DAYA SHANKAR AGGARWAL,NEW DELHI vs. DCIT CENTRAL CIRCLE-8, NEW DELHI

This assessee’s appeal raised the following substantive grounds: 1. The assessment order passed in the present case is based on personal whims and fancies without ascertaining the facts and circumstances of the case. Hence liable to be quashed. 2. That the intimation by police would not confer juri iction on revenue to detain and withhold cash by issuance of an invalid search warrant under section 132 of the Income Tax Act, 1961 for future contingency, since revenue had no reason to believe that assessee would not disclose cash transaction in the return of income. 3. That the Ld. CIT(A) has grossly upheld the order passed by Ld. AO by ignoring that the intercepted cash seized amounting to Rs. 51,34,000/- are part of books of account and generated through sales proceeding of the business activity and accounted for in books of accounts maintained by the appellant. 4. That the Ld. CIT(A) has grossly erred in law and on facts by sustaining the addition made by the Ld. AO as the same cannot be treated under the provisions of section 69A and applying the provisions of section 115BBE of the Act. 5. That the appellant craves leave to add, amend, modify, rescind, supplement or alter any of the grounds of appeal before the appeal is finally adjudicated upon.

Learned counsel first of all submits that the assessee’s second substantive ground herein in fact seeks to quash the impugned “initiation” of proceedings under section 132 of the Act as not sustainable in law. We are of the considered view that the instant issue as to whether the assessee could challenge initiation of such proceedings itself or not, is hardly res-integra since having been decided in department’s favour in Promain Ltd. Vs. DCIT (2005) 95 ITD 489 (Del.) (SB) and M.B. Lal v. CIT [2005] 149 Taxman 490 3 | P a g e

1.5 A search and seizure action u/s.132 of the Income tax Act, 1961 was conducted on Sh. Daya Shankar Aggarwal after receiving information from flying squad Team-II, Hodal on 20.04.2019 regarding intercepted cash of Rs. 51,34,000/- from Sh. Daya Shankar Aggarwal and his employee Sh. Bantu S/o Sh. Kamruddin, near village Bhoraka on Hodal Punahana Road, Hodal, Palwal were carrying in vehicle no HR-29AD-4602 on 20.04.2019 in F.Y. 2019-20. In this case, the Investigation Wing received information from flying squad Team-II, Hodal on 20.04.2019 regarding intercepted cash of Rs. 51,34,000/-from Sh. Daya Shankar Aggarwal and his employee Sh. Bantu S/o Sh. Kamruddin, near village-Bhoraka on Hodal Punahana Road, Hodal, Palwal. They were carrying the cash in vehicle no HR-29AD-4602. Statement of Sh. Daya Shankar Aggarwal was recorded on oath on 20.04.2019 u/s 131(1A) of the Income Tax Act, 1961, at Police Station, Hodal Distt- Palwal, Haryana. Sh. Daya Shankar Aggarwal, in his statement, stated that he is engaged in the business of trading of milk and milk products like desi ghee, milk powder and refined under the name and style of M/s Bansal Agencies, Sarai Sahi, Kosi Kalan, Mathura. He also stated that the intercepted cash of Rs. 51,34,000/- is related to his business which was collected from his customers.

1.6 During the course of search, the statement of Sh. Daya Shankar Aggarwal was recorded on oath on 20.04.2019 u/s 131(1A) of the Income Tax Act, 1961, at Police Station, Hodal Distt-Palwal, Haryana. The relevant findings in his statement are as under: 4 | P a g e

The appellant started his journey on 18.04.2019 at 3:00 PM for recovering his dues from debtors. He collected Rs. 1.5 lacs from Sunil Dairy and also collected money from Islam Dairy and Fajjar Dairy. The appellant does not remember that from which other parties he had collected the money. He mentioned that he has not given any receipt on receiving the money. As per his knowledge he had collected around Rs. 1 to Rs. 1.5 lacs from 40 Dairies on 19.04.2019. He was going to deposit his cash in the bank on the next day. 2. He conveyed that he has sold milk powder to these dairies in the month of March 2019 and issued bills in this regard. 3. Except for one or two occasions the appellant did not deposit any money in cash during FYs 2018-19 and 2019-20. 4. This entire money of Rs. 51,34,000/- pertains to the recoveries of business of the appellant. 5. The appellant did not have any evidence or proof to prove that this money pertains to the appellant. 6. The appellant does not remember the names and addresses of the 40 dairies (Except three dairies) from whom this cash amounting to Rs. 51,34,000/- was received. 7. The appellant did not remember the names of 40 dairies. He accepted that this amount of Rs. 51,34,000/- is part of his undisclosed income. Further, he mentioned that this amount is unexplained/unaccounted income of the appellant.

