Loading judgment…
Facts
A search and seizure action led to the discovery of ₹69,99,000 cash in a locker registered in the assessee's name. The assessee claimed this cash belonged to various group companies, primarily M/s Goyal M G Gases (P.) Ltd., accumulated from scrap sales and kept for safe custody. The Assessing Officer (AO) treated ₹24,58,590 of this cash as unexplained and made an addition under section 69A of the Income Tax Act.
Held
The Tribunal held that the AO failed to provide details on how the cash figures were bifurcated and that the claim of the assessee regarding the cash belonging to group companies, especially M/s Goyal M G Gases (P.) Ltd., could not be denied without contrary material. Since no addition was made in the hands of M/s Goyal M G Gases (P.) Ltd. despite its substantial cash in hand, the addition made in the assessee's hands was deleted.
Key Issues
Whether the cash found in a locker in the assessee's name, claimed to belong to a group company, can be treated as unexplained income of the assessee under Section 69A without proper bifurcation and contrary evidence, especially when the group company itself had significant cash in hand not subjected to addition.
Sections Cited
132, 143(3), 142(1), 132(4), 69A, 115BBE, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI “B” BENCH: NEW DELHI
Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL
Year : 2023-24] Faridabad Implements vs DCIT Pvt.Ltd., 37, Ring Road, Central Circle-31 Lajpat Nagar-IV, Jhandewalan New Delhi -110024. Extension, New Delhi PAN-AAACF9995Q APPELLANT RESPONDENT Appellant by Shri Gaurav Jain, Adv. & Shri Tarun Chanana, Adv. Respondent by Ms. Pooja Swaroop, CIT DR Date of Hearing 19.01.2026 Date of Pronouncement 10.04.2026 ORDER
PER MANISH AGARWAL, AM :
The present appeal is filed by assessee against the order dated 24.07.2025 by Ld. Commissioner of Income Tax (A), New Delhi [“Ld. CIT(A)”] in Appeal No. CIT(A), Delhi-30/1022/2022-23 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 28.03.2025 passed u/s 143(3) of the Act pertaining to Assessment Year 2023-24.
Brief facts of the case are that assessee is a Private Limited company and filed its return of income on 17.10.2023 declaring total income of INR 5,63,770/-. A search and seizure action was carried out u/s 132 on 10.01.2023 in the case of Goyal Gases Group of cases of which assessee is one of the members and therefore, the proceedings u/s 153A were initiated in the case of the assessee. Notice u/s 143(2) was issued on 24.06.2024 followed by various notices issued u/s 142(1) alongwith questionnaires from time to time which were duly replied. AO observed that during the course of search, one Locker No.1201 maintained with South Delhi Vaults and Credits Ltd., D-1097, New Friends Colony, New Delhi-110025 was found in the name of assessee wherein total cash of INR 69,99,000/- was found and seized. During the course of search, statements of Shri Sanjeev Kumar was recorded u/s 132(4) of the Act who was authorized to operate the locker wherein he has shown his inability to explain the source of the cash found in the locker. Thereafter, his statements were controverted which Shri Suresh Chand Goyal, Promoter of the assessee company who in his statement stated that he will provide detailed explanation in due course. During the course of assessment proceedings when the show cause notice was issued, assessee claimed that the cash found in the locker belonged to assessee company and other companies and various individuals of Goyal Gases Group, which is tabulated at page 6 of assessment order. The assessee further claimed that majority of the cash belonged to one Group company namely M/s Goyal M G Gases (P.) Ltd. accumulated from the sale of the scrap from its Sahibabad Unit and was kept in Locker for safe custody. AO in para 8.3 of the order, has observed that the total cash in hand of various group company was INR 4,10,60,052/- which is tabulated at page 12-14 of the order which includes cash of assessee as on the date of search of INR 3,413/- only. The AO further observed that during the course of search as per the books of accounts available in the Tally data were seized, total cash in hand was of INR 54,20,908/- only which includes cash of INR 12,63,190/- in the hands of the M/s. Goyal M G Gases (P.) Ltd. and cash in hand of the assessee company was of INR 3,413/-. Thereafter, AO treated the cash of INR 24,58,590/- as unexplained and added the same as unexplained money u/s 69A of the Act and invoked the provision of section 115BBE of the Act. Accordingly, the total income of the assessee was assessed at INR 30,22,360/-.
Against the assessment order, assessee preferred an appeal before Ld. CIT(A) who vide impugned order dated 24.07.2025, dismissed the appeal of the assessee.
Aggrieved by the order of Ld. CIT(A), assessee is in appeal before the Tribunal by taking various Grounds of appeal as stated in appeal memo.
All the Grounds of appeal are with respect to the confirmation of addition of INR 24,58,590/- made u/s 69A of the Act therefore, they are taken together for consideration.
