SMT. SHAKUNTALA VIJAYKUMAR,BENGALURU vs. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(2), BENGALURU

This is an appeal filed by the assessee against the order passed by the ld. CIT(A)-15, Bangalore dated 28/02/2024 in DIN No. ITBA/APL/ M/250/2023-24/1061713129(1) for the assessment year 2018-19.

Briefly stated facts are that the assessee in the present case is an individual and a partner in the firm, namely M/s Vijay Gems and Jewellery. There was a search and seizure operation in the premises of the firm and its partners dated 4/11/2018 u/s 132 of the Act. As a result of the search at the premises of the assessee, a cash of Rs. 5,90,000/- was sized u/s 132 of the Act. The statement of the assessee was recorded u/s 132(4) of the Act dated 5/1/2018, wherein the assessee was asked to clarify the source of cash vide question No. 12 of the statement, but the assessee failed to give any satisfactory reply.

However, the assessee vide letter dated 25/01/2018 addressed to Director, Income-tax (Investigation) submitted that she has withdrawn the sum of Rs. 8,35,500/- from the partnership firm in the financial year 2017-18 and the sum seized was offered to be treated as payment towards the advance tax. The assessee vide letter dated 27/11/2019 also submitted that at the time of search, she sought time to recall the source of cash found during the course of search. However, the AO was not satisfied with the reply of the assessee and, therefore, treated the sum of Rs. 5,90,000/- as unexplained money u/s 69A of the Act and added to the total income of the assessee.

Aggrieved, assessee preferred an appeal to the ld. CIT(A)

The assessee before the ld. CIT(A) submitted that cash withdrawal from the firm was duly recorded in the books of the accounts of the firm. The supporting documents justifying the availability of cash were furnished to the search team and no defect whatsoever was pointed out therein. The assessee also submitted that she has been maintaining the books of accounts as specified us/ 44AA of the Act, wherein the withdrawal from the partnership firm was duly recorded. Likewise, all the withdrawals from the firm were also recorded in the partnership firm. As per the assessee, she has been withdrawing cash from the partnership firm consistently for her personal needs. The assessee in support of her claim has filed her cash book and cash book of the partnership firm along with the current account for the assessment years 2018-19, 2017-18 and 2016-17.

However, the ld. CIT(A) disagreed with the submissions of the assessee and confirmed the order of the AO by observing as under:

Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us.

The ld. AR before us filed a paper book running from 1 to 591 pages and reiterated the contentions made before the authorities below. The ld. AR in support of his contention has filed copy of cash book, capital account in the books of accounts of the partnership firm for the assessment year 2016-17, 2017-18 and 2018-19 which are placed in the paper book.

The ld. AR also submitted that the withdrawal of the cash from the firm by the partner has not been disputed by the AO of the partnership firm, who was also the AO of the assessee. In view of the above, the ld. AR submitted that the addition made by the AO and confirmed by the ld. CIT(A) is liable to be deleted.

On the other hand, the ld. DR vehemently supported the order of the authorities below.

We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the availability of cash out of the withdrawal . from the firm by the assessee in the financial year 2017-18 corresponding to the assessment year 2018-19 from the partnership firm was very much available before the ld. CIT(A) which is placed on pages 513 and 514 of the paper books. On perusal of the current account of the partner being assessee, we note that there was a substantial cash withdrawal by the assessee, which is sufficient to justify the cash in the hands of the assessee. At the time of hearing, the ld. DR could not bring anything contrary to the argument advanced by the ld. AR of the assessee. It is also pertinent to note that the availability of cash in the hands of the partnership firm has nowhere been doubted by the authorities below. As such the same was accepted by the revenue in the assessment framed in the case of the partnership firm which is placed on pages 515 to 539 of paper book. Thus, in the view of the above and after considering the facts in totality, we do not find any reason to uphold the order of the authorities below. As such, we set aside the order of the ld. CIT(A) and direct the AO to delete the addition made by him. Hence, the ground of appeal raised by the assessee is hereby allowed.

In the result, the appeal filed by the assessee is hereby allowed.