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Facts
An individual assessee filed its return of income. Information was received by the Investigation Wing Mumbai regarding cash of Rs. 25 lacs found in possession of the assessee. The assessee could not explain the source of the cash, leading to its seizure and subsequent addition to income.
Held
The Tribunal held that the assessee is entitled to credit for the opening cash balance of Rs. 15,14,268/- available for the year under consideration. Only the balance amount is to be brought to tax.
Key Issues
Whether the addition of cash found in possession can be made fully without considering the opening cash balance, and whether the appeal should be partly allowed based on available records.
Sections Cited
69A, 131, 132, 143(2), 142(1), 143(3), 153A, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SMT. BEENA PILLAI
Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 11/09/2024 passed by Ld.CIT(A) – 52 for assessment year 2017-18 on following grounds of appeal :
“1. Under the facts and circumstances of the case and in law the order passed by Ld. CIT(A) is bad in law on various grounds inter-alia including but not restricting to violation of Natural justice. 2. Under the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax-Appeals erred in confirming 2 ITA 5776/Mum/2024 A.Y. 2017-18 the addition of Rs. 25,00,000/-made by the Ld. AO u/s 69A of the Income Tax Act, 1961.
3. Under the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax-Appeals has erred in invoking provisions of section 69A of the Income Tax Act, 1961.
4. Under the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax-Appeals has erred in taxing the Business Income of the Appellant u/s 69A of the Income Tax Act, 1961.
5. The Appellant craves leaves to add, to amend, alter, modify and / or withdraw any or all of the above grounds of appeal, each of which are without prejudice to one another.” Brief facts of the case are as under:
Assessee is an individual and filed its return of income 30/01/2018 declaring total income at Rs. 23,65,750/-. It is submitted that an information was received on 19/12/2016 by the Investigation wing Mumbai, from police inspector that cash of Rs. 25 lacs was found in possession of assessee during an interception on 16/12/2016.
2.1 Based on the information, summons was issued u/s. 131 of the Act to the assessee on 20/12/2016 and statement was recorded. The assessee could not explain the source of the cash. Subsequently, warrant u/s. 132 of the Act was issued to the inspector and the cash amounting to Rs. 25 laksh was taken into custody and the same was deposited into the PD account thereafter, the return of income was filed by the assessee declaring total income of Rs. 23,65,730/-.
2.2 The case of the assessee selected for scrutiny and notice u/s. 143(2) was issued along with notice u/s. 142(1) of the Act.
3 ITA 5776/Mum/2024 A.Y. 2017-18 As the assessee offered the cash found and seized amounting to Rs. 25 lacs in the return of income, addition was made us 69A of the Act.
Aggrieved by the order of Ld.AO assessee preferred the appeal before the Ld.CIT(A).
The Ld.CIT(A) upheld the addition as assessee could not explain the source of the cash found and seized.
Aggrieved by the order of the Ld.CIT(A) assessee preferred the appeal before this Tribunal.
The Ld.AR at the outset submitted that assessee had cash on hand amounting to Rs. 15,14,268/-. In support of the same he filed capital account and balance sheet as on 31/03/2016.
4.1 The Ld.AR also has furnished the assessment order dated 15/10/2018 passed u/s. 143(3) r.w.s. 153A of the Act for A.Y. 2016-17.
He submitted that, the assessment order for A.Y. 2016-17 was passed accepting the income declared by the assessee. It is submitted that, the said assessment was u/s. 153A of the Act as cash amounting to Rs. 25lacs was taken into custody on 16/12/2016. He submitted that, since the assessee had cash in hand amounting to Rs. 15,14,268/- entire amount of 25 lacs cannot be added in the hands of the assessee. He thus, prayed for restricting the addition after giving credit to the opening cash balance available in hand for the year under consideration.
4 ITA 5776/Mum/2024 A.Y. 2017-18 4.2 On the contrary, the Ld.DR relied on the orders passed by the authorities below.
I have perused the submission advance by both sides in the light of records placed before this Tribunal.
Admittedly, there is cash in hand as opening balance for the year under consideration amounting to Rs. 15,14,268/-. The assessment for assessment year 2016-17 was completed u/s. 143(3) of the Act accepting the financials submitted by the assessee. There is nothing on record brought by the Ld.DR to controvert the above factual submissions. Under such circumstances assessee has to be given credit of Rs. 15,14,268/- as a opening cash available for the year under consideration.
In my view only the balance amount could to brought to tax u/s. 115BBE of the Act. The Ld.AO is directed to compute the tax of the assessee on the balance amount after giving credit to the cash available with the assessee in the form of opening balance.