ALLAUDDIN FARISHTA,RAIPUR vs. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 8,, NEW DELHI

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ITSSA 1585/DEL/2025Status: DisposedITAT Delhi04 November 2025AY 2020-20216 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal rejected the assessee's first ground regarding the invalidity of the Section 153C jurisdiction, stating that the issue was settled in favour of the department by the jurisdictional High Court's judgment in Indian National Congress Vs. DCIT (2024) 160 taxmann.com 606 (Del.). Regarding the addition of Rs. 5,00,000/-, the Tribunal acknowledged that this amount represented cash seized from the assessee's locker. While upholding the principle of the addition, the Tribunal found part merit in the assessee's contentions concerning the quantification. Considering the assessee is a senior citizen and an MD in medicine and cardiology, assessed at the maximum marginal rate, and had filed detailed cash books and evidence of past savings, the Tribunal granted a lump sum relief of Rs. 2,00,000/- in the interest of justice. The remaining addition of Rs. 3,00,000/- was upheld. The Tribunal explicitly stated that this relief would not be treated as a precedent. No other grounds were pressed.

What were the facts?

The assessee, Allauddin Farishta, filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging the order of the CIT(A)-25, Delhi, dated 30.01.2025. This order was passed in proceedings under Section 153C of the Income Tax Act, 1961, for Assessment Year 2020-21. The Assessing Officer (AO) had made an addition of Rs. 5,00,000/- representing cash found in the assessee's locker, treating it as unexplained money under Section 69A and consequently invoking Section 115BBE. The CIT(A) upheld this addition. The AO's reasoning was that the cash in hand as per the cash ledger was Rs. 6,51,760/- as of the search date (27.02.2020), while the total cash found was Rs. 13,38,000/- (Rs. 8,38,000/- at residence and Rs. 5,00,000/- in the locker). The AO rejected the assessee's explanation that the locker cash was sourced from regular cash withdrawals.

What were the issues?

1. Whether the assessment order passed under Section 153C of the Income Tax Act, 1961, is liable to be quashed and annulled due to invalid assumption of jurisdiction, as the foundation for the notice was not based on materials seized from the searched person and the appellant's name was not mentioned in the warrant of authorization/panchanama? The assessee argued that the assumption of jurisdiction under Section 153C was invalid and void ab initio. The revenue did not record any specific arguments on this point in the judgment. 2. Whether the addition of Rs. 5,00,000/- being cash found from the locker, treated as unexplained money under Section 69A and taxed under Section 115BBE, is justified? The assessee contended that the cash found was sourced from regular cash withdrawals from the cash book, sufficiently covering the amount found. The revenue, through the AO and upheld by the CIT(A), argued that the explanation was not satisfactory as the assessee did not provide proof of depositing the withdrawn cash into the locker or how personal expenses were met.

Which sections of the Income-tax Act were involved?

Section 153C,Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI

Before: Sh. Satbeer Singh Godara & Sh. Naveen Chandra

Hearing: 04.11.2025Pronounced: 04.11.2025

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI Before Sh. Satbeer Singh Godara, Judicial Member & Sh. Naveen Chandra, Accountant Member ITA No. 1585/Del/2025 : Asstt. Year : 2020-21 Allauddin Farishta, Vs DCIT, 14/458, Katora Talab, Civil Lines, Central Circle-8, Raipur, Chhattisgarh-492001 New Delhi-110055 (APPELLANT) (RESPONDENT) PAN No. AADPF0329A Assessee by: Sh. Nikhilesh Bengani, Adv. Revenue by : Sh. Mahesh Kumar, CIT-DR Date of Hearing: 04.11.2025 Date of Pronouncement: 04.11.2025 ORDER Per Satbeer Singh Godara, Judicial Member: This assessee’s appeal for Assessment Year 2020-21, arises against the CIT(A)-25, Delhi’s DIN & order No. ITBA/APL/S/250/2024-25/1072792934(1) dated 30.01.2025, in proceedings u/s 153C of the Income Tax Act, 1961 (in short “the Act”).

