G. ELUMALAI,VELLORE vs. DCIT, CENGTRAL CIRCLE-3(4), CHENNAI

The sole issue raised by the assessee is that sustaining the addition of Rs.22,89,925/- out of Rs.27,74,000/- being cash found during the search on 13.07.2019 as unexplained money

The brief facts are that, the assessee is an agriculturist and doing business of real estate cum builders. In connection with the by-election to the Vellore Parliamentary constituency, checking was conducted on 13.07.2019 by the flying squad team, during which cash of Rs.27,74,000/- was found in the residence of the assessee, for which the assessee could not explain source for the same. Subsequently, a summons u/s. 131 of the Act was issued to the assessee. During the course of examination, the assessee claimed that the amount received against sale of immovable properties was the source for the said cash but could not furnish any documentary evidence for the same. Since, the assessee failed to substantiate the source for cash, the same is treated as unexplained money. The case was notified to the Circle vide notification no. 20/2020-21 in C.No.831/PCIT-8/Cent & Decent/2020-21 dated 29.03.2021. The Assessing Officer noted that the assessee has not filed his return of income for the assessment year 2020-21 and issued notice u/s. 142(1) of the Act on 26.08.2021. Later, the assessee filed return of income but Assessing Officer noted that

And the Assessing Officer noted that during the course of examination u/s. 131 of the Act, the assessee has claimed that the source for the cash of Rs.27,74,000/- found was out of sale of some immovable properties and the jewel loan taken by his son. And pointed out that in the statement recorded u/s. 132A of the Act, the assessee had provided the details of income earned by himself and his family and his HUF was Rs.11,53,700/-. However, the Assessing Officer didn’t accept the statements of the assessee and passed an order u/s. 153A r.w.s. 153B(1)(b) r.w.s. 144 of the Act on 28.09.2021 and added Rs.27,24,000/- as unexplained money u/s. 69A of the Act, r.w.s. 115BBE of the Act. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld.CIT(A).

The ld.CIT(A) acknowledged that the assessee had furnished the details of cash flow statements of himself, (G. Elumalai), Elumalai HUF, E. Babu (son) and E. Janaki Ammal (wife), in support of the cash found at Rs.27,74,000/- on the date of search. On perusal of documents and statements

The Ld. Counsel for the assessee assailing the action of the ld.CIT(A) stated that the complete cash flow was provided to show that the cash was available at the time of search which belongs to the family members (Supra). However, the ld.CIT(A) has erred in passing the impugned order by sustaining the addition of Rs.22,89,925/-. The Ld. Counsel for the assessee filed a paper book containing 53 pages wherein the assessee had filed a cash flow statement of G.Elumalai, G.Elumalai HUF, E.Babu and E.Janaki Ammal from 01.04.2018 to the date of seizure i.e. up to 13.07.2019 and stated that the cash available was Rs.29,09,042/- as against the amount allowed as cash held by the ld.CIT(A) of Rs.4,84,075/-. The Ld. Counsel for the assessee, submitted that the ld.CIT(A) has erred in not considering the commission of Rs.3 lakhs rental

Further, the ld.AR submitted that the ld.CIT(A) has not considered the following income which was available as cash on hand as on 13.07.2019 as under: Details G. Elumalai E. Babu E.Janaki Total Elumalai (HUF) Ammal Commission 3,00,000 3,00,000 Rental 3,30,000 1,50,000 3,67,500 8,47,500 income Agricultural 20,000 4,00,000 3,15,000 4,40,000 11,75,000 income TOTAL 6,50,000 4,00,000 4,65,000 8,07,500 23,22,500

According to the ld.AR, the ld.CIT(A) failed to appreciate that the assessee has sufficient source of the cash as explained supra and therefore prayed that the addition sustained by the ld.CIT(A) be deleted.

Per contra, the ld.DR relying on the decision of the ld.CIT(A)/AO submitted that the ld.CIT(A) has already given relief of Rs.4,84,075/- and therefore, the balance addition should be sustained.

We have gone through the facts and circumstances of the case and perused the material. We note that the assessee claims himself to be an agriculturalist and doing business of real estate/builder and during the by-election to the Vellore Parliamentary Constituency, the flying squad found that the assessee was having cash of Rs.27,74,000/- in his possession/residence. Later on, the Assessing Officer asked the assessee to prove the nature and source of the amount seized and according to the Assessing Officer, the assessee failed to prove the same and therefore, he made the entire addition of Rs.27,74,000/- which addition was restricted to Rs.22,89,925/- by the ld.CIT(A). Before us, the ld.AR has submitted that he has agricultural income to the tune of Rs.11,75,000/- in the year under consideration and was available with him and for that he has brought to our notice that the assessee and his family is holding the agricultural land in their name which is captured in chart below: Name of the person Total extent of agricultural land holding in all places G. Elumalai 7.94 acres G. Elumalai (HUF) 11.96 acres E. Babu 2.81 acres Mrs. Janaki Ammal 4.32 acres Total land holdings 27.03 acres

In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 05th July, 2024 at Chennai. Sd/- Sd/- (एस. आर. रघुनाथा) (एबी टी वक� ) (S. R. RAGHUNATHA) (ABY T VARKEY) लेखासद�/Accountant Member �ाियक सद�/Judicial Member चे�ई/Chennai, �दनांक/Dated, the 05th July, 2024 JPV आदेश की �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3.आयकर आयु�/CIT – Chennai 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF