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Facts
A search and seizure operation was conducted at the assessee's locker, where cash amounting to Rs. 17,50,000/- was found. The assessee initially accepted the cash and offered it for taxation, but later explained its source as business income, sale of jewelry, and money from friends/relatives. The Assessing Officer rejected the explanation and made an addition of Rs. 17,50,000/- under section 69A.
Held
The Tribunal noted that the income from the transport business was accepted by the Assessing Officer. The assessee's explained availability of cash in hand as on the date of search, calculated at Rs. 17,24,350/-, exceeded the cash found. Therefore, there was no scope for addition on account of unexplained money under section 69A.
Key Issues
Whether the addition of Rs. 14,27,000/- as unexplained money under section 69A is justified when the availability of cash in hand from business sources exceeds the amount found.
Sections Cited
69A
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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
This appeal by the assessee is directed against order dated 06.07.2023 passed by the Ld. Commissioner of Income-tax (Appeals)-11, Pune [in short ‘the Ld. CIT(A)’] for assessment year 2020-21, raising following grounds:
The Ld. CIT (A) erred in confirming addition of Rs. 14,27,000/ - (Rs. 17,50,000/- less Rs, 323,000/-) u/s 69A of the Act.
2. The Ld.CIT (A) did not appreciate that above income is duly reflected in computation of income for the year under appeal the. 3. The Ld. CIT (A) did not appreciate that the AO in his remand report has confirm that the above income is part of computation of income for the year under appeal.
Rakesh Sharma 2 ITA No. 2947/M/2023
Briefly stated, facts of the case are that a search and seizure Briefly stated, facts of the case are that a search and seizure Briefly stated, facts of the case are that a search and seizure operation u/s 132 of the Income operation u/s 132 of the Income-tax Act, 1961 (in short ‘the Act’) tax Act, 1961 (in short ‘the Act’) was conducted at assessee’s locker assessee’s locker No. 158 at Shree Mumbadevi No. 158 at Shree Mumbadevi Safe, Zaveri Bazar, Mumbai on 19.10.2019 Zaveri Bazar, Mumbai on 19.10.2019, , wherein cash amounting to 17,50,000/ amounting to 17,50,000/- was found and seized. In the statement was found and seized. In the statement recorded, the assessee accepted the cash the assessee accepted the cash as belonging to him and as belonging to him and offered the same for the purpose of income for the purpose of income-tax. However, w tax. However, while filing return of income, the assessee offered gross receipt from filing return of income, the assessee offered gross receipt filing return of income, the assessee offered gross receipt business of transport commission at Rs.18,75,000/- and after business of transport commission at Rs.18,75,000/ business of transport commission at Rs.18,75,000/ claiming commission expenses of Rs.7,75,000/ claiming commission expenses of Rs.7,75,000/- and convenience and convenience expenses of Rs.25,650/ of Rs.25,650/- , declared net income from transportation declared net income from transportation commission amounting to Rs.10,74,350/ commission amounting to Rs.10,74,350/-, on which the assessee on which the assessee paid taxes accordingly. During scrutiny proceedings before the paid taxes accordingly. During scrutiny proceedings before the paid taxes accordingly. During scrutiny proceedings before the Assessing Officer, the assessee explained the source of cash found Assessing Officer, the assessee explained the source of cash found Assessing Officer, the assessee explained the source of cash found as received from business of transport commission as received from business of transport commission, sale of jewellary and money received from friends an and money received from friends and relatives for the purpose of d relatives for the purpose of medical treatment of his younger brother. The Assessing Officer medical treatment of his younger brother. The Assessing Officer medical treatment of his younger brother. The Assessing Officer rejected the explanation of the assessee and made addition for the rejected the explanation of the assessee and made addition for the rejected the explanation of the assessee and made addition for the cash found of Rs.17,50,000/ cash found of Rs.17,50,000/- as unexplained money in terms of as unexplained money in terms of section 69A of the Act. section 69A of the Act.
On further appeal before the Ld. CIT(A), the assessee filed further appeal before the Ld. CIT(A), the assessee filed further appeal before the Ld. CIT(A), the assessee filed evidence in support of money received from friends and relatives evidence in support of money received from friends an evidence in support of money received from friends an amounting to Rs.3,23 amounting to Rs.3,23,000/- which has been accepted by the Ld. which has been accepted by the Ld. CIT(A) and accordingly relief of Rs.3,23,000/ CIT(A) and accordingly relief of Rs.3,23,000/- has been has been granted to Rakesh Sharma 3 ITA No. 2947/M/2023 the assessee, against which revenue is not in appeal. Regarding the against which revenue is not in appeal. Regarding the against which revenue is not in appeal. Regarding the remaining cash found, the Ld. CIT(A) did not accept the contention remaining cash found, the Ld. CIT(A) did not accept the contention remaining cash found, the Ld. CIT(A) did not accept the contention of the assessee and sustained the addition of Rs.14,27,000/- of the assessee and sustained the addition of Rs.14,27,000/ of the assessee and sustained the addition of Rs.14,27,000/ (17,50,000 – 3,23,000). 3,23,000).
