MURLIDHAR SADHURAM KHEMANI,NASHIK vs. ASSISTANT COMMISSIONER OF INCOME TAX,

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.

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.”

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’).

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.

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

order of Assessing Officer/ CIT(A).

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.

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.