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Facts
During a search operation, cash of Rs. 22,80,500/- was seized from the assessee, who was engaged in trading old clothes. The assessee admitted that this cash represented his unaccounted income, stating that he did not maintain books of account for it due to the nature of his business.
Held
The Tribunal held that the primary onus to explain the source of unexplained cash lies with the assessee. Since the assessee failed to provide a satisfactory explanation and had admitted the cash as unaccounted income, the addition made by the AO under section 69A read with section 115BBE was justified. The appeal grounds concerning this addition were dismissed.
Key Issues
Whether the addition of Rs. 22,80,500/- on account of seized cash, treated as unaccounted income under Section 69A and taxed under Section 115BBE, is justified. Whether the assessee was denied a proper opportunity, violating principles of natural justice.
Sections Cited
69A, 115BBE, 143(2), 142(1)
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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI AMITABH SHUKLA
Year: 2020-21 Arun Kumar Deputy Commissioner of No.99/48, V.V.Koil Street, Vs. Income Tax, Choolai, Central Circle-3(4), Chennai-600112. Chennai. [PAN: AUTPK 0322J] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Appellant by : Shri N.Arjun Raj, Advocate. प्रत्यर्थी की ओर से /Respondent by : Shri V.Nandakumar, CIT सुिवाई की तारीख/Date of Hearing : 31.07.2024 घोर्णा की तारीख /Date of Pronouncement : 23.10.2024 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This appeal is filed against the order bearing DIN & Order No.ITBA/APL/M/250/2022-23/1049524542(1) dated 08.02.2023 of the Learned Commissioner of Income Tax [herein after “CIT(A) for the assessment years 2020-21. Through the aforesaid appeal the assesse has challenged order u/s 250 dated 08.02.2023 passed by CIT(A), Chennai.
2.0 The first issue arising in this case in respect of ground of appeal no.2 to 7 is regarding addition of Rs.22,80,500/- on account of cash seized during search upon assesse treating the same as explained money u/s 69A and corresponding invocation of section 115BBE done by the AO vide his order dated 28.09.2021. Brief factual matrix of the case as emanating from assessment order is that the assesse has been engaged in the business of trading of old clothes on Pan India basis. A search action was conducted upon the assesse leading to seizure of cash of Rs.22,80,500/-. On being confronted during the course of search, the assesse through its sworn statement submitted that said cash represented his unaccounted income. In response to question, he had stated that “No sir, I have not maintained any books of account for the above mentioned cash amount because of the nature of my business. This is my unaccounted income”. In para-3 of his order the Ld. AO has recorded that, the assesse vide its submission dated 22.09.2021 had stated that the sum of Rs.22 lakhs has been admitted as “other income” in the return of income filed for the AY-2020-21. In the above background the AO concluded that provisions of section 69A r.w.s 115BBE are clearly attracted in the case. He proceeded accordingly making the impugned addition of Rs.22,80,500/-. The Ld. First Appellate Authority confirmed the order of the Ld.AO after considering and comprehensively analyzing all the submissions made by the assesse before him. It was held that the primary onus to substantiate that the unaccounted cash was out of business was upon the assesse itself. It was for the assesse to have explained the modus operandi for the generation of this cash. The Ld. CIT(A) observed that section 69A r.w.s. 115BBE is fully applicable in his case. It also refuted the claim of the assesse that the Ld. AO in para-3 of his assessment order accepted that the impugned cash is in the form of business income observing that no such finding has been given by the Ld.AO. On the issue of Ld. AO not discharging its burden of proof, the Ld. CIT(A) observed that the same was primarily upon the assesse. The Ld. CIT(A) observed that twin conditions of section 69A that the cash found was unaccounted and remained unexplained satisfactorily were satisfied in the case to justify their invocation. The Ld. CIT(A) further observed that section 115BBE is not a deeming provision but one which comes to force automatically in a case where 69A is attracted. 3.0 The Ld. Counsel for the assesse argued that the hypothesis of Ld. AO and the CIT DR is incorrect. It was stated that the assesse had admitted that seized cash was business receipts and therefore application of section 69A r.w.s 115BBE is unwarranted. The Ld.
Counsel primarily repeated the arguments taken before the Ld. First Appellate Authority. The Ld. Counsel filed a chart indicating turnover and corresponding business income of the assesse from AY-2015-16 to AY-2020-21 to allude that the seized cash has apparent linkage with the business turnover. The Ld. DR vehemently opposed contentions of the assesse and relied upon the orders of authorities below. The Ld. DR submitted that the case is covered by the decision of Hon’ble Madras High Court Thiru A.J.Rameshkumar 139 taxman.com 190. It was urged that in the impugned case Hon’ble High Court has held that if the assesse fails to lead satisfactory evidence in support of its claim, a presumption qua his guilt can be taken to make an addition. The Ld. DR also placed reliance upon the decision of Hon’ble Madras High Court in the case of SVS Oil mills 418 ITR 442. The Ld. AR would like to make us believe that the impugned cases are distinguished. 4.0 We have heard rival submissions in the light of material available on records. On the controversy of assessing officer admitting in para-3 of his order that the impugned cash is a business receipt, we do not find any such finding given by the assessing officer. It is trite law that the primary onus of explaining the source of any cash, bullion, jewellery or valuable found during search proceedings is upon the taxpayer. A plain reading of section 69A is establishes that if the assesse fails to offer any explanation or an unsatisfactory explanation, the assessing officer would proceed to invoke deeming provision of assuming that the same is undisclosed income of the taxpayer. We have noted that the assesse has failed to discharge its primary responsibility. The subsequent submissions by the assesse made during assessment proceedings would not come to its rescue. It is also an undisputed fact of the case that the assesse has himself, through its return of income filed for AY-2020-21, disclosed an amount of Rs.22 lakhs as other income and this fact was also admitted by him vide his submission dated 22.09.2021 made before the AO during the assessment proceedings. Thus, there is no connection between business of the assesse and unaccounted cash found during the search proceedings. Accordingly, we are of the view that no interference is required to be made in the order of Ld.CIT(A) at this stage. The order of Ld.CIT(A) is therefore is confirmed and the grounds of appeal Nos. 2 to 7 are dismissed. 5.0 Grounds of appeal no. 1 & 8 have been found to be general in nature and devoid of any meritorious adjudication. 6.0 Through ground of appeal no.9 the assesse has contested that it was not given proper opportunity by the Ld. AO and hence principle of natural justice were violated. No evidence has been brought out on record by the assesse in support of this ground of appeal. Para-2.1 of the assessment order indicates that the assesse was issued noticed u/s 143(2) as well as u/s 142(1) along with questionnaire which were responded by the assesse. No case of denial of any opportunity has therefore been made out. It is also noted that no such controversy was raised by the assesse before the Ld. First Appellate Authority. Accordingly the ground of appeal no.9 is also dismissed. 7.0 In the result, the appeal of the assesse is dismissed. Order pronounced on 23rd , October-2024.