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Facts
During a search operation, cash of Rs. 5,45,350/- was found at the assessee's residence. The assessee explained this as accumulated savings of his wife and adult daughter for emergency and marriage. The Assessing Officer added Rs. 20,96,136/- as unexplained cash, applying Section 115BBE. The CIT(A) partially deleted this, confirming an addition of Rs. 5,00,136/- and its taxation under Section 115BBE, leading to the present appeal.
Held
The Tribunal held that since the CIT(A) had accepted the evidentiary value of the assessee's statement during the search, the explanation for the cash found at the residence, attributed to the accumulated savings of the assessee's wife and adult daughter, should have been accepted. The lower authorities failed to rebut this explanation or prove it false. Consequently, the addition of Rs. 5,00,136/- confirmed by the CIT(A) was deleted, rendering the applicability of Section 115BBE academic.
Key Issues
The primary issues were the justification of the Rs. 5,00,136/- addition as unexplained cash found during a search, specifically regarding the acceptance of the assessee's explanation about his wife's and daughter's accumulated savings, and the applicability of Section 115BBE.
Sections Cited
250, 143(3), 44AB, 139, 69A, 115BBE, 132(4)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM vk;dj vihy la-@ITA No. 789/JPR/2025
fu/kZkj.k o"kZ@Assessment Year : 2019-20 Puran Mal Agarwal cuke Asstt. Commissioner of Income F-73-B, Shankar Marg, Banipark, Vs. Tax, Jaipur. Central Circle-2, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AASPA6272A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri Vijay Goyal, C.A. jktLo dh vksj ls@Revenue by : Mrs. Anita Rinesh, JCIT-DR 19/08/2025 lquokbZ dh rkjh[k@Date of Hearing: ?kks"k.kk dh rkjh[k@Date of Pronouncement: 09/09/2025 vkns'k@ORDER PER DR. S. SEETHALAKSHMI, J.M. This appeal filed by the assessee against the order of Ld. Commissioner of Income tax (Appeals)-, Jaipur-4, Jaipur [hereinafter referred to as ‘CIT(A)’] dated 24.03.2025 for A.Y. 2019-20 passed under section 250 of IT Act which in turn arise from the order dated 12.04.2021 passed u/s. 143(3) of the Act by the ACIT, Central Circle-2, Jaipur.
The assessee is an individual and during the year under consideration the assessee derived income from house property, business & profession and income Puran Mal Agarwal, Jaipur. from other sources. The assessee is carrying his business of brokerage/commission as proprietor of M/s Puranmal & Company. The assessee was maintaining the books of accounts and the same were audited u/s 44AB of I. Tax Act. The assessee filed his regular return u/s 139of Income Tax Act on 28-09-2019 wherein total income of Rs. 87,01,410/- was declared. The Search & seizure operations on assessee were carried out by the I.T. Department on 06-09-2018. The assessment of assessee was completed u/s 143(3) of Income Tax Act, 1961 vide his order dated 12-04-2021 in which the income of the assessee was assessed at Rs. 1,37,16,816/- as against returned income of Rs. 87,01,410/-. In the assessment, the addition of Rs. 20,96,136/- and Rs. 29,19,270/- was made u/s 69A on a/c of excess unexplained cash and jewellery respectively. The Ld. A.O. taxed the additions so made as per the provisions of section 115BBE of Income Tax Act, 1961.
2.1 The assessee being aggrieved from the additions made by Ld. A.O. preferred an appeal before Ld. CIT (A), who deleted the addition of Rs. 29,19,270/-and 15,96,000/- on a/c of excess Jewellery and Cash respectively and the addition to the tune of Rs. 5,00,136/- was confirmed on a/c of unexplained cash found during search. Further, Ld. CIT (A) also confirmed the invocation of provisions of section 115BBE of the Act on the addition of Rs. 5,00,136/-.
Puran Mal Agarwal, Jaipur. 3. The assessee being aggrieved from the addition confirmed by Ld. CIT (A) preferred the present appeal before us. The assessee raised the following grounds of appeal: - “1. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in confirming the addition of Rs. 5,00,136/- out of total addition of Rs. 20,96,136/- made by the ld AO against the cash found in search u/s 69A and charging the tax by applying provisions of section 115BBE.
