PANKAJKUMAR ATMARAM PRAJAPATI,AHMEDABAD vs. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), AHMEDABAD

ITSSA 74/AHD/2022Status: DisposedITAT Ahmedabad03 May 2024AY 2019-2016 pages
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What were the facts?

The assessee, Pankajkumar Atmaram Prajapati, filed an appeal against the order of the CIT(A) for Assessment Year 2019-20. The appeal was filed with a delay of 217 days, which was condoned by the Tribunal due to the assessee's personal circumstances, including the demise of his wife and financial constraints. A search and seizure action on 06.10.2018 revealed cash of Rs. 16,92,500/- at the assessee's premises, which he initially admitted as belonging to the firm but later retracted and claimed as his unaccounted income from commission and other businesses. During assessment, the Assessing Officer noted that the assessee had returned only Rs. 15,90,000/- of this admitted income and also deposited Rs. 5,29,000/- in his bank account. The total cash generated was Rs. 22,21,500/-, exceeding the justified cash generation of Rs. 18,10,000/- by Rs. 4,11,500/-, which was treated as unexplained.

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 1,89,141/- (Rs. 4,11,500/- minus Rs. 2,22,359/-) made under Section 69A of the Act is confirmed, as the assessee conceded this portion of the addition. Regarding the remaining amount of Rs. 2,22,359/-, the Tribunal noted the assessee's explanations for opening cash balance (Rs. 1,01,859/-), gift (Rs. 48,500/-), unrealized rent (Rs. 48,500/-), and loans (Rs. 23,500/-). However, the judgment does not explicitly state the finding on each of these sub-points or the final decision on the Rs. 2,22,359/-. The Tribunal dismissed the assessee's contention regarding the adjustment of seized cash against advance tax or self-assessment tax liability. It reasoned that Explanation 2 to Section 132B explicitly excludes advance tax from existing liability. Furthermore, adjustment against seized assets is only for existing tax liability or liability determined subsequently, not self-assessment tax determined by the assessee. The assessee's application for release of seized assets was filed beyond the 30-day period prescribed in the first proviso to Section 132B, rendering it non-entertainable. Therefore, the Assessing Officer was not bound to release the cash. The ratio is that seized assets can only be adjusted against specific types of tax liabilities as defined in Section 132B, and procedural timelines for release applications must be strictly adhered to.

What were the issues?

1. Whether the addition of Rs. 4,11,500/- made by the Assessing Officer and confirmed by the CIT(A) on account of unexplained cash is based on doubt, surmise, and conjecture rather than cogent material or evidence, and if the explanations offered by the assessee were not properly considered? (Question of law and fact, turning on Section 69A of the Income-tax Act, 1961). Assessee's Contention: The addition was based on doubt and conjecture, and the explanations offered with supporting evidence were not taken into account. The assessee sought limited relief, offering explanations for Rs. 2,22,359/- (opening cash balance, gift, unrealized rent, loans) and conceding the balance addition of Rs. 1,89,141/-. Revenue's Contention: Not recorded in the judgment. 2. Whether the seized cash of Rs. 16,92,500/- could be adjusted against the assessee's advance tax liability or self-assessment tax liability under Section 132B of the Income-tax Act, 1961? Assessee's Contention: The assessee contended that his advance tax liability ought to have been adjusted against the seized cash, and that the seized assets should have been adjusted against his self-assessment tax liability. He also argued that if the Assessing Officer had acted on his request for release of assets, he could have paid advance tax and escaped interest under Section 234B. Revenue's Contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 132,Section 132B,Section 133A,Section 250,Section 69A,Section 234B

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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: MRS. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL

For Appellant: Shri Kalpesh Shah, AR
Hearing: 05.02.2024Pronounced: 03.05.2024

आदेश आदेश PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER:

Present appeal has been filed by the assessee against order of the Commissioner of Income-tax (Appeals), Ahmedabad-12 [hereinafter referred to as "CIT(A)" for short] dated 25.03.2022 passed under Section 250(6) of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for the Asse

The order continues below.

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