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Facts
During a search operation under Section 132 at Natasha Jain's residence, cash of Rs.4,90,600/- was found, of which Rs.4.80 lacs was seized. The assessee claimed the cash belonged to her friend, Priyank Sukhija, who also submitted an affidavit admitting ownership and offering the amount for taxation before the settlement commission. The Assessing Officer, however, rejected this explanation and made an addition of Rs.4,90,600/- to Natasha Jain's income.
Held
The Tribunal noted that Priyank Sukhija had admitted ownership of the cash and offered it for taxation before the settlement commission, a fact not available to the lower authorities. Therefore, the Tribunal restored the issue to the Assessing Officer for verification of this claim. If the claim is found correct, no addition should be made in the hands of the assessee, and the penalty appeal would be decided accordingly.
Key Issues
Whether an addition for unexplained cash seized during a search should be made in the assessee's hands when a third party claims ownership and has offered it for taxation before the settlement commission, and consequently, whether penalty u/s 271AAB is leviable.
Sections Cited
132, 271AAB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: SH. N. K. BILLAIYA & MS ASTHA CHANDRA
ORDER PER N. K. BILLAIYA, AM: is the appeal by the assessee preferred against the order of the CIT(A)-27, New Delhi dated 25.06.2019 pertaining to A.Y.2017-18.
This appeal is in respect of the addition of Rs.490600/- made on substantive basis whereas protective addition made in the hands of Priyank Sukhija.
CIT(A) – 30 New Delhi dated 17.11.2022 pertaining to A.Y.2017-18 which is against the levy of penalty u/s. 271AAB of the Act.
Both these appeals are disposed of by this common order for the sake of convenience and brevity.
Facts on record show that search and survey operations u/s. 132 of the Act were conducted on 22.10.2016 in the Sukhija Group of cases at various residential and business premises which included the residence of the assessee Natasha Jain. During the search cash of Rs.490600/- was found out of which Rs.4.80 lacs was seized. The assessee was asked to explain the source of the cash. The assessee stated that the cash belongs to Priyank Sukhija who happens to be her friend. In support affidavit from Priyank Sukhija was submitted in which he stated that cash of Rs. 4.80 lacs found and seized from the premises of Natasha Jain did not belong to her but belonged to him.
The explanation of the assessee did not find any favour with the AO who made the addition of Rs.490600/-.
Before us the Counsel for the assessee vehemently stated that Priyank Sukhija has admitted the ownership of the said cash and has offered for taxation before the settlement commission. The Counsel furnished necessary orders.
We have carefully considered the impugned issue. We find that not only the assessee explained at the time of search and post search proceedings that the cash belongs to Priyank Sukhija but Priyank Sukhija also accepted by way of a sworn affidavit and has offered the same as his income before the income tax settlement commission. Since the order of the settlement commission was not available before the lower authorities we deem it fit to restore the issue for verification by the AO. The AO is directed to verify the claim of the assessee that the impugned amount have been settled before the settlement commission by Priyank Sukhija and if found correct no addition should be made in the hands of the assessee. The appeal is allowed for statistical purpose.
The appeal relating to the levy of penalty may be decided accordingly by the AO.
In the result, both the appeals filed by the assessee are allowed for statistical purpose.
Decision announced in the open court on 24.01.2024.