NAROTTAM DAYALJI RANA,NASHIK vs. ASSISANT COMMISSIONER OF INCOME-TAX,

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ITA 943/PUN/2016Status: DisposedITAT Pune09 February 2018AY 2010-115 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that while the assessee provided explanations and evidence regarding cash withdrawals by family members, the entire amount could not be fully substantiated. Therefore, a partial disallowance was deemed appropriate to meet the ends of justice.

What were the facts?

During a search, cash of Rs. 6,65,420/- was found in a locker owned by the assessee. The Assessing Officer made an addition of this entire amount as income from undisclosed sources, which was upheld by the CIT(A).

What were the issues?

Whether the cash found in the locker, despite explanations of family savings and withdrawals, could be treated as unexplained investment. The extent to which such cash can be added to the assessee's income.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

For Appellant: Shri Pramod Shingte
For Respondent: Ms. Nirupama Kotru, CIT-DR
Hearing: 07.02.2018Pronounced: 09.02.2018

PER D. KARUNAKARA RAO, AM :

This appeal is filed by the assessee against the order of CIT(A)-12, Pune dated 05-02-2016 for the Assessment Year 2010-11.

2.

The only ground raised by the assessee reads as under : “The Ld. CIT(A) erred in retaining the entire addition of Rs.6,65,420/- on account of cash found at Locker No.376 with Janalaxmi Co.op. Bank Ltd. Nashik during the course of search on 26-04-2010 as Appellant’s income from undisclosed sources. Therefore, it is prayed to cancel the addition made of Rs.6,65,420/-.”

3.

Background facts of this case and the ground include that the assessee is a Retired Employee working with Ashoka group of cases. During the search and seizure action on the said group on 20-04-2010, assessee was also covered. The search action led to the discovery of Lockers No. 376 and 189 in the Cooperative bank at Nashik. These lockers are owned by the assessee and his wife Smt. Nilima

2 ITA No.943/PUN/2016 Narottam Dayalji Rana

Narottam Rana. On opening the locker No.376 held in the name of the assessee,

there was discovery of cash of Rs.6,65,420/-. Revenue seized the cash of Rs.6

lakhs. Further, on opening the other locker No.189 held jointly by the assessee and

his wife, there was cash discovery of Rs.7,60,230/-. There was discovery of

jewellery also in that locker. AO made addition of the said cash in her assessment.

Subsequently, the assessment in the case of his wife Smt. Nilima Narottam Rana

became final and the Tribunal deleted the addition of said cash seizure of

Rs.7,60,230/-. The appeal ITA No.959/PUN/2016 for the A.Y. 2010-11 order dated

04-05-2017 is relevant and the relevant operational para No.5 of the order is

relevant. The savings centric explanation with regard to the source of the said cash

was accepted by the Tribunal relying on the corroborative statements filed by the

assessee involving her daughter-in-law. In the background facts of the above, we

shall now go to the present issue and the cash seized from the Locker No.376.

Rs.6,65,420/- was found in the said locker. In the assessments, AO made addition

of entire cash found in the said locker. CIT(A) confirmed the same.

4.

Coming to the file details regarding the addition of Rs.6,65,420/-, assessee

explained the source of the said cash as the cash withdrawal from the bank

accounts of his wife, assessee’s son and daughter-in-law from time to time. Para

No.10 of the assessment order contains the details. AO did not accept the said

explanation and proceeded to make the addition.

5.

During the First Appellate proceedings, the assessee submitted that the

source of this cash seizure from the bank locker is explained by the cash withdrawn

by the self and the family members. His family includes Wife, Son and Daughter-in-

law. There was discussion about the way the assessee demonstrated the source

and mentioned the supply of the income-tax particulars of these family members.

There was a detailed discussion about the total income of the family members, cash

3 ITA No.943/PUN/2016 Narottam Dayalji Rana

withdrawals and the chart given in Para No.3 on page 16 of the order of CIT(A)

supports the same. Eventually, CIT(A) rejected the assessee’s explanation and it is

the finding of CIT(A) that the cash found in the locker is to be held as unexplained

investment of the assessee. Contents of relevant operational para as given in

Pages Nos. 15/16 of the order of CIT(A) are extracted here as under :

3.4 . . . . . . . . . . . . . . . . . . . .

