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Facts
A search and seizure operation under Section 132 of the Income-tax Act, 1961, led to the discovery of Rs. 9,50,000/- cash, of which Rs. 7,00,000/- was seized. The assessee claimed the cash belonged to M/s Gulmohar Township India Pvt. Ltd. (GTIPL), a company where he was a director, and that it was disclosed to the Income Tax Settlement Commission (ITSC).
Held
The Tribunal held that since the Revenue had accepted GTIPL's ownership of the cash before the Settlement Commission and the settlement is final and binding under Section 245D of the Act, it is impermissible for the Revenue to take a contradictory stand. The cash considered as undisclosed income of GTIPL cannot be taxed again in the hands of the assessee.
Key Issues
Whether cash found during search, claimed to be owned by a company and disclosed before the Settlement Commission, can be taxed again in the hands of the assessee as unexplained money, leading to double taxation.
Sections Cited
132, 132(4), 69A, 245D
AI-generated summary — verify with the full judgment below
Order PER LALIET KUMAR, J.M: These are two connected appeals filed by the Assessee feeling aggrieved by the order passed by the Ld. CIT(A) for the Assessment Year 2019-20. Since the identical issues have been raised in both the connected appeals we are reproducing below the facts and the grounds pertaining to ITA No. 82/Chd/2024. 2. This appeal by the assessee is directed against the order of the Ld. CIT(A)- 3, Gurgaon dt. 21/12/2023 for the assessment year 2019-20. The ground raised
by the assessee are as under:
1. Grounds of Appeal 1.1 The assessee has raised multiple grounds of appeal contesting the action of the learned CIT(A) in confirming the addition of Rs. 4,75,000/- made under Section 69A of the Income-tax Act, 1961, pertaining to cash found during search operations. 1.2 In essence, the grounds revolve around: Improper appreciation of facts, Non-consideration of disclosures made before the Hon’ble Settlement Commission, Erroneous attribution of unexplained cash to the assessee, resulting in double taxation.
Briefly, the facts of the case are that a search and seizure operation under 3. Section 132 of the Income-tax Act, 1961, was carried out at the residential premises of the assessee, Shri Jagdeep Singh, on 13.02.2019. During the course of the search proceedings, cash amounting to Rs.9,50,000/- was found at the premises. Out of this total cash, Rs.7,00,000/- was seized by the search party.In his statement recorded during the search proceedings under Section 132(4) of the Act, the assessee categorically stated that the said cash did not belong to him personally but was the property of M/s Gulmohar Township India Pvt. Ltd. (hereinafter referred to as "GTIPL"), a company where he served as a director.The assessee further submitted that the cash found had been duly reflected in the disclosures made before the Hon'ble Income Tax Settlement Commission (ITSC) by GTIPL. It was contended that the cash was considered as part of GTIPL’s undisclosed income and thus did not constitute the assessee's personal unexplained assets. However, the Ld. AO rejected the explanation furnished by the assessee. The AO observed that upon a perusal of the Statement of Facts (SOF) filed by GTIPL before the Hon’ble ITSC, there was no specific disclosure found regarding the cash seized from the residence of the assessee. Therefore, the AO concluded that the claim of ownership of cash by GTIPL was not substantiated.Consequently, the AO held that 50% of the cash amounting to Rs.4,75,000/- (i.e., 50% of Rs.9,50,000/-) was unexplained money belonging to the assessee. Accordingly, an addition of Rs.4,75,000/- was made under Section 69A of the Act, and the total assessed income of the assessee was determined at Rs.30,55,390/- 4. Feeling aggrieved by the order, the assessee preferred the appeal before the Ld. CIT(A), however the Ld. CIT(A) had dismissed the appeal of the assessee by giving the following reasons :
It was held that the assessee failed to conclusively prove that the cash belonged to GTIPL and that the mere assertion without supportive documents could not be accepted. The CIT(A) also noted that no final order from the Hon'ble Settlement Commission had been placed on record demonstrating that the specific cash found was accounted for in GTIPL’s disclosure
Now the assessee is in appeal before us, against the order passed by the Ld. CIT(A) is on the grounds mentioned above. The Ld. AR of the assessee reiterated the submissions made before the lower authorities. It was argued that: The assessee had no independent source of unaccounted cash. GTIPL admitted the ownership of the cash, and tax liability had already been assumed by the company in its settlement application. The addition in the hands of the assessee would result in double taxation, which is not permissible under law. GTIPL filed the refund claim for the seized cash, not the assessee personally, further establishing the company's ownership.
