RELIANCE RITU KUMAR PRIVATE LIMITED, NEW DELHI vs. ACIT, CENTRAL CIRCLE-4, NEW DELHI

Though the assessee has raised several grounds of appeal, the only effective issue to be decided in this appeal is as to whether the ld CIT(A) was justified in treating the cash seized of Rs. 13 lakhs as unexplained money u/s 69A read with Section 115BBE of the Act in the facts and circumstances of the instant case.

We have heard the rival submissions and perused the material available on record. A search and seizure action u/s 132 of the Act was carried out in “Ritika Pvt. Ltd” (RPL) group and associates on 29.05.2018. During the course of search and seizure action at the premises 260, Udyog Vihar, Phase-I, Gurgaon, cash amounting to Rs. 21,26,180/- was found out of which cash amounting to Rs. 13 lakhs was seized from the premises. The assessee was requested to provide explanation of source of cash found with the supporting documents. The assessee in response to the query stated that company‟s Kolkata office had transferred cash of Rs. 13 lakhs to company‟s Gurgaon office in the form of inter branch transfer. In fact during the search itself Mr. Nikhil Batra (GM Finance & Accounts) of M/s. Ritika Pvt. Ltd was confronted by the search team with regard to cash of Rs. 13 lakhs which was seized. He responded that Rs. 13 lakhs was received as inter branch transfer from Kolkata Office in the month of February or March 2018 and the said cash was handed over to him by Mr. Suresh Chander Kumar. He also stated that he was not aware as to who brought cash from Kolkata and how the same was transported from Kolkata to Gurgaon. The ld AO however while framing the assessment for the year under consideration did not heed to the contention of the assessee and proceeded to treat the seized cash of Rs. 13 lakhs as unexplained money u/s 69A read with Section 115BBE of the Act and added the same to the total income of the assessee. This action of the ld AO was upheld by the ld CIT(A) on the ground that the assessee was not able to explain either during the course of search or during the course of assessment proceedings as to how the cash had actually travelled from Kolkata to Gurgaon and who carried the same.

We find that the assessee had duly furnished the cash reconciliation statement before the lower authorities as under:-

The assessee right from the time of search had given impromptu statement that cash balance of the assessee company as a whole remains the same after the inter branch transfer of cash of Rs 13 lakhs from Kolkata to Gurgaon. Further, we find that from pages 206 to 241 of the Paper Book containing the extract of the cash book of Kolkata Branch that a sum of Rs. 24,14,872.24 was available as cash balance as on 28.05.2018 with Kolkata Branch of the assessee, and that the cash transferred of Rs. 13 lakhs was duly entered in the books of Kolkata Branch on 02.06.2018 which is evident from page 241 of the Paper Book. In fact on 02.06.2018, the narration very clearly depicts that the cash is transferred to Gurgaon location from Kolkata location. Similarly, corresponding entries were posted in the cash book at Gurgaon location on 02.06.2018 showing receipt of cash from Kolkata Branch by the Gurgaon Branch. Though, the cash has been transferred prior to the date of search on 29.05.2018, the same was only recorded with a delay of 4 days in the books of respective branches. Either way, the company as a whole did have sufficient cash balance to explain the seized cash of Rs.

In the result, the appeal of the assessee is allowed.