1.7 During the course of post search proceedings, assessee was asked to produce bills and list of customers from whom cash of Rs 51,34,000/- was received and was asked to provide the details of Year wise details of cash deposited in his bank A/c in the name of his firm M/s Bansal Agencies for the last three financial year, Name and Address of the persons, to wham cash sale made and cash collected in the last three years, Audited copy of cashbook of your proprietorship concern is M/s Bansal Agencies the last three years etc. The assessee in reply to the Investigation Wing submitted the bank account statement and balance sheet and the list of customers whom cash sale made of last three years but he has not provided the cash book and details of customers to whom cash sale made. In this regard, vide questionnaire dated 13.08.2021, the assessee was asked to furnish source of the cash seized of Rs 51,34,000/-. In its reply dated 25.8.2021 for the specific issue of cash seizure the assessee has explained it as receipt from its business activities. From the details submitted by the assessee it couldn't be deciphered that the cash found was from these parties as there were no confirmation from the parties to this effect. Further, the Assessing Officer opined that the invoices submitted by the assessee belongs to March, 2019 while the cash was found from the assessee in April, 2019. Also the 5 | P a g e contention of the assessee that the amount seized was from the collection from the parties couldn't be accepted as there are total 37 parties mentioned by him and Assessing Officer was of the opinion that it is improbable that he could have collected cash from all these parties on the same day. Further, from the sales book submitted by him there were meager cash sales from 1.4.2019 to 20.4.2019 and total cash sales didn't tally the amount of Rs 51,34,000. Hence the contention of the assessee was rejected by the Assessing Officer. Thus, the cash of Rs. 51,34,000/- remained unexplained money as provided in section 69A of the Income Tax Act, 1961. The unexplained amount of Rs. 51,34,000/- has been added u/s 69A r.w.s. 115BBE of the L.T. Act, 1961 to the income of the assessee by the Assessing Officer.

1.8 The appellant argued that the cash collected was against the sale invoice which pertain to March-2019 and he only recovered his debtors on 18.04.2019 evening and on 19.04.2019. The relevant extracts of the cash book submitted during the appellate proceedings is as under: 6 | P a g e

1.9 The issue of credit sale, subsequent recovery of debtors and seizure of cash were analysed in detail and the submissions/documents filed during the course of appellate proceedings were perused. Following issues/points are noteworthy:

During the course of search proceedings the appellant was asked about the names and addresses of the persons from whom he had collected the cash but the appellant said that he does not remember the names and addresses of the 40 dairies 7 | P a g e from whom this cash amounting to Rs. 51,34,000/- was received. 2. Except for one or two occasions the appellant did not deposit any money in cash during FYs 2018-19 and 2019-20. 3. The appellant did not have any evidence or proof to prove that this money pertains to the appellant. 4. The appellant does not remember the names and addresses of the 40 dairies from whom this cash amounting to Rs. 51,34,000/- was received. 5. The appellant did not remember the names of 40 dairies. He accepted that this amount of Rs. 51,34,000/- is part of his undisclosed income. Further, he mentioned that this amount is unexplained/unaccounted income of the appellant. 6. The appellant did not produce/file the copies of books of accounts during the search indicating that sales to these 37/40 parties was made on credit in the month of March 2019. 4.1.10 As per the written submission dated 11.04.2022 filed by the appellant, the appellant claimed to have stayed one night at debtor's home, namely Sumit Dairy. This is how the appellant has tried to justify that he made collections on 18.04.2019 evening and 19.04.2019 for the whole day. However, on the perusal of cash book for April 2019 it was observed that there is no debtor by the name of 'Sumit Dairy' from whom the payment has been received. Therefore, it appears that the facts mentioned by the appellant during the course of appellate proceedings are neither correct nor complete.

1.11 The appellant was found in possession of cash amounting to Rs. 51,34,000/- and explained the source as the amount recovered from debtors. He did not produce any books of accounts at that stage to prove that sales were actually made to these parties in the month of March 2019 and this cash is out of recoveries from those debtors. During the course of search proceedings the appellant did not even inform the names of the parties from whom he had collected this money allegedly only a day earlier. Therefore, the statement of the appellant is not reliable as the facts mentioned by him on the date of search were not found to be complete and duly supported by evidence. The facts submitted during the course of statement were therefore incomplete.