Before us, Ld.AR for the assessee submits that assessee is having income from rent and no document whatsoever was found during the course of search indicating any undisclosed income generated by the assessee from any other activity. Ld. AR submits that Locker was operated by the Director and employees of M/s Goyal M G Gases (P.) Ltd. and other Group Companies and the persons Page | 3 authorized was neither the employee nor the Director or otherwise associated with the assessee company. He submits that during the course of search, books of accounts were incomplete and therefore, after completion of the same, total cash in hand of INR 4,10,60,052/- was submitted alongwith necessary chart to the AO which is reproduced at page 12 of the assessment order. Ld.AR submits that as per the said chart, cash of INR 3,69,02,334/- was of M/s. Goyal M G Gases (P.) Ltd. The AO has partly accepted the explanation by holding that the cash related to the assessee of INR 45,40,410/- by ignoring the fact that as per the books of accounts of the assessee, the cash as on the date of search was only INR 3,413/-.
Ld.AR submits that said cash was kept in the locker out of the cash in hand of various Group Companies for safety purposes and majorly belonged to M/s. Goyal M G Gases (P.) Ltd. and in support copy of cash book was filed before the AO. Ld. AR submits that during the course of search, total cash seized was of INR 3,59,99,000/- from various premises of Goyal Gases group and during the course of post search proceedings, assessee filed a chart placed at page 76 of Paper Book, as per which cash in hand as on the date of search of various group companies was submitted. As per the said chart, cash in hand of INR 3,26,05,602/- was of M/s Goyal M G Gases (P.) Ltd. Ld. AR submits that in the case of M/s. Goyal M G Gases (P.) Ltd., cash sales of scrap from Sahibabad Unit were of INR 3,56,77,839/- and in support copy of sales register was filed which is placed at page 57 to 65 of Paper Book. Ld. AR submits that out of the cash sales, some cash was kept in the Locker which was Page | 4 found during the course of search. Ld.AR submits that AO rejected the same without any basis. Ld. AR submits that the AO has not doubted the cash in hand in the case of Goyal M G Gases Pvt. Ltd. nor any adverse inference is drawn in its case, therefore the addition made for such cash in the hands of the assessee company deserves to be deleted. He prayed accordingly.
On the other hand, Ld. CIT DR for the Revenue vehemently supported the orders of the AO and submits that the Locker was in the name of the assessee company and therefore, it is the duty of the assessee to explain the source of the cash found therein. Once the assessee has failed to explain the source of such cash, the AO has rightly made the addition which order deserves to be upheld.
Heard the contentions of both the parties and perused the material available on record. From the perusal of the orders of lower authorities, it is observed that the AO has calculated the cash as belonging to the assessee at INR 45,40,410/-. This balance was computed on the basis of cash found recorded in the books of accounts of various Group Companies in Tally data seized during the course of search as per which total cash balance was of INR 54,20,908/- as tabulated in page 14 to 16 of the assessment order. It is observed that AO in para 8.4 of the order has bifurcated the said cash into three group companies namely, M/s Goyal MG Gases Pvt. Ltd. of INR 8,54,320/-; Morgan Signature Tower Pvt. Ltd. of INR 26,178/-; and third in the name of the appellant company of INR 45,40,410/-. It is further observed that the AO in para 8.5 has stated that this cash of INR 45,40,410/- was belong to M/s. Goyal MG Gases Pvt. Ltd. and made the addition of differential amount of INR 24,58,590/- as unexplained money of the assessee. However, no details whatsoever was provided as to how these figures were worked out by the AO. Surprisingly, when the cash in hand as on the date of search of INR 3,69,02,334/- was admitted by one of the group company namely M/s Goyal MG Gases Pvt. Ltd., worked out after completing its cash book, which has not been doubted, claim of the assessee that part of it was kept in the locker cannot be denied without any contrary material brought on record. the AO has not stated as to why he has taken the cash in hand of this company at INR 8,54,320/- in the chart at para 8.4 of the order. Thereafter, in para 8.5, AO has taken a sum of INR 45,40,410/- as cash in hand belonged to M/s. Goyal MG Gases Pvt. Ltd.
In para 9.4 of the order of M/s. Goyal MG Gases Pvt .Ltd. reproduced the same chart as available in the case of the assessee at para 8.3 & 8.4 of the assessment order however, no addition was made in the hands of the company.
Ld. CIT(A) has failed to appreciate this anomaly in the assessment order while confirming the addition. Looking to the entirety of the facts and further considering the fact that in the case of M/s. Goyal MG Gases Pvt. Ltd., availability of total cash in hand as on the date of search of INR 3,69,02,334/- as per its cash book has not been doubted as could be seen from the assessment order of M/s. Goyal MG Gases Pvt. Ltd. placed at pages 222 to 294 of Paper Book. Once no addition whatsoever, was made on account of excess cash in the case of M/s. Goyal MG Gases Pvt. Ltd. therefore, the cash found in the locker of assessee as out of such cash in hand of M/s. Goyal MG Gases Pvt. Ltd. of INR 3,69,02,334/- should be accepted and due credit of the same in the hands of the assessee should be allowed. In view of these facts, we delete the addition of INR 25,58,590/- made u/s 69A of the Act. All the grounds of appeal taken by the assessee are thus allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 10.04.2026.