SH. AVINASH SINGLA,LUDHIANA vs. DCIT, CENTRAL CIRCLE -1, LUDHIANA

the order of the Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 17.06.2022 passed for assessment year 2019-20. Though the assessee has taken five grounds of appeal but his solitary grievance is that ld. CIT(A) has erred in confirming the addition of Rs.6 lacs which was A.Y.2019-20 2 added by the Assessing Officer on account of unexplained cash found at the residential premises during the course of search.

The AO has issued notice and a return of income was filed on 31.12.2019 declaring total income of Rs.7,38,280/-.

According to the AO, this return was filed under Section 139(4) of the Income Tax Act. The AO has issued notice under Section 143(2) on 07.02.2020. On scrutiny of the accounts it revealed that a cash of Rs.10,72,500/- was found at the residential premises of Shri Avinash Singla at the time of search. This factum was put to Shri Avinash Singla during the course of search vide Question No. 12-13 while recording his statement under Section 132(4) of the Income Tax Act.

The Question No. 12 exhibits that how much cash is lying within his residential premises. In reply to it, it was submitted by the assessee that approximately Rs. 10.50 lacs A.Y.2019-20 3 is available. Similarly, when it was put to the assessee that whether this cash belongs to somebody else, then assessee has replied that this cash related to him, his business concern and may be of family members but exact break-up cannot be given at present. During the course of assessment proceedings, AO confronted the assessee to explain source of this cash. The assessee has submitted that Rs. Four Lacs was brought at home by his son Shri Nitish Singla who is the Director, Avinash Agro Pvt. Ltd. and rest of the amount is savings of the family as well as Rs.7 lacs received by him as a gift from his brother. He has filed documentary evidence in respect of this plea. The ld. AO has accepted the availability of Rs.4 lacs from M/s Avinash Agro Pvt. Ltd. but did not accept balance explanation and made the addition of Rs.6 lacs.

ITA No.597/CHD/2022 A.Y.2019-20 4 of the Director has declared a sum of Rs.10 lacs in M/s Avinash Agro Pvt. Ltd. to cover up any irregularity in explanation of any unexplained item. This Rs.10 lacs has been assessed in the hands of M/s Avinash Agro Pvt. Ltd. which was framed under Section 143(3) of the Income Tax Act. The ld. Counsel for the assessee has drew our attention to page No. 47 to 50 of the Paper Book where this factum is available in the assessment order. He has also referred to page No. 38 to 46, ITR-V and Computation of Income in the case of M/s Avinash Agro Pvt. Ltd. and these documents, it has been disclosed that assessee has declared additional income of Rs.10 lacs. Therefore, we are of the view that if explanation is taken into consideration, based on cumulative circumstances, namely; (1) Rs.10 lacs was declared to cover up such type of issues in the case of M/s Avinash Agro Pvt. Ltd.; (b) Past savings of the family members, and (c) Gift received from the brothers, then it would be established that source of cash is available with the assessee. It is difficult to establish a cash available in the family with a mathematic precision. It is to be appreciated on the normal human behaviour available in the A.Y.2019-20 5 family and if all the family members are assessable to tax, then possibility of their savings and availability of Rs.10 lacs could never be denied. Therefore, learned Revenue Officers have erred in not appreciating the facts and circumstances in right perspective and confirming the addition of Rs.6 lacs.

We allow this appeal and delete the addition of Rs.6 lacs.

Order pronounced on 08.01.2025.