RASHI COMMERCIAL COMPANY,MUMBAI vs. DCIT CENT. CIRCLE 6(1), MUMBAI

This appeal is filed by the assessee against order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld.CIT(A)”] dated 31.05.2022 for the A.Y.2020-21.

During survey action at the premises of the assessee, cash of ₹.1.22 crores were found. Shri Vivek Singhania explained the source of the above cash in statement recorded u/s. 131 of the Act dated 03.12.2019. As per the statement recorded u/s. 131 of the Act, wherein Shri Vivek Singhania accepted that the cash found of ₹.1.22 crores, whereas as per the book shown of all the entities the cash in hand is shown at ₹.23,50,831/-. Since the difference could not be explained, Assessing Officer issued warrant u/s. 132 of the Act to the other group- concerns on 04.12.2019. When the assessee was show caused to explain the details of extra cash found of ₹.98,49,169/-. In response vide submission dated 22.02.2021 the assessee submitted that the Books of (A.Y. 2020-2021) M/s. Rashi Commercial Company Accounts of certain family members of the directors Shri Vivek Singania and Shri Ashish Singhania were maintained at the same office premises of the assessee. The cash balance as per their Books of Accounts as on 02.12.2019 was as under: -

Further, it was claimed that Grandmother Smt. Savitri Devi Nangalia of Shri Ashish Singhania has kept a sum of ₹.10,00,000/- out of her cash balance with Ashish Singhania for fulfillment of medical and other emergencies. It was submitted that she is aged about 90 years old and not keeping in good health. Further, it was claimed by the assessee that assessee has received cash back against the non-genuine losses booked by the assessee to the extent of ₹.16.39 crores which is treated as bogus loss and added to the total income. It was submitted that the assessee has to give cheque amount to the brokers for booking alleged loss and broker in turn bound to refund the same in the form of cash after deduction of certain expenses/charges. It is claimed that the assessee

Aggrieved, assessee preferred an appeal before the Ld.CIT(A) and made detailed submissions. After considering the detailed submissions and grounds raised by the assessee Ld.CIT(A) allowed the claim of the assessee on the cash balance of other family members and cash of grandmother to the extent of ₹.10,00,000/-. With regard to the cash maintained by the assessee out of alleged bogus losses, Ld.CIT(A) rejected the same with the following observation: -

Considered the rival submissions and material placed on record, we observe from the record that during search, the excess cash was found at the premises of the assessee to the extent of ₹.1.32 crores. The assessee has explained the sources of these cash and the relief was granted by Ld.CIT(A) to the extent of ₹.19.77 lakhs. The balance of ₹.78 lakhs was found to be excessive. The assessee has explained that the source for this excess cash is, in the past assessee had indulged in booking bogus trading losses and the same was declared and surrendered in the A.Y.2014-15 and 2015-16 to the extent of ₹.13.40 crores. It is fact on record that the assessee has indulged in such activities and has such checkered history. The excess cash found during the present search is only ₹.78 lakhs whereas the assessee has declared the bogus losses which the assessee was converting into cash. It is already established that assessee had huge cash under his disposal in the above mentioned Assessment Years. Assessee has not brought this cash into his books and how assessee has dealt with those cash. There is enough merit in this peculiar case to extend the benefit of telescoping effect. Therefore, we are inclined to direct the Assessing Officer to treat the excess cash found

In the result, appeal filed by the assessee is allowed.