MUNNA PRASAD,GOPALGANJ vs. ACIT, CENTRAL CIRCLE, MUZF., MUZAFFARPUR

ITA 246/PAT/2026Status: DisposedITAT Patna08 October 2026AY 2024-2511 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) did not provide sufficient justification for treating 50% of the intercepted cash as unexplained, especially when the assessee's cash book showed ₹22,59,080/- in hand on 09.10.2023. The Tribunal noted that neither the AO nor the CIT(A) pointed out specific entries in the cash book prior to 09.10.2023 that were unacceptable. The rejection of books under Section 145(3) due to partial suppression of turnover does not automatically mean all book cash is unexplained. The Tribunal found that the CIT(A)'s order upholding 50% of the intercepted cash was not a speaking and reasoned order. Therefore, the order of the CIT(A) was set aside, and the appeal was restored to the CIT(A) for a fresh adjudication. The CIT(A) was directed to grant an opportunity to the assessee to produce the cash book and to the AO to examine it, and then give a specific finding regarding the unexplained cash out of that recorded in the books as on 09.10.2023. The addition of ₹94,452/- as undisclosed business income was accepted as it was admitted by the assessee. The appeal was partly allowed for statistical purposes.

What were the facts?

The assessee, Munna Prasad, filed an appeal against the order of the Commissioner of Income Tax (Appeals)-3, Patna, for Assessment Year 2024-25. The case involved an interception of cash amounting to ₹20,65,000/- by the police on 09.10.2023. The Assessing Officer (AO) added ₹94,452/- on account of undisclosed business income from petty unrecorded transactions and treated the entire intercepted cash of ₹20,65,000/- as unexplained money under Section 69A, rejecting the assessee's books of account. The total income was assessed at ₹28,80,580/-. The CIT(A) confirmed the addition of ₹94,452/- as accepted by the assessee. Regarding the intercepted cash, the CIT(A) treated 50% as unexplained and 50% as explained, modifying the AO's order and partly allowing the assessee's appeal.

What were the issues?

1. Whether the Ld. CIT(A) erred in sustaining the addition of ₹10,32,500/- (50% of ₹20,65,000/-) without direct evidence that the cash was not from recorded business sources, turning on Section 69A of the Income Tax Act, 1961. Assessee's Contention: The assessee argued that the CIT(A) erred in sustaining the addition of ₹10,32,500/- without direct evidence. The assessee contended that complete books of accounts, including the cash book showing ₹22,59,080/- in hand on 09.10.2023, were produced before the AO. The CIT(A) observed that additions were based on suspicion from earlier years' low cash balances and ledger observations, and arbitrarily estimated 50% of the intercepted cash as unexplained. The assessee also relied on an agreement for sale executed on 05.10.2023, indicating the cash was for land purchase advance. The assessee argued that low cash balances in earlier years were irrelevant and that the cash book showed sufficient balance on the date of interception. Revenue's Contention: The Revenue, represented by the Sr. DR, argued that the CIT(A) correctly confirmed 50% of the addition, acknowledging the defects in the books and admitted suppression of turnover, while also considering the availability of substantial book cash. The Revenue supported the CIT(A)'s approach of treating 50% as unexplained and 50% as explained.

Which sections of the Income-tax Act were involved?

Section 69A,Section 145(3),Section 115BBE,Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PATNA ‘SMC’ BENCH AT KOLKATA

Before: SHRI YOGESH KUMAR US & SHRI RAKESH MISHRA

For Appellant: CA. प्रत्यर्थी के ओर से/

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-3, Patna [Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 [the 'Act'] for AY 2024-25 dated 10.03.2026. ITA No(s). 246/PAT/2026 Assessment Year(s) 2024-25 Munna Prasad.

2.

The assessee is in appeal before the Tribunal raisin

The order continues below.

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