2.

Heard both the parties at length. Case file perused.

3.

The assessee proposes the following substantive grounds in the instant appeal:

“Ground No. I 1. That the assessment order passed under section 153C of the Income Tax Act, 1961 ("the Act") by the Learned Dy. Commissioner of Income Tax, Central - 8, Delhi ("the

2 IT(SS)A No. 1585/Del/2025 Allauddin Farishta Ld.AO') and its affirmation by the Learned Commissioner of Income Tax (Appeals), Delhi - 25 ("the Ld.CIT(A") is highly illegal, bad in law suffers from legal infirmities, void ab initio and hence liable to be quashed and annulled on the ground alone. Further, that the assumption of jurisdiction under section 153C is Invalid, void ab initio, bad in law unsustainable since, the foundation of issuance of notice U/S.153C and consequential additions in the search assessment order is not based on any of the materials & documents seized from the premises of the searched person and further, the name of appellant is not mentioned in the warrant of authorization/panchanama hence, recourse to section 153C is highly Illegal, improper, infirm & untenable and hence liable to be quashed and annulled on this ground alone. Ground No. II 2. On the facts and circumstances of the case as well as In law, the Ld. CIT(A) has grievously erred in affirming the action of the Ld.AO in making an addition of Rs.5,00,000/- being cash found from the locker of the appellant thereby treating the same as unexplained money under section 69A of the Act and consequentially, invoking the provisions of section 115BBE of the Act which is highly unjustified invalid, bad in law and liable to be deleted. The Ld.CIT(A) has failed to appreciate that the cash found from the locker was sourced from the withdrawals made from cash book regularly maintained and hence, the cash withdrawals sufficiently covers the cash found from the locker hence, the Invocation of the provisions of section 69A of the Act is patently illegal, irrational, perverse and arbitrary and explicitly based upon the fallacious observations. Hence, the addition of Rs.5,00,000/- under section 69A of the Act being cash found from locker is highly unjustified, unwarranted, unsustainable, presumptive, arbitrary, uncorroborated, lacking intelligible basis, not proper on facts and not in accordance with the provisions of law and it is earnestly requested that the same may please be deleted.” 4. Learned counsel vehemently submits at the outset that the impugned assessment framed by the Assessing Officer herein

3 IT(SS)A No. 1585/Del/2025 Allauddin Farishta dated 31.03.2024 in section 153C proceedings itself deserves to be quashed since based on a common section 153C satisfaction note dated 30.08.2022 (pages 25 to 31 of the paper book) for assessment years 2014-15 to 2020-21 in light of DCIT Vs. Sunil Kumar Sharma (2024) 155 taxmann.com 179 (Karnataka). We find no merit in the assessee’s instant first and foremost legal argument as the issue already settled in the department’s favour in light of hon’ble jurisdictional high court’s judgment in Indian National Congress Vs. DCIT (2024) 160 taxmann.com 606 (Del.). Rejected accordingly.

5.

Next comes the sole substantive issue between the parties on merit i.e. correctness of both the learned lower authorities’ action treating the cash seized amount of Rs.5,00,000/- as the assessee’s unexplained money u/s 69A r.w.s. 115BBE of the Act, upheld in the CIT(A)’s lower appellate discussion; reading as under: “13.4 With respect to the cash of Rs. 5,00,000/- found in the locker, it was submitted by the appellant that the said amount has been kept in the locker, out of the cash withdrawn from the books of the appellant. It was submitted by the appellant that the locker was last operated on 23.10.2019, and the appellant has withdrawn various amounts amounting to Rs. 5,00,000/- from time to time, which has been kept by him in the locker. 13.5 The AO has rejected the aforesaid explanation of the appellant by holding as under: “7.2 Addition on account of cash found: It has been noted that the total cash found amounted to Rs. 13,38,000 (Rs. 8,38,000 at residence and Rs.

