ADARSH HEGDE,MUMBAI vs. ACIT CEN CIR 44, MUMBAI

Having heard and considered material on record, we find that the assessee has taken one stand, right from beginning from the date of search to till date of assessment that cash found during the course of search in his residence belongs to Mr. Sanath Kumar Shetty. We, further noted that the assessee has substantiated its claim by filing confirmation along with affidavit of Mr. Sanath Kumar Shetty. These facts were not disputed by the AO, as well as the Ld. CIT(A). The AO made additions towards cash found during the course of search only on the ground that although, assessee claims that cash found in his residence belongs to Mr. Sanath Kumar Shetty, but there is a major discrepancy between the stand taken, at the time of search, while recording statement u/s 132(4) and at the time of filing of affidavit of Mr.Sanath Kumar Shetty. No doubt there is difference in explanations offered by the assessee , at the time of search, in respect of cash found in his premises, as per which cash belongs to Mr. Sanath kumar Shetty, however said cash has been collected from one of the buyer from Mumbai and kept in his residence. Whereas, at the time of confirmation filed along with affidavit, it was explained that said cash has been brought from Mangalore through one of his employee Shri Prasad Shetty for the purpose of purchase of immovable property in Mumbai and the same has been handover to the assessee for safe keeping. On perusal of statement recorded , during the course of search and contents of affidavit filed by Mr.Sanath Kumar Shetty, we find that there is no difference in stand taken by the assessee, in respect of said cash. The assessee all along claims that said cash belongs to his brother in law Shri. Sanath kumar Shetty and this fact was even confirmed by his brother in law Mr. Sanath kumar Shetty. Therefore, we are of the considered view that merely for the reason that there is a difference in statement given at the time of search and statement given in sworn affidavit regarding source of cash in the hands of Mr. Sanath Kumar Shetty, no adverse inference could be drawn against the assessee that said cash belongs to the assessee and assessee is unable to explain source of cash found during the course of search. We further noted that it is not a case of the AO that there is a difference between statement given during the course of search and explanation furnished during the course of assessment proceedings. The assessee has right from the date of search to till date of assessment had taken one stand, in respect of cash found from his residence. Therefore, we are considered view that the Ld.AO, as well as Ld.CIT(A) erred in sustained additions towards cash found, during the course of search u/s 69A of the I.T.Act, 1961.

Hence, we set aside order of the Ld. CIT(A) and direct the AO to delete the additions made towards cash found during the course of search as unexplained money u/s 69A of the I.T.Act, 1961.

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