1.12 During the course of appellate proceedings, the appellant was asked to provide the details of month wise sales for AY 2019-20 and AY 2018-19 along with the details of cash deposits in those two years. However, the appellant did not respond to these queries despite of four subsequent notices. In the absence of details of sales made in the earlier years it is not possible to determine as to whether the sales during the month of March 2019 are abnormally high or not. The 8 | P a g e perusal of cash book for the month of April 2019 indicates that there are only meager cash sales from 01.04.2019 to 19.04.2019 amounting to only Rs. 68,997/-. None of the parties from the list of 37 parties finds mention in the sales made during the period from 01.04.2019 to 19.04.2019. It is very surprising that none of the 37 parties to whom credit sales were made during March 2019, made any purchases from the appellant during April 2019. The appellant himself mentioned during the course of statement that except for one or two occasions the appellant did not deposit any money in cash during FYs 2018-19 and 2019-20. Therefore, such high credit sales in month of March 2019 and subsequent cash recoveries during April 2019 will not fall in the pattern of cash sales of the appellant in the last two years namely FY 2018-19 and 2019-20. 4.1.13 The appellant did not produce his books of accounts during the course of search proceedings and therefore the same cannot be considered as reliable. It appears that these small sales (below Rs. 2 Lacs each) to 37 parties in the month of March 2019 is only an afterthought and these sales were not booked in the books of accounts on the date of search. That is the reason of not filing/producing the Books of Accounts during the Search. This amount, which was subsequently seized was appellant's own cash which was depicted as sales made during March 2019 and April 2019. In his statement the appellant even admitted that he has no evidence to prove that this money pertains to the appellant. No confirmations from these 37 parties were provided and even their names were not conveyed during the course of search proceedings. During his statement the appellant specifically mentioned that this amount of Rs. 51,34,000/- is part of his undisclosed income. Further, he mentioned that this amount is unexplained/unaccounted income of the appellant. Therefore, all the subsequent explanations are only afterthoughts and are devoid of merit.

1.14 During the course of search, as per the statement recorded the appellant accepted that this amount of Rs. 51,34,000/- is part of his undisclosed income. Further, he mentioned that this amount is unexplained/unaccounted income of the appellant. No explanation and/or withdrawal of such statement have been filed during the course of assessment or appellate proceedings. Therefore, the appellant himself admitted during the course of search that this amount is unexplained/unaccounted income of the appellant.

1.15 In view of the above, it is conclusively determined that appellant did not offer any satisfactory explanation regarding the source of cash amounting to Rs. 51,34,000/- found in his possession during the course of search. During the search, he did not even mention the names of the parties from whom this cash has allegedly 9 | P a g e been obtained. The explanation submitted by the appellant was neither acceptable to the Assessing Officer nor can be justified during the appellato proceedings. The explanation submitted does not tally with the past history of the case as well as the statements made during the course of search proceedings. Further this alleged sale was apparently not recorded in the books of accounts on the date of search and therefore these alleged transactions were never a part of books of accounts at the time of search. The appellant did not provide any evidence or copies of books of accounts to substantiate his claim regarding the cash found. As per the statement, except for the year under consideration, cash was hardly deposited in the bank account in the earlier years. Therefore, the alleged sale in March 2019 and subsequent recoveries in cash from alleged debtors cannot be considered as genuine and correct. Further, the appellant himself admitted during the course of search that this amount is unexplained/unaccounted income of the appellant. In view of the above, it can be concluded that the appellant does not have any valid and acceptable explanation regarding the source of cash seized during the course of search. In view of the above I am of the considered opinion that the action of the Assessing Officer making addition of seized cash u/s 69A r.w.s 115BBE of Income Tax Act was correct and is not required to be interfered with at this stage. Accordingly, the addition of unexplained amount of Rs. 51,34,000/- u/s 69A r.w.s 115BBE of Income Tax Act is upheld. The grounds of appeal are decided against the appellant and no relief is granted to the appellant. All the grounds of appeal are accordingly dismissed.

Learned counsel vehemently argues in light of the assessee’s detailed paper-book running into 324 pages, inter alia, comprising a copy of his letter dated 03.05.2019 asking for panchnama and a copy thereof dated 23rd April, 2019, a copy of police report u/s 102 Cr.P.C. dated 19.04.2019, a copy of proforma with respect to cash seized by the police on the very date, bank account statements, cash book, receipt, register, invoices and stock as well as purchase register etc., to buttress the point that the above cash seized amounting to Rs. 51.34 lakhs in fact represents his collection in 10 | P a g e dairy business etc. realized from various parties whose list already stands extracted at page 10 in the assessment order. The assessee’s case accordingly is that the impugned addition deserves to be deleted as he has already explained the source of the cash seized which has wrongly been treated as unexplained in both the lower proceedings.