4 IT(SS)A No. 1585/Del/2025 Allauddin Farishta 5,00,000 in the locker) but the cash in hand as per cash ledger as on 27.02.2020 (i.e. date of search) amounted to Rs. 6,51,760/-. Further, the assessee has highlighted the cash withdrawal entries in the “withdrawal A/c” ledger of his nursing home, but he has not highlighted how and when these sums of cash withdrawal have been deposited in the locker. He has not produced any proof as to the operation of locker to show deposits of said cash withdrawals. On examination of the submission of the assessee, it is not explained satisfactorily about the source of cash found.” 13.6 It is seen that while making the addition in respect of cash found amounting to Rs. 13,38,000/- (Rs. 8,38,000 at residence and Rs. 5,00,000 in the locker), the AO has ignored that cash books as on 27.02.2020 of the appellant and his wife shows cash in hand of Rs.6,51,760/- and Rs. 6,61,157/- respectively which aggregates to Rs. 13,12,917/-. The AO while rejecting the explanation of the appellant has not brought any material on record to rebut the explanation of the appellant. Once the cash book of the appellant and his wife shows the availability of cash of Rs. 13,12,917/- in their respective books on the date of search, cash of Rs. 8,38,000 found from the residence of the appellant cannot be termed as unexplained, and accordingly the same is deleted. 13.7 Further, with regard to cash of Rs. 5,00,000/- found in the locker, it is seen that the appellant has provided the cash book, which shows that from time to time, the appellant has withdrawn cash which aggregates to Rs. 5,00,000/-. From the cash withdrawal account, it is seen that the aforesaid cash of Rs 5,00,000/- has not been withdrawn at one go, but has been withdrawn on 7 different occasions starting from April 2019 till October 2019. Further, from the pattern of the withdrawal, it is seen that appellant has withdrawn cash in each month starting from April till October, 2019 which goes to show that such withdrawal could only be for the purpose of personal expenses, and not for depositing the same in the locker. In fact, the appellant has also not stated how he has met his personal expenses when such withdrawals were kept for depositing in the locker. In fact the appellant has also not given the details of operation of locker to substantiate that cash deposit made in the locker was out of the disclosed sources. In view of the aforesaid, I am of the considered view that the AO has rightly made the addition of the sum of Rs. 5,00,000/- found in the locker, and accordingly addition made of Rs. 5,00,000/- is sustained.”

5 IT(SS)A No. 1585/Del/2025 Allauddin Farishta 5.1 This is what leaves the assessee aggrieved who has preferred the instant appeal before the tribunal.

6.

We have given our thoughtful consideration to the assessee’s and the Revenue’s vehement submissions reiterating their respective stands. We make it clear first of all that the impugned addition amount of Rs.5,00,000/- admittedly represents the cash seized from the assessee’s locker only. That being the case, we are of the considered view that the impugned addition does not deserve to be interfered with in principle so far as the assessee’s first and foremost argument on merit is concerned.

7.

Next comes the equally important aspect of quantification of the impugned addition. The Revenue could hardly dispute that this assessee is a senior citizen who happens to be an MD in medicine and cardiology and stated to be assessed at the maximum marginal rate all along. This being the clinching factual position, we find part merit in his vehement contentions that not only he had filed his detailed cash book but also all other evidence of the cash in hand and accumulated past savings etc. which couldn’t be brushed aside in entirety. Faced with this situation and in the larger interest of justice, we are of the considered view keeping in mind the assessee’s socio economic status that a lump sum relief of Rs.2,00,000/- would

6 IT(SS)A No. 1585/Del/2025 Allauddin Farishta be just and proper with a rider that the same shall not be treated as a precedent. We accordingly uphold the impugned remaining addition of Rs.3,00,000/- in very terms. Necessary computation shall follow.

8.

No other ground or argument has been pressed before us.

9.

This assessee’s appeal is partly allowed in above terms. Order Pronounced in the Open Court on 04/11/2025. Sd/- Sd/- (Naveen Chandra) (Satbeer Singh Godara) Accountant Member Judicial Member Dated: 04/11/2025 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

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