NARAYANDAS KISHANDAS L/R SUNIL NARANG,SECUNDERABAD vs. ACIT., CENTRAL CIRCLE-2(3), HYDERABAD

(निर्धारण वर्ा/Assessment Year: 2020-21) Sri Sunil Narang Vs. Assistant Commissioner Legal heir of of Income Tax Sri Narayandas Kishandas Central Circle-2(3) Hyderabad Hyderabad [PAN : ABFPN3762L] (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri P.Murali Mohan Rao, AR रधजस् व द्वधरध/Revenue by:: Shri Srinath Sadanala, DR सुिवधई की तधरीख/Date of hearing: 26/11/2024 घोर्णध की तधरीख/Date of 27/11/2024 Pronouncement: आदेश / ORDER PER. MANJUNATHA G., A.M: This appeal filed by the assessee is directed against the order dated 30/09/2022 of the learned Commissioner of Income Tax (Appeals) [Learned CIT(A)]-12, Hyderabad relating to A.Y.2020-21.

3 5. The learned Counsel for the assessee submitted that the Ld.CIT(A) erred in upholding the reasons given by the Assessing Officer to invoke the provisions of section 115BBE of the Act, towards additional income offered in the return of income filed for the assessment year in question, which includes additional income declared towards cash found during the course of search, without appreciating the fact that the assessee has admitted the additional income under the head ‘income from business’ and also explained before the Assessing Officer that the cash found during the course of search was generated from his business activity. Learned Counsel for the assessee further submitted that this issue is also decided in favour of the assessee by the decision of ITAT Hyderabad in the case of ACIT Vs.Syed Zeeshanuddin in where, identical issue has been considered by the Tribunal and held that income offered under the head ‘income from business’ cannot be assessed under the head ‘income from other sources’ and provisions of section 115BBE cannot be invoked. Therefore, he submitted that the additions made by the Assessing Officer and confirmed by the Ld.CIT(A) should be deleted.

4 the provisions of section 69A, if the assessee is found to be the owner of any money, which is not recorded the in books of account, if any maintained by him for source of income and the assessee offers no explanation about the nature and source of the money to the satisfaction of the Assessing Officer, then the money may be deemed to be the income of the assessee for such financial year. Therefore, when the appellant is not able to explain the source of cash found during the course of search, even if he admits the income from business in the return of income filed, the nature of income and explanation offered by the assessee cannot be altered and thus, the Assessing Officer has rightly assessed the additional income u/s 69A of the Act, and brought to tax u/s 115BBE of the Act, and thus, the orders of the Assessing Officer and the Ld.CIT(A) should be upheld.

5 for the assessment year and the assessee offers no explanation or explanation offered by the assessee is not satisfactory to the Assessing Officer, then such money should be assessed u/s 69A of the Act. Further, once any income is assessed u/s 68 to 69D of the Act, then the same needs to be brought tax u/s 115BBE of the Act. It was the argument by the Learned Counsel for the assessee that although the appellant could not explain the source of cash found immediately during the course of search, but subsequently explained that the cash found during the course of search was generated out of business income and accordingly offered additional income under the head ‘income from business’. Further, the assessee, being an individual is not required to maintain books of accounts for the impugned assessment year and thus the question of recording the said cash in the books of accounts maintained by him if any, for the relevant assessment year does not arise. Therefore, merely for the reason that the assessee could not explain the nature and source of cash at the time of search, it cannot be said that said cash is generated from undisclosed source of income and can be taxed u/s 69A r.w.s.115BBE of the Act.

6 Officer never disputed these facts. However, ignored the explanation of the assessee with regard to the nature and sources of cash only on the ground that the assessee has admitted the additional income during the course of search and not explained the nature and source of cash found during the course of search. In our considered view, the assessee being an individual does not require to maintain books of accounts for his business activity. Once, the assessee is not required to maintain the books of accounts, then the question of recording cash in the books of accounts, if any, maintained by the assessee for the relevant assessment year does not arise. Since the assessee is not required to maintain books of accounts and further the assessee had also explained the nature and source of cash by filing the return of income, in our considered view, the Assessing Officer ought to have accepted the explanation of the assessee with regard to nature and source of cash. The Assessing Officer, without disbelieving the explanation of the assessee, simply assessed additional income u/s 69A and brought to tax u/s 115BBE of the Act. In our considered view, in order to invoke the provisions of section 115BBE of the Act, income referred to u/s 68 to 69D of the Act should be assessed. In the present case, although the Assessing Officer assessed additional income u/s 69A of the Act, but no reason has been assigned. Therefore, we are of the considered view that the Assessing Officer erred in taxing additional income, being cash found during the course of search u/s 69A, r.w.s.115BBE of the Act. The Ld.CIT(A), without appreciating relevant facts simply sustained the reasons given by the Assessing Officer to tax the cash found u/s 115BBE of the Act. Thus, we set aside the order

7 of the Ld.CIT(a) and direct the Assessing Officer to assess additional income of Rs.89,18,100/- as income from business as returned by the assessee and to compute tax under normal rates of taxes.

Order pronounced in the Open Court on 27th November, 2024.