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Facts
During a search and seizure operation on the assessee, cash amounting to Rs.14,18,100/- was found, leading to an addition under Section 69A of the Income Tax Act. The CIT(A) partially confirmed the addition to Rs.10,68,100/-. The assessee contended that the cash belonged to 24 family members, providing a cash book to substantiate this claim, which was disregarded by the lower authorities.
Held
The Tribunal found the CIT(A)'s rejection of the cash book as "baseless and perverse" because the assessee produced the cash book and explained the source of the cash. It noted that the panchnama included family members and the AO had not found any fault with the cash book upon examination. Consequently, the Tribunal deleted the addition of Rs.10,68,100/-, concluding that the lower authorities erred in making and sustaining it.
Key Issues
Whether the addition of unexplained cash found during a search, claimed by the assessee to belong to family members and supported by a cash book, was justified when the cash book's validity was not properly disproven by the tax authorities.
Sections Cited
132, 139(1), 143(1), 143(2), 143(3), 153A, 69A
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Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
ORDER
PER YOGESH KUMAR U.S., JM:
This appeal filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals), 23, New Delhi [“Ld. CIT(A)”, for short], dated 08/06/2022 for Assessment Year 2018-19. The Grounds taken by the Assessee are as under:
Mool Chand Aggarwal, Saharanpur vs. ACIT “1. That having regard to the facts and circumstances of the case and in law the addition of Rs.10,68,100/- confirmed by Ld. Commissioner of Income Tax (A) is arbitrary, against law and facts on record and is not sustainable on various legal and factual grounds.
That on the facts and circumstances of the case and in law the learned Ld. Commissioner of Income Tax (A) while confirming the above addition arbitrarily and, mechanically rejected the explanation and evidence tendered by the appellant and made the addition by drawing subjective, premeditated and preconceived inferences therefore the same is not sustainable.
That the appellant craves the leave to add, alter or amend the grounds of appeal
at any stage and all the grounds are without prejudice to each other.”
2. The brief facts of the case are that, a search and seizure action u/s 132 of the Income Tax Act, 1961 (‘Act’ for short) was carried out in the ‘SMC Group’ of cases on 21/11/2017 in Financial Year 2017-18. A search warrant of authorization u/s 132 of the Act was issued and the search in the case was initiated on 21/11/2017. The assessee furnished original return of income filed u/s 139(1) of the Act before the AO decaling total income of Rs.3,18,43,450/-, the same was processed u/s 143(1) of the Act as the search was initiated in the case of the assessee. The case was picked up for ‘compulsory scrutiny’ and notice under section 143(2) of the Act was issued. The assessment order came to be passed u/s 143(3) r.w.s 153A of the Act by computing the income of the of the assessee at Rs.3,32,61,550/- as against the return income of the Mool Chand Aggarwal, Saharanpur vs. ACIT assessee at Rs.3,18,43,450/- by making an addition of Rs.14,18,100/- u/s 69A of the Act in respect of the cash found during the search.
3. Aggrieved by the assessment order dated 30/12/2019, the assessee preferred the appeal before the Ld. CIT(A) and the Ld. CIT(A) vide order dated 08/06/2022 confirmed the partial addition of Rs.10,68,100/-. As against the order of the Ld. CIT(A) dated 08/06/2022, the assessee preferred the present appeal on the ground mentioned above.
The Ld. Counsel for the submitted that, the panchnama has been drawn in respect of the alleged cash found during the search in the name of the assessee, Sh. Mool Chand Aggarwal and the family members of the Aggarwal family. The location of the cash found seized at B-42, G K –I, New Delhi which is the residential address of the Assessee’s family members. The above cash found during the search amounting to Rs.14,18,110/- belongs to assessee and his family members and the cash found during the course of search was available in the cash book of the assessee and his family
Mool Chand Aggarwal, Saharanpur vs. ACIT members which has been made available to the AO. The AO while passing the assessment order erroneously made the addition observing that the assessee failed to reconcile the cash found during the search and the Ld. Counsel submitted that the addition has been made with the erroneous findings without considering the cash book produced by the assessee and other details. Therefore, submitted that the order of the Ld. CIT(A) confirming the assessment order is bad in law.