The Ld. AR has drawn our attention to page 8 of the paper book wherein the statement of the assessee was recorded by the Revenue. It was submitted by the Ld. AR that in the said statement, the assessee had categorically stated that the cash pertained to the business concerns, namely M/s Gulmohar Township India Pvt. Ltd. Furthermore, it was pointed out that in the Statement of Facts filed before the Hon'ble Settlement Commission (at page 26 of the paper book), M/s Gulmohar Township India Pvt. Ltd. had also mentioned that the amount found at the premises of the assessee belonged to the company and the same was duly considered in the undisclosed fund flow statement of the company. Attention was further drawn to page 38 of the paper book, where the amount of Rs.7,00,000/- was mentioned against the Director, and on the basis of the said amount, the financials of the company were prepared. The Ld. AR also referred to page 35 of the paper book to submit that for the A.Y. 2019- 20, the said company had offered net income of Rs.81,57,430/-, which matched with the figures reflected at page 38 of the paper book. 6.1 The Ld. AR further submitted that the order of the Hon'ble Settlement Commission (at page 40 of the paper book) had duly considered the above cash seizure in its settlement. 6.2 It was further contended that in the Rule 9A report submitted to the Settlement Commission, the assessee had provided a detailed cash flow statement, and the said facts could be verified from page 227 of the paper book.
Per contra, the Ld. DR relied upon paragraph 4.3 of the impugned order and submitted that the order passed by the Ld. CIT(A) was in accordance with law. 8. We have heard the rival contentions and perused the material on record. It is not in dispute that the assessee, during the search itself, attributed the ownership of the cash to GTIPL. The search operations were conducted simultaneously across group cases, and GTIPL had filed a petition before the Hon’ble Settlement Commission admitting undisclosed income, which allegedly included the cash in question. 8.1 The record shows that the Hon'ble Settlement Commission duly considered the cash flow statement, the balance sheet, and other relevant documents before passing the settlement order. It is evident that the amount of Rs.7,00,000/- was duly accounted for by GTIPL in its financial statements placed before the Settlement Commission, and no objection was raised by the Revenue in this regard. 8.2 In our considered opinion, once the Revenue has accepted the ownership of the cash of Rs.7,00,000/- in the hands of GTIPL before the Settlement Commission, it is impermissible for the Revenue to take a contradictory stand in the present proceedings and allege that the said cash belonged to the assessee. It is a well-settled principle that the Revenue must maintain consistency in its approach and cannot adopt contradictory stands in different proceedings. Furthermore, under the provisions of Section 245D of the Act, the settlement reached before the Hon'ble Settlement Commission is final and binding and cannot be reopened or challenged in any other proceedings. Therefore, once the amount of Rs.7,00,000/- has been considered as part of the undisclosed income of GTIPL in the settlement proceedings, the same cannot be taxed again in the hands of the assessee. 8.3 In view of the foregoing, no addition can be sustained in the hands of the assessee. Accordingly, the addition made in the hands of the assessee is deleted and the appeal of the assessee stands allowed.
Both the parties fairly submitted that the facts and circumstances of this appeal is exactly identical to the Appeal in and similar contentions raised therein may be considered, therefore, our findings and directions given in ITA No. 82/Chd/2024 shall apply mutatis mutandis to this appeal, which is accordingly allowed.
In the result, both the above appeals filed by the assessees are allowed.
Order pronounced in the open Court on 22/04/2025 मनोज कुमार अ"वाल लिलत कुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद"/ ACCOUNTANT MEMBER "ाियक सद" /JUDICIAL MEMBER