We have heard rival submission of the We have heard rival submission of the parties on the issue in parties on the issue in dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the Ld. Counsel for the assessee submitted that the cash seized has for the assessee submitted that the cash seized has for the assessee submitted that the cash seized has been explained by the assessee by way of three sources, firstly been explained by the assessee by way of three sources been explained by the assessee by way of three sources received from transportation commiss received from transportation commission, secondly, sale of jewellary and thirdly, received from friends and relatives. The Ld. counsel received from friends and relatives. The Ld. counsel received from friends and relatives. The Ld. counsel submitted that as far as submitted that as far as amount of Rs. 3,23,000/ amount of Rs. 3,23,000/- received from friends and relatives is concerned friends and relatives is concerned, same has been accepted by the same has been accepted by the Ld. CIT(A). Regarding the b egarding the balance amount, the Ld. counsel the Ld. counsel submitted a chart of working of cash tted a chart of working of cash-in-hand, which is reproduced which is reproduced as under: Working of cash-in-hand as on 19.10.2019 hand as on 19.10.2019 Amt. (Rs.) Commission income offered in the return of income (PB Page 14) Commission income offered in the return of income (PB Page 14) Commission income offered in the return of income (PB Page 14) 1074350 Add: Commission expenses claimed as deduction still not paid on expenses claimed as deduction still not paid on expenses claimed as deduction still not paid on 775000 account of seizure of cash found in the locker (PB Page 26 account of seizure of cash found in the locker (PB Page 26-28 & 28 & 35) 1849350 Less: Commission income earned during the period 20.10.2019 to 125000 Commission income earned during the period 20.10.2019 to Commission income earned during the period 20.10.2019 to 31.03.2020 (PB Page 34 31.03.2020 (PB Page 34-35 & 39) 1724350 Add: Add: Cash received from relatives & friends till 19.10.2019 (PB 323000 Add: Cash received from relatives & friends till 19.10.2019 (PB Add: Cash received from relatives & friends till 19.10.2019 (PB Page 48) 2047350 4.1 We are of the opinion that are of the opinion that source of balance cash of Rs. source of balance cash of Rs. 14,27,000/- can only be explained by way availability of cash in can only be explained by way availability of cash in can only be explained by way availability of cash in Rakesh Sharma 4 ITA No. 2947/M/2023 hand with the assessee as on the date of search. The Ld Counsel hand with the assessee as on the date of search. The Ld Counsel hand with the assessee as on the date of search. The Ld Counsel has submitted detail of availability of cash of Rs. 17,24,350/- as on has submitted detail of availability of cash of Rs. 17,24,350/ has submitted detail of availability of cash of Rs. 17,24,350/ date of search, which is exceeding the amount of cash addition date of search, which is exceeding the amount of cash addition date of search, which is exceeding the amount of cash addition sustained by the ld CIT(A). The objection of ld DR is that AO/ CIT(A) sustained by the ld CIT(A). The objection of ld DR is that sustained by the ld CIT(A). The objection of ld DR is that has raised doubt on the commission income/expenses shown by has raised doubt on the commission income/expenses shown by has raised doubt on the commission income/expenses shown by the assessee. But, regarding But, regarding the business income of Rs.10,20,207/ the business income of Rs.10,20,207/- declared by the assessee declared by the assessee, the Ld. Assessing Officer has neither the Ld. Assessing Officer has neither disturbed the receipt from transportation commission n the receipt from transportation commission n the receipt from transportation commission nor the commission expenses claimed by the assessee commission expenses claimed by the assessee. If AO was having . If AO was having any doubt of genuineness of commission income, he should have any doubt of genuineness of commission income, he should have any doubt of genuineness of commission income, he should have assessed the same as protective only but he has assessed the same assessed the same as protective only but he has assessed the same assessed the same as protective only but he has assessed the same on substantive income on substantive income. The Ld. Counsel referred to Paper Bo referred to Paper Book page No. 15 wherein the assessee has filed the computation of the page No. 15 wherein the assessee has filed the computation of the page No. 15 wherein the assessee has filed the computation of the income from transport commission which is reproduced as under: income from transport commission which is reproduced as under: income from transport commission which is reproduced as under:
4.2 Further, the assessee has also filed details of sundry creditors Further, the assessee has also filed details of sundry creditors Further, the assessee has also filed details of sundry creditors in respect of commission expenses which in respect of commission expenses which are available available on page 26 and 27 of the Paper Book. The Assessing Officer has not disputed and 27 of the Paper Book. The Assessing Officer has not disputed and 27 of the Paper Book. The Assessing Officer has not disputed the sundry creditors for the commission expenses. Thus, we are of the sundry creditors for the commission expenses. Thus the sundry creditors for the commission expenses. Thus
Rakesh Sharma 5 ITA No. 2947/M/2023 the opinion that the Assessing Officer has accepted the income from the opinion that the Assessing Officer has accepted the income from the opinion that the Assessing Officer has accepted the income from the transport business therefore, the availab the transport business therefore, the availability of the cash in hand ility of the cash in hand as on the date of the search from transportation business as as on the date of the search from transportation business as as on the date of the search from transportation business as worked out by the assessee being in excess of the cash found, there worked out by the assessee being in excess of the cash found, there worked out by the assessee being in excess of the cash found, there is no scope for addition on account of unexplained money u/s 69A is no scope for addition on account of unexplained money u/s 69A is no scope for addition on account of unexplained money u/s 69A of the Act. Accordingly, we set asid of the Act. Accordingly, we set aside the finding of the Ld e the finding of the Ld. CIT(A) in respect of addition sustained of Rs.14,27,000/ sustained of Rs.14,27,000/-. The ground of the . The ground of the appeal of the assessee is accordingly allowed. appeal of the assessee is accordingly allowed.
In the result, the appeal of the assessee is allowed. In the result, the appeal of the assessee is allowed. In the result, the appeal of the assessee is allowed.