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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: PRASHANT MAHARISHI & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the Order of ld.CIT(A)-11, Bangalore dated 22.8.2024 vide DIN & Order No. ITBA/APL/M/250/2024-25/1067877143(1) passed under section 250 of the Income Tax Act, 1961 (in Short “The Act”) for the assessment year 2019-20. The assessee has raised following grounds of appeal: 1. “The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. The learned CIT[A] is not justified. in upholding the addition of Rs.7,50,000/- made as unexplained money u/s.69A of the Act, being the cash found and seized during the course of search under the facts and in the circumstances of the appellant's case.
Sri Marala Reddy Sreenivas, Bangalore Page 2 of 6 2.1 The learned CIT[A] failed to appreciate that during the course of search the appellant had explained that the cash found was from out of the cash sales of the firm M/S Concrete India in which he was a partner and that during appellate proceedings. the appellant had also furnished documentary evidences in support of the explanation under the facts and in the circumstances of the appellant's case.
For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”
Brief facts of the case are that the assessee has e-filed his original return of income for the Asst. year 2019-20 u/s 139(4) of the Act on 18.6.2020 declaring total income of Rs.1,88,310/-. A search was conducted u/s 132 of the Act on 6.2.2019 on assessee’s residence in connection with B.T. Nagaraja Reddy, Concrete India, Ravi Kumar & others group. Subsequently, the case was centralized to the ACIT Circle-1(2), Bangalore by the ld. Principal CIT-6, Bangalore. The notices u/s 143(2) dated 17.1.2021 as well as u/s 142(1) of the Act along with questionnaire dated 16.1.2021 were issued and served. The assessee failed to respond to notices u/s 142(1) of the Act served on four occasions but only made part submission on 05.03.2021. Finally, notice u/s 142(1) of the Act dated 5.4.2021 was issued and served asking the assessee to show cause as to why an assessment should not be completed based on the material available on record and in response to the said show cause also, no response was received from the assessee. During the course of assessment proceedings, the AO observed that the assessee in his sworn statement u/s 132(4) of the Act during the course of search, has offered cash at Rs.15,00,000/- as additional income, which is reproduced below:
Sri Marala Reddy Sreenivas, Bangalore Page 3 of 6 “Q.62 Have you got anything else to say: Ans. Further, though I am not in a correct position to ascertain the profitability from President Properties, roughly I estimate that around Rs.2,00,00,000 will be my firm’s income so I voluntarily offer it. I am not in a position to correctly offer the Capital Gains on sale of my property at A-105, Nagarjuna Meadows in FY 2017-18.
So in toto, for the current year my declaration will be as below:
Concrete India: Rs.1,00,00,000 President Properties: Rs.2,00,00,000 My own return of income: Rs.15,00,000”
2.1 However, as the assessee failed to offer the income in his return and also failed to explain whether the same was considered in his return of income and accordingly, the amount of Rs.15,00,000/- was added to his income for the year under consideration. Further, during the course of search, cash of Rs.7,50,000/- was seized from the assessee. The assessee was asked to explain the source for the cash seized. However, as the assessee failed to substantiate the source for the cash seized, the cash seized amounting to Rs.7,50,000/- was treated as unexplained money u/s 69A of the Act and the AO concluded the assessment by making total addition of Rs.22,50,000/-.