2. The appellant prays for leave to Add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal.”
4. In ground No. 1 of the appeal the assessee challenged to the addition of Rs. 5,00,136/- and applicability of section 115BBE confirmed by CIT (A). The factsof the issue involved in the appeal before us is that the Income Tax department carried out search at residence and office of the assessee on 06.09.2018 and during the course of search cash amounting Rs. 5,45,350/- was found from residence of assessee and Rs. 17,93,300/- was found from the office of the assessee. During the course of search, the statement of the assessee was recorded u/s 132(4) of the Act, wherein he was asked to explain the source of cash so found. In reply to that, the assessee explained that the cash amounting Rs. 5,45,350/- found from his residence, was accumulated saving of wife of assessee Smt. Savita Agarwal and his daughter Miss Priyanka Agarwal aged 30 years, which were saved & accumulated by them over the year out of gifts &savings for emergency and for marriage of daughter Priyanka Agarwal. It was also stated by him that both of them Puran Mal Agarwal, Jaipur. are separate assessee. As regard to the source of cash amounting Rs. 17,93,300/- from office of assessee it was explained that Rs. 1,97,020/- is cash available as per cash book of proprietorship concern of assessee M/s Puran Mal & Company, Rs. 3,96,000/- is out of cash brokerage of assessee from tanker transportation, which is to be accounted for in books of accounts and Rs. 12,00,000/- is out of brokerage income of son of assessee Shri Harsh Agarwal, which he will declare in his ITR of the year. As against Rs. 3,96,000/- the assessee in his ITR declared Rs. 4,00,000/- as his brokerage income of current year. The son of assessee. Shri Harsh Agarwal as against Rs. 12,00,000/- declared Rs. 17,00,000/-as his brokerage income of current year. During the course of search and also during the assessment proceedings, the assessee explained the source of cash of Rs. 23,37,650/- (5,44,350+17,93,300) found from residence and office. The Ld. A.O. did not accept the explanation of assessee and the cash to the extent of Rs. 2,41,514/-, being cash balance as per cash books found during search, was only treated as explained and balance amount of Rs. 20,96,136/- was added as income of the assessee. The Ld. CIT (A) relying on the search statement of the assessee, accepted the source of cash amounting to Rs. 3,96,000/- from the commission income of assessee and Rs. 12,00,000/- being cash belonging to son of the assessee Shri Harsh Agarwal and accordingly, he allowed the relief to the extent Rs. 15,96,000/- and confirmed the addition of Rs. 5,00,136/-(20,96,136-15,96,000).
Puran Mal Agarwal, Jaipur. 4.1 The Ld. A.R. filed the written submission, relied on the same and argued the case on same line. The Ld. A.R. submitted that the ldCIT (A) allowed relief of Rs. 15,96,000/- by relying on the search statement of the assessee, which were recorded u/s 132(4) of the Act but the same were relied upon partly and confirmed the addition of Rs. 5,00,136/- on account of cash found in search. It was submitted that on the one hand on the basis of search statement, the credit of commission income of assessee of the year under consideration was allowed Rs. 3,96,000/- only as against Rs. 4,00,000/-and credit of commission income of son of assessee, Shri Harsh Agarwal, was allowed Rs. 12,00,000/- as against Rs. 17,00,000/- claimed by assessee during the assessment proceedings. On the other hand, the explanation offered in search statement regarding the cash amounting Rs. 5,44,350/- found from the residence of assessee, which stated to be pertaining to his wife and unmarried daughter (age 30 yrs) was ignored. The cash to the extent of Rs. 35,000/-, as per cash balance available in the books of account of family members, was only treated as explained and accordingly cash to the tune of Rs. 5,00,136/- was treated unexplained and addition to that extent was confirmed by ld CIT(A). The Ld. A.R. of the assessee submitted that the Ld. CIT (A) adopted dual approach and he completely neither adhered the explanation of cash given in search statement nor the explanation/documents filed during the course of assessment proceeding and he proceeded with the pick and choose theory.