Per contra, the Ld. DR submitted that the cash book produced by the assessee is an afterthought and maintaining of cash book is not mandatory for the individual, therefore, the assessee cannot rely on such document. Ld. DR relying on the findings and conclusion of the lower authorities sought for dismissal of the appeal.
We have heard the parties and perused the materials on record. It is not in disputed that during the course of search and seizure operation, cash of Rs.14,18,100/- was found at B-42, G.K.
Part-1, New Delhi. On the panchnama placed at page No. 68, the Assessee’s name along with Subhash Chand Aggarwal and other
Mool Chand Aggarwal, Saharanpur vs. ACIT family member’s name written but the addition has been made only in the name of the assessee. During the assessment proceedings, the assessee has produced cash book and contended that the cash found during search and seizure action was belongs to his 24 family members which is reproduced as under:
S. No. Party Name Address Cash in hand New Delhi 6495 ' 1 Poonam Garg 2 Mithlesh Aqqarwal Saharanpur 32677 3 Shelly Aggarwal Saharanpur 103223 4 Amit Aqqarwal & Sons Saharanpur 3054 5 Anuraq Aqqarwal &. Sons Saharanpur 484 6 Anurao Aqqarwal Saharanpur 75868 7 MC Aqqarwal Saharanpur 175202 8 Sandeep Aqqarwal Saharanpur 30159 9 Shweta Aqqarwal Saharanpur 252005 Saharanpur 57464 10 Chander Prakash Aqqarwal 11 Laxmi Rani Saharanpur 32538 C.P Aqqarwal & Sons Saharanpur 16981 12 13 Sarita Aqgarwal Saharanpur 12369 14 Siddharth Aqqarwal Saharanpur 16112 15 Akshay Aqqarwal Saharanpur 99416 16 Ankita Aqqarwal New Delhi 4064 17 Sushila Rani Saharanpur 4405 18 Vrinda Aqqarwal Saharanpur 673 19 S.C Aqqarwal Saharanpur 76190 20 S.C Aqqarwal & Sons Saharanpur 22573 21 Saniay Aqqarwal Saharanpur 71114 22 Saniay Aqqarwal & Sons Saharanpur 32669 23 Shubhra Aqqarwal Saharanpur 3608 24 Konark Ispat Ltd. New Delhi 302462 The said cash book has not been disputed or controverter by the AO. The AO has not even doubted that the names reflected in the cash book are not the family members of the assessee or who are not residing under the same roof. Further, the Ld. CIT(A) has Mool Chand Aggarwal, Saharanpur vs. ACIT disbelieved the cash book only on the ground that ‘generally individuals do not maintain cash book and it is not mandatory to maintain cash book for the individual’. The Ld. CIT(A) without any basis observed that the cash book was created to explain the unaccounted cash found and seized during the course of the search. But the Ld. CIT(A) treated that the amount of Rs.3,50,000/- as explained on the estimated basis and confirmed the rest of the addition of Rs.10,68,100/-. In our considered opinion, the findings given by the CIT(A) on the cash book is baseless and perverse. The assessee having been produced the cash book and explained the cash found during the search and seizure operation contending that the cash found during the search are belongs to family members and considering the fact that even the Panchnama drawn during the search proceedings containing the names of the Assessee and other family members and the A.O. who has examined the cash book has not found fault on the same on the merit of it, in our considered opinion, the authorities have committed error in making/sustaining the addition. Accordingly,
Mool Chand Aggarwal, Saharanpur vs. ACIT the Ground No.1 of the assessee is allowed and the addition made by the A.O. which was sustained by the CIT(A) is hereby deleted.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in open Court on 13th February, 2024.