2.2 Aggrieved by the order of the assessment passed u/s 143(3) of the Act dated 21/06/2021, the assessee preferred an appeal before the ld. CIT(A). The ld. CIT(A) partly allowed the appeal by holding that assessee has merely stated that his total income for the year would be Rs.15,00,000. The assessee has not agreed to offer additional income of Rs.15,00,000/- over and above the actual income. The words “additional income” does not appear in the statement recorded and accordingly, addition of Rs.15,00,000/- was deleted by the ld. CIT(A). With regard to addition of Rs.7,50,000/-, being cash seized, treated as unexplained money Sri Marala Reddy Sreenivas, Bangalore Page 4 of 6 u/s 69A of the Act, the ld. CIT(A) held that the assessee has produced ledger extracts of the customers in the books of Concrete India highlighting the cash receipt entries. However, the assessee has not explained as to why the cash collections were kept at the assessee’s house and not at the office of the partnership firm. 2.3 Further, the ld. CIT(A) has held that the ledger extract furnished cannot be said to be conclusive evidence for the cash received from the customers. The onus is on the assessee to establish beyond doubt that the explanations furnished by him is correct as per law which the assessee unable to do so and accordingly, the ld. CIT(A) held that cash seized of Rs.7,50,000/- from the premises of the assessee has been rightly taxed as unexplained money u/s 69A of the Act by the AO and this addition is sustained by the ld. CIT(A). Aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before this Tribunal. 2.4 The solitary issue that is raised is as to whether the ld. CIT(A) is justified in confirming cash seized of Rs.7,50,000/- from the premises of the assessee as unexplained money u/s 69A of the Act? 3. Before us, the ld. A.R. for the assessee submitted that the assessee is a partner of firm namely M/s Concrete India. The Customers/Debtors of M/s Concrete India had paid monies in cash towards goods purchased by them and the cash so collected was kept at the assessee’s house. The source and nature of cash seized were properly explained before the ld. CIT(A) along with ledger extracts of the customer in the books of Concrete India highlighting the cash receipt entries and accordingly, the assessee has proved the genuineness of the cash seized.
The ld. D.R. on the other hand, vehemently supported the order of ld. CIT(A) and submitted that the assessee instead of submitting the entire ledger copies produced only some ledger extract and further the assessee has failed to establish that the cash seized of Rs.7,50,000/- belongs to the partnership firm.
Sri Marala Reddy Sreenivas, Bangalore Page 5 of 6 Further, the ld. D.R. submitted that assessee could not explain why the cash collections were kept at the assessee’s house and not at the office of the partnership firm and accordingly, by applying the principles of preponderance of probabilities, the cash seized has rightly been taxed as unexplained money u/s 69A of the Act.
We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that during the course of search proceedings, cash of Rs.7,50,000/- was found and seized from the assessee. During the course of the assessment proceedings the assessee was given ample opportunities to explain the nature and source of cash seized but the assessee had failed to submit the details and accordingly, Rs.7,50,000/- was charged to tax as unexplained money u/s 69A of the Act by the AO. 5.1 During the course of the first appellate proceedings, the ld. CIT(A) has called for the remand report from the AO. The AO vide his remand report dated 20.6.2024 has observed that during the course of remand proceedings, the assessee has furnished ledger account copies of various parties as mentioned in Para 6.2 of the ld. CIT(A)’s order. In the present case, the assessee explained that the cash seized from his premises are the cash payments made by the customers of Concrete India towards purchases made by them. The assessee has also produced the ledger account copies of the customers in the books of Concrete India highlighting the cash receipts entry. However, we find that the ld. CIT(A) has not allowed on the ground that the assessee has not explained why the cash collections were kept at the assessee’s house and not at the office of the partnership firm. Further, the ld. CIT(A) has observed that the ledger extract furnished cannot be said to be conclusive evidence for cash receipt from customer and the onus is on the assessee to establish beyond doubt that the explanation furnished by him is correct as per law.
Sri Marala Reddy Sreenivas, Bangalore Page 6 of 6 5.2 Further, we also find that during the course of assessment proceedings, the assessee failed to offer any explanations or made submissions before the AO and accordingly, in the interest of justice and fair play, we are of the opinion that it is appropriate to remit this issue in dispute in its entirety to the file of AO to consider the same afresh in the light of the document produced before the first appellate authority. Accordingly, the assessee is once again directed to file all these documents/records to substantiate its claim and satisfy them regarding the genuineness of the cash seized amounting to Rs.7,50,000/- claimed to have been received from the customer of Concrete India for purchases made by them. The AO is directed to give reasonable opportunity of being heard and decide the issue on merits as deemed fit as per the law. It is ordered accordingly.