SHRI AMIT SHASHIKANT SHAH,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 6(2), MUMBAI, MUMBAI

The brief facts of the case are that the assessee, an individual, filed his return of income for A.Y. 2023-24 on 21.07.2023 declaring total income of ₹8,75,490/-. During the relevant year, the assessee was intercepted by the Government Railway Police at Kalupur Railway Station, Ahmedabad on 12.11.2022 while carrying cash of ₹57,00,000/-. In the statements recorded under sections 131(1A) and 132(4) of the Act on the same day, the assessee stated that the cash was being carried for purchase of a flat at Ahmedabad, but at that stage he could not produce documentary evidence regarding its source. The cash was thereafter seized. The case was subsequently selected for compulsory scrutiny and notices under sections 143(2) and 142(1) of the Act were issued by the Assessing Officer.

During the assessment proceedings, the assessee submitted that out of the seized cash, ₹43,90,000/- were gifts received from eight family members, ₹6,15,000/- was the withdrawal from his proprietary concern, M/s Associated Industrial Corporation, and the balance ₹6,95,000/- were old family savings. The assessee also furnished certain confirmations of family members. The Assessing Officer, however, held that the assessee did not furnish sufficient documentary evidence and the creditworthiness of the persons who as per the assessee had given the gifts to the assessee. The Assessing Officer therefore treated the entire cash of ₹57,00,000/- as unexplained money under section 69A of the Act and assessed the total income at ₹65,75,490/-.

The assessee carried the matter in appeal before the learned CIT(Appeals). During the appellate proceedings, the assessee filed further documents, like PAN details, gift confirmations, returns of income and bank statements of some of the persons concerned. The learned CIT(Appeals) asked the assessee to establish the financial capacity of the donors and the actual availability of funds with them. The CIT(Appeals) also asked the assessee to substantiate the withdrawal of ₹6,15,000/- from the proprietary concern and to prove the assessee had savings from old family of ₹6,95,000/-. The learned CIT(Appeals) was of the view that merely filing a number of documents was not sufficient unless the assessee clearly established the fund flow and the capacity of the persons concerned to give the amounts claimed to have been given. The CIT(Appeals) therefore upheld the addition of ₹57,00,000/- under section 69A of the Act.

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

We have heard the parties and perused the material available on record. The dispute is with respect to the addition of ₹57,00,000/- under section 69A of the Act. The assessee has explained that the cash consisted of gifts received from family members, withdrawal from his proprietary concern and old family savings. The assessee has also furnished the names, PANs, confirmations and certain supporting documents in respect of the persons from whom the amounts were supposedly received.

We find that the main issue is factual and requires proper verification. The persons who have been stated to have given the gifts to the assessee are identifiable and their details are available on record. However, their financial capacity and the actual source of the amounts given to the assessee have not been properly examined. Similarly, the assessee's claim regarding withdrawal from the proprietary concern and availability of old family savings also requires verification from the relevant books, bank statements, cash book and other supporting records.

In these circumstances, we are of the view that the matter should be examined afresh by the Assessing Officer, who is better placed to make the necessary enquiry and verify the evidence. We, therefore restore the matter to the file of the Assessing Officer for de-novo consideration.

The Assessing Officer shall verify the explanation furnished by the assessee and may call the persons who had given the gifts to the assessee. He shall examine their identity, financial capacity and the genuineness of the transactions. The Assessing Officer shall also verify the claim of withdrawal from M/s Associated Industrial Corporation and the claim of old family savings from the relevant books of account, bank statements, cash-flow details and other evidence which may be produced by the assessee.

After carrying out the necessary enquiry, the Assessing Officer shall decide the issue afresh in accordance with law after giving reasonable opportunity of hearing to the assessee.

Accordingly, this ground of appeal is allowed for statistical purposes.