It can be seen from the above table that during AY 2005-06, all family members together had withdrawal of only Rs 1,03,022 and also claimed accumulated cash available out of pre-marriage savings of the daughter-in-law of Rs 2,50,000. Marriage also took place during this period and no separate marriage expenditure was booked by the family, therefore there was no possibility of any savings out of his total cash of Rs 3,53,022 claimed as available with the family. Similarly, total cash withdrawals during AY 2006-07 to AY 2010-11 were Rs 2,49,632, Rs 4,01,019, Rs 3,00,272, Rs 3,98,289 and Rs 4,31,497 respectively. Considering the family of 4 adult members even the highest total withdrawal during AY 2010-11 was less than Rs 36,000 per month. Therefore, AO was right in holding that appellant and his family could not have saved any cash which was found in the locker. Search did not take place at the residence of the appellant therefore amount of cash and other household assets at home could not be ascertained. In this manner, appellant failed to explain the sources of cash found in the locker. During the search, appellant admitted income of Rs 4,00,000 for AY under consideration and of Rs 2,00,000 for AY 2011-12 out of the cash found in the locker. However, in the return filed after the search, the admission was not adhered to. Since the locker was last operated on 3.2.2010 therefore cash found in the locker of Rs 6,65,420 is held as unexplained investment of the appellant for the year under consideration. Addition made by the AO is upheld and the grounds raised by the appellant are hereby dismissed.”

6.

Aggrieved with the same, the assessee is in appeal before us with the

solitary ground extracted above.

7.

Ld. Counsel for the assessee explained facts about the retirement of the

assessee, re-employment with Ashoka group. Further, Ld. Counsel brought our

attention to the fact that the total cash withdrawals since A.Yrs. 2005-06 to 2010-

11 is undisputedly in the range of about Rs.18 lakhs. Before us, Ld. DR for the

Revenue has not disputed this fact.

8.

Ld. DR for the Revenue relied heavily on the orders of the AO/CIT(A)

dutifully.

4 ITA No.943/PUN/2016 Narottam Dayalji Rana

9.

We have heard both the parties on this issue of sustainability of addition of

Rs.6,65,420/-, the cash found in the locker during the search action. On going

through the facts, we find it is a case where assessee is not without any

explanation that revolves around the savings of the self and the other family

members. Assessee filed evidences relating to the income-tax particulars of his

family members. His family includes wife, son and the daughter-in-law. The gross

cash withdrawals of the family members from their respective bank accounts work

out to around Rs.18 lakhs over the years. Details of cash withdrawal are tabulated

and there is no dispute about the cash withdrawals of the family members. The

gross of cash withdrawals is much higher than the cash found in the locker during

the search action. AO dismissed the explanation of the assessee summarily stating

that the same is not good enough for meeting the home needs. These claims have

not been disproved with any incriminating details by the Revenue authorities while

rejecting the explanation of the assessee. Therefore, there exists some explanation

of the assessee which is not proved unsustainable by any direct evidence.

Considering the overall facts of the case and the explanation of the assessee etc.

we find restricting the disallowance to Rs.1,65,420/- should meet the ends of

justice. AO is directed to add only the said sum of Rs.1,65,420/- as unexplained

investment on estimation basis. Consequently, the assessee gets the relief of Rs.5

lakhs. Accordingly, the solitary ground raised by the assessee is partly allowed.

10.

In the result, appeal of the assessee is partly allowed.

Order pronounced on this 09th day of February, 2018.

Sd/- Sd/- (SUSHMA CHOWLA) (D.KARUNAKARA RAO) �ाियक सद� / JUDICIAL MEMBER लेखा सद� / ACCOUNTANT MEMBER पुणे / Pune; �दनांक Dated : 09th February, 2018. Satish

5 ITA No.943/PUN/2016 Narottam Dayalji Rana

आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : अ�ेिषत

अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-12, Pune 3. आयकर आयु� / The CIT-12, Pune 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “बी 5. बी बी” / DR ‘B’, बी ITAT, Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार

स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

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