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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI N.K. BILLAIYA (AM) & SHRI RAM LAL NEGI (JM)
PER RAM LAL NEGI, JM The revenue has preferred the present appeal against order dated 11.02.2015 passed by the Ld. Commissioner of Income Tax (Appeals), Raipur, for the assessment year 2011-12, whereby the Ld. CIT (A) has allowed the appeal filed by the assessee against assessment order passed by the AO u/s 143 (3) read with section 153B (1)(b)of the Income Tax Act, 1961 (for short ‘the Act’).
Brief facts of the case are that a search and seizure operation u/s 132 of the Act was carried out at the business cum residential of the assessee. In response to the notice u/s 153A of the Act, assessee filed its return of income for the assessment year under consideration declaring the total income of Rs. 1,53,660/-. Since, the case was selected for 2 Assessment Year: 2011-12
compulsory scrutiny, notice u/s 143 (2) and 142 (1) were issued and the assessee was asked submit the details and to give explanations regarding assets and documents seized during the search and seizure action. Accordingly, authorized representative (AR) of the assessee attended the proceeding filed the written submissions and submitted the copies of bank accounts and other details called for by the AO. The assessment proceedings was completed u/s 143 (3) determining the total income of Rs. 43,27,140/- after making addition of Rs. 41,73,484/- on account of unexplained cash. Aggrieved by the assessment order, the assessee challenged the same by filing appeal before the CIT(A)). The Ld. CIT(A) after hearing the assessee deleted the addition of Rs. 41,73,484/- made by AO on account of unexplained cash found during the search and seizure operation. The revenue is in appeal against the said order passed by the Ld. CIT (A).
The revenue has challenged the impugned order passed by the Ld. CIT(A) on the following grounds:-
“Whether in law and on facts & circumstances of the case, the Learned CIT (A) has erred in deleting the disallowance of Rs. 41,73,484/- u/s 69A on account of unexplained cash found at the time of Search & Seizure Operation.
The order of the Ld. CIT (A) is erroneous both in law and on facts.”
Before us, the Ld. Departmental Representative (DR) relying on the assessment order submitted that since the assessee had not disclosed the income so added by the AO in its books of account or return of income, the AO has rightly made addition by invoking the provisions u/s 3 Assessment Year: 2011-12
69A of the Act. Hence, the impugned order passed by the Ld. CIT(A) id liable to be set aside.
On the other hand, the Ld. counsel for the assessee relying on the order passed by the Ld. CIT (A) submitted that since the Ld. CIT (A) has held that the income disclosed by the assessee is adequate to cover the expenditure on the basis of evidence on record, there is no merit in the appeal of the revenue. Hence, the same is liable to be dismissed.
We have heard the rival submissions and also gone through the orders passed by the authorities below. The only grievance of the revenue is that the Ld. CIT(A) has wrongly deleted the addition made by the AO. Ld. CIT (A) has deleted the addition made by the AO u/s 69A of the Act holding as under:- “6. I have carefully gone through the assessment order, and submissions of the appellant. A search action u/s 132 was conducted in the premises of the appellant. According to the AO, undisclosed expenditure was identified in the seized documents A-1/3 page 60 & 83 to the extent of aggregate amount of Rs. 48,38,000/- in addition to excess cash of Rs. 41,73,484/-. The appellant had offered a sum of Rs. 95,00,000/- in A.Y. 2010-11 and claimed that the income offered is adequate to cover undisclosed expenditure as per appellant at Rs. 45,88,000/- (as against determined by AO at Rs. 48,38,000/-) in A.Y. 2010-11 and excess cash of Rs. 41,73,484/- in A.Y. 2011-12. The appellant further explained that the expenditure of Rs. 2,50,000/- was found noted in both the alleged loose papers and therefore, the actual expenditure is Rs. 45,88,000/-. Even if the expenditure is determined at Rs. 48,38,000/-, the income disclosed at Rs. 95,00,000/- is adequate to cover the expenditure. The AO did not accept the explanation offered by the appellant stating
4 Assessment Year: 2011-12
that the unspent balance as per appellant at Rs. 49,12,000/- was claimed as cash and therefore, the sum of Rs. 2,50,000/- remains unexplained. As regards cash, the AO rejected the explanations of the appellant stating that as per statement recorded during the course of search, the cash is out of current year’s income. I have perused the loose papers identified as A-1/3 page 60 & 83 an also the statement rendered by the appellant during the course of search. There is nothing in the seized documents to support the contention of the appellant that there is repetition in the figures of payments. However, for making the addition, it is necessary that there is failure on the part of the appellant to explain the source. In my considered view, the statement of the appellant has been misinterpreted by the AO. There is nothing in the statement to support the interference drawn by the A.O. that the cash is income of the current year. It is an undisputed fact that after examining the seized documents and the assets found during the course of search, the AO has come across the unexplained expenditure at Rs. 48,38,000/- and unexplained cash at Rs. 41,73,484/-. The aggregate amount of unexplained expenditure and unexplained cash works out to Rs. 90,11,484/. Under these facts, the claim of the appellant that source of expenditure and the cash is out of undisclosed income offered at Rs. 95,00,000/- cannot be denied. On the facts and in the circumstances of the case, it can be reasonably inferred that the excess cash was out of earlier years undisclosed income. Considering the facts and the case laws relied upon by the appellant, I am of the considered opinion that the expenditure of Rs. 48,38,000/- has been spent out of income of Rs. 95,00,000/- and the unspent balance is adequate to explain the excess cash of Rs. 41,73,484/- and therefore, addition of Rs. 2,50,000/- u/s 69C in AY 2010-11 and addition of Rs. 41,73,484/- u/s 69A in A.Y. 2011-12 are hereby deleted.”
5 Assessment Year: 2011-12
We have examined the reasons given by the Ld. CIT (A) in the light of the evidence on record. As per the AO, the assessee has claimed expenses of Rs. 45,88,000/- out of the total income of Rs. 95,00,000/- disclosed by the assessee. However, as per the entries found in the seized during the search/seizure operation, the amount of expenses comes to Rs. 48,38,000/-, therefore the assessee has failed to account for the difference. On the other hand the Ld. CIT(A) has pointed out that the AO has misinterpreted the statement of the appellant as there is nothing in the statement of the assessee to draw the inference and conclude that the cash pertains to the current year. Rather the facts and circumstances of the case suggest that the excess cash was out of earlier year’s undisclosed income. In our considered view, the findings of the Ld. CIT(A) are based on the evidence on record. Hence, we do not find any reason to interfere with the findings of the Ld. CIT(A). We, therefore upheld the findings of the Ld. CIT(A) and dismiss both the grounds of appeal and direct the AO to delete the addition.
In the result, appeal filed by the revenue for assessment year 2011- 2012 is dismissed.
Order pronounced in the open court on 6th June, 2018. (N.K. BILLAIYA) JUDICIAL MEMBER Raipur, दिन ांक Dated: 06/06/2018
Alindra, PS
6 Assessment Year: 2011-12
आदेश प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण,Raipur / DR, ITAT, Raipur 6. ग र्ड फ ईल / Guard file.
आदेशानुसार/ BY ORDER, सत्य दपि प्रदि //// उि/सहायक िंजीकार (Dy./Asstt.