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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI D. KARUNAKARA RAO, AM
आदेश / ORDER
PER D. KARUNAKARA RAO, AM
This appeal filed by assessee is directed against the order of Commissioner of Income Tax (Appeals)-13, Pune dated 21.09.2016 for assessment year 2004-05.
The assessee has raised following grounds in appeal:
2 ITA No.2855/PUN/2016 A.Y. 2004-05
“1. The learned CIT(A) erred in confirming the addition of Rs.3,11,742/- out of total addition of Rs.5,52,057/- made by the A.O. on account of excess stock found at the business premises of assessee during the search without appreciating that no addition was warranted on the facts of the case. 2. The learned CIT(A) erred in confirming that the addition of Rs.95,638/- in respect of excess cash found in the course of search without appreciating that no addition was justified on facts of the case. 2.1. The learned CIT(A) failed to appreciate that the said cash belonged to the other family members of the assessee who had also con finned the said fact in their cash flow statements furnished during their respective asst. proceedings and the same was also accepted by the A.O. in the assts. completed in their cases and hence, there was no reason to reject the above claim in the case of the assessee. 3. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”
At the outset the Ld. Counsel for the assessee submitted that
assessee intends to not press the ground No. 1 relating to addition of
Rs.3,11,742/- on account of excess stock. Accordingly, ground No. 1 is
dismissed as not pressed. Thus, remaining grounds left for adjudication
are grounds No. 2 and 2.1 and they relate to the issue of addition of
Rs.95,638/- on account of excess cash found during the course of search
u/s. 132 (1) of the income Tax Act, 1961 ( hereinafter referred to as ‘the
Act’).
Briefly stated relevant facts include that assessee is an individual
and deals in Indian made foreign liquor (IMFL). The assessee filed return of
income on 31.10.2004 declaring total income of Rs.3,50,930/- from
business and Rs. Nil from agricultural income. He paid taxes of
Rs.55,000/- on the original return of income. During assessment
proceedings, the Assessing Officer assessed the total income of assessee
Rs.10,72,735/ (rounded off) and made additions of Rs.69,200/- on account
of unexplained investment in stock, Rs.95,638/- on account of excess cash
3 ITA No.2855/PUN/2016 A.Y. 2004-05
found in search action and Rs.4007/- on account of cash found in ration
shop. Aggrieved with the assessment order, assessee filed appeal before
CIT(A) who granted partial relief to the assessee. However, the CIT(A)
confirmed the addition of Rs.95,638/- on account of excess cash found in
search action. Aggrieved with the same, the assessee raised grounds No. 2
and 2.1 in this appeal.
Before me, Ld. Counsel for the assessee submitted that there was
discovery of total cash around Rs.14.12 Lakhs during search action, out of
which Rs.10.81 Lakhs was found at residential premises of the assessee.
Undisputedly, the cash of Rs.9.86 Lakhs belongs to the assessee and
balance of Rs.95,638/- is claimed to be owned by the other five members
of assessee’s family i.e. wife, two sons and their spouses. The Assessing
Officer and CIT(A) did not accept the contention of the assessee with regard
to balance cash of Rs.95,638/-. The Ld. Counsel for the assessee further
submitted that family members of the assessee, being qualified individual
have right to earn money from their respective business operations on
individual basis. But the Assessing Officer did not accept the contention of
the assessee. The Ld. AR further submitted that the explanations by the
said members of the family with regard to said balance cash, was filed
before Assessing Officer and the same were examined by Assessing Officer
during assessment proceedings. Financial statements, belonging to them
were also furnished before Assessing Officer. The Assessing Officer
accepted the explanation about the existence of cash balance in the hands
of assessee’s family members and did not make any addition in their
hands. Assessing Officer, however, added the same i.e. Rs.95,638/- in the
hands of the assessee.
4 ITA No.2855/PUN/2016 A.Y. 2004-05
On the other hand, Ld. DR for the Revenue heavily relied on the
order of Assessing Officer/ CIT(A).
On hearing both the parties on the issue of addition Rs.95,638/-, I
am of the opinion that the facts regarding existence of cash balance in the
hands of the family members of assessee is undisputed. The same is
evident from the fact that Assessing Officer did not make any addition in
their individual hands of the family of the assessee. The CIT(A) failed to
appreciate that the said cash belonged to the other family members of the
assessee who had also confirmed the said fact in their cash flow statements
furnished during their respective assessment proceedings. The same was
also accepted by the Assessing Officer in the assessments completed in
their cases.
Considering the same, I find there is no reason to reject the above
claim of the assessee and also for making addition in the hands of
assessee. In my view, the same is unsustainable in law. Therefore, I am of
the opinion that the finding of CIT(A) is required to be reversed on this
issue and in favour of assessee. Thus, grounds No. 2 and 2.1 raised in
appeal by assessee are allowed in favour of assessee.
In the result, appeal of the assessee is partly allowed. 9.
Order pronounced on 16th day of May, 2018.
Sd/- (डी.क�णाकरा राव/D. Karunakara Rao) लेखा सद�य / ACCOUNTANT MEMBER
पुणे / Pune; �दनांक / Dated : 16th May, 2018. SB
5 ITA No.2855/PUN/2016 A.Y. 2004-05
आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-13, Pune. 4. The Pr. CIT (Central), Nagpur. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.