RAKESH KUMAR VOHRA,PANCHKULA vs. DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL CIRCLE-2), CHANDIGARH, C.R. BUILDING CHANDIGARH

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ITA 1015/CHANDI/2025Status: DisposedITAT Chandigarh02 February 2026AY 2019-204 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Income Tax Appellate Tribunal (ITAT) noted that the assessee was a 50% partner in M/s Anant Stones Crusher, which had disclosed Rs.62.87 Lacs as estimated unaccounted profit for AYs 2018-19 & 2019-20. The Tribunal held that telescoping benefit should be granted, as unaccounted cash accumulates over time, and the assessee, being a substantial partner, is entitled to it. Consequently, the addition of Rs.5.50 Lacs made by the AO under Section 69A was deleted.

What were the facts?

During a search on 05-04-2018, Rs.7.29 Lacs cash was found from the assessee's bedroom. The assessee explained Rs.5.50 Lacs belonged to his partnership firm, M/s Anant Stones Crusher, but the AO added this amount under Section 69A as the assessee's capital account in the firm did not reflect such payment. The CIT(A) upheld the addition, rejecting the assessee's claim for telescoping benefit against additional income disclosed by the firm, arguing no direct nexus.

What were the issues?

Whether the assessee is entitled to telescoping benefit for cash found during a search when a partnership firm, in which the assessee is a substantial partner, has disclosed additional unaccounted income.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH

Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

(िनधा"रण वष" / Assessment Year: 2019-20) Shri Rakesh Kumar Vohra DCIT (Central Circle-2) 420, Sector-6, Mansa Devi 2nd Floor, C.R. Building Sector 17 बनाम/ Vs. Sec-5, S.O.Panchkula Chandigarh 160017 Haryana - 134114 "थायीलेखासं./जीआइआरसं./PAN/GIR No. ACJPV-7330-B (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant by : Sh. Dhruv Goel (CA) – Ld. AR ""थ"कीओरसे/Respondent by : Sh. Bharat Bhushan Garg (CIT) – Ld. DR (Virtual) सुनवाईकीतारीख/Date of Hearing : 28-01-2026 घोषणाकीतारीख /Date of Pronouncement : 02-02-2026 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2019-20 arises out of an order of learned Commissioner of Income Tax (Appeals)-3, Gurgaon [CIT(A)] dated 29-07-2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 17-06-2021. The sole grievance of the assessee is confirmation of addition of Rs.5.50 Lacs u/s 69A which represent cash found during search on the assessee. The Ld. AR sought telescoping benefit out of surrender made by the partnership firm in which the assessee acted as partner to the extent of 50%. The Ld. CIT-DR stated that in the absence of proven nexus, the benefit as pleaded by Ld. AR could not be granted to the assessee. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.

2.

The assessee-group was subjected to search action by the department on 05-04-2018. During search, cash of Rs.12,39,600/- was found from the residential premises which include Rs.7,29,300/- as found from the bedroom of the assessee. The assessee was accordingly required to explain the source of Rs.7,29,300/-. It was explained that the amount of Rs.5.50 Lacs belonged to assessee’s partnership firm M/s Anant Stones Crusher whereas the balance was kept for household and general expenses. The Ld. AO did not accept the source of Rs.5.50 Lacs since the capital account of the assessee in the firm did not show any such payment to the assessee. Accordingly, the amount of Rs. 5.50 Lakhs was added in the hands of the assessee.

3.

During first appeal proceedings, the assessee drew attention to assessment of firm M/s Anant Stone Crusher for AYs 2018-19 & 2019- 20 wherein the firm had admitted additional income of Rs.62.87 Lacs which was estimated by Ld. AO at Rs.95 Lacs. However, Ld. CIT(A) rejected the same on the ground that income in those assessments was determined by applying a profit percentage to the estimated unaccounted turnover and it was not a cashflow-based disclosure wherein specific amount of cash was identified and traced to physical cash seized from any partner or the business premises. The seized cash was not specifically linked to any entry or component of the firm’s revised income disclosures. Therefore, the benefit of telescoping could not be granted to the assessee. Accordingly, the impugned addition was confirmed against which the assessee in further appeal before us.

4.

It clearly emerges that the assessee has acted substantial partner to the extent of 50% in M/s Anant Stone Crusher. The firm has suo- moto made additional disclosure of Rs.62.87 Lacs which represent estimated unaccounted profit. This income would be represented in the form of cash / investment or any other asset only. How the said estimation has been made would not be a relevant factor. The direct nexus of the same may also not be available since the unaccounted cash would be accumulated over a period of time. Therefore, on these facts, the telescoping benefit, in our considered opinion, could be granted to the assessee since the assessee is a substantial partner in the firm. This being so, the impugned addition as made by Ld. AO stand deleted. No other ground has been urged in the appeal.

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