be deleted.

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