Puran Mal Agarwal, Jaipur. The Ld. A.R. of the assessee argued that if the source of cash is analysed in the light of the statement of the assessee recorded during search, which always carry the evidentiary value, then there is no occasion to confirm the addition of cash pertaining to wife and daughter of the assessee, which accumulated by them out of their own gifts and savings of over the years, more so when both of them are separate assessee of income tax. It is submitted that, if the explanation of the source submitted during the course of assessment proceeding is considered, then also there cannot be any addition in the hands of the assessee on account of unexplained cash. It was submitted that during the course of assessment proceeding the elaborate submission, supported by the documents which includes cash books, ITR & Balance Sheet of his son and also the sworn affidavit of son Shri Harsh Agarwal, wherein he affirmed the cash amounting to Rs. 17,00,000/- belonging to him, were filed. However, without any plausible reason and without making any independent inquiry no heed was given thereon. It is submitted that the it is an admitted position of the law that the contents of affidavits, which are not vague, should be accepted correct. It is also submitted by Ld. A.R. that interestingly the commission income declared by the assessee in his ITR Rs. 4,00,000/- and declared by his son Shri Harsh Agarwal Rs. 17,00,000/- in his ITR, was accepted in assessment but the corresponding credit of cash generated from such income was not allowed. It is Puran Mal Agarwal, Jaipur. also submitted that once in the affidavit filed by Shri Harsh Agarwal it is admitted by him that cash Rs. 17,00,000/- found during search pertaining to him, then such cash cannot be taxed in the hands of the assessee. The Ld. A.R. of the assessee also submitted that the cash found from business premises cannot be treated as unexplained and the same can only be taxed as business income only. Lastly, it was argued that for applying the provisions of section 115BBE of the Act the specific show cause notice was not given and hence provisions of this section cannot be applied mechanically.
The Ld. D.R. relied on the finding of Ld. CIT (A).
We have considered the rival contention and perused the orders of the lower authorities, the material available on record, arguments advanced by both the parties. The assessee has in his initial statement u/s 132(4) of the Act recorded during the search has explained cash found from business premise and residential premise. The search statements have the evidentiary value. The department found cash of Rs. 17,93,300/- from office premise of the assessee for which the assessee stated in the search statement that Rs. 1,97,020/- is cash available as per cash book of proprietorship concern of assessee M/s Puran Mal & Company, Rs. 3,96,000/- is out of cash brokerage of assessee from tanker transport, which is to be accounted for in books of account and Rs. 12,00,000/- is out of brokerage income of son of assessee Shri Harsh Agarwal. The CIT(A) allowed the relief of Rs. 12,00,000/- and Puran Mal Agarwal, Jaipur. Rs. 3,96,000/- totalling to Rs. 15,96,000/- on the basis of search statement. The ld CIT(A) at page 37 of his order has held as under:- "...The statement of the appellant recorded during the search action is the first initial response of the appellant during the search and seizure action and cannot be rejected on mere presumption. Further the statement recorded during the course of the search and seizure action itself is an evidence which is of the binding nature..."
The search party found cash amounting to Rs. 5,45,350/- from the residence of the assessee. The assessee in his search statement has said that the cash amounting to Rs. 5,45,350/- which were found from his bedroom and from the bedroom of unmarried daughter Miss Priyanka Agarwal (aged about 30 years) is accumulated saving of wife of assessee Smt. Savita Agarwal and his daughter Miss Priyanka Agarwal, which were saved and accumulated by them over the year out of gifts & savings for emergency and for marriage of daughter. The search statement reveals that the assessee completely explained the source of cash found during search from the residence and the lower authorities could not rebut to such explanation and also such explanation was not proved to be false. Once, the search statement is considered by Ld. CIT (A) as true and acceptable, then in our considered opinion the same should be taken into consideration in totality and if not, the plausible reason for not accepting the same should be there, which is not in this case. Looking to the customary in Indian family, status of the assessee and also specifically stated by assessee in his search statement u/s 132(4), the savings of Puran Mal Agarwal, Jaipur. this much saved by both the ladies over the years is quite reasonable and cannot be denied. Therefore, we are in consider view that there is no reason with the lower authorities for not accepting this explanation submitted by assessee during the course of search. Accordingly, in view of foregoing discussions, facts and circumstances of the case we set aside the additions confirmed by Ld. CIT (A) and direct to Ld. A.O. delete the addition of Rs. 5,00,136/-.Since, we have deleted the addition confirmed by Ld. CIT (A), therefore the other arguments raised by the assessee regarding to legal admissibility of affidavit filed, not considering the explanation/documents filed during assessment and applicability of provisions of section 115BBE of the Act became academic in nature only and hence are not being adjudicated separately. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 09/09/2025.