MOHAMMED QUADRI AHMED,HYDERABAD vs. ACIT, CENTRAL CIRCLE-2(2), HYDERABAD

Learned DR vehemently opposed the condonation of delay. We, however, are of the view that there is nothing to suspect the plea taken by the assessee that the staff member of the assessee misplaced the order and that is the reason why the delay occurred, because the assessee does not stand to gain by causing any delay in preferring the appeal. Taking a pragmatic view having regard to the totality of circumstances, we condone the delay and proceed to hear and dispose of the matter on merits.

Assessee filed the return of income for the assessment year 2019- 20 on 29/6/2020 admitting an income of Rs. 92,85,980/- and it was processed under section 143(1) of the Income Tax Act, 1961 (for short “the Act”) by intimation dated 9/7/2020. There was search and seizure operation under section 132 of the Act in the case of Red Rose group on 12/7/2018 and as a part of such search operations a search was conducted in the case of the assessee also. At the time of search cash of Rs. 9 76,500/- was found, which the learned Assessing Officer brought to tax as unexplained cash in section 69A of the Act.

Assessee filed appeal before the learned CIT(A) and pleaded that the assessee is a regular filer of income tax and has declared incomes of Rs.24,16,730/-, Rs.4,33,18,890/- and Rs.92,85,980/- for the AYs2017-18, 2018-19 and 2019-20 respectively and the sources for seized cash of Rs.9,76,500/- can be easily explained from the past accumulations and savings of the assessee. Learned CIT(A), however, did not accept the contention of the assessee, holding that the assessee has not produced books of accounts showing the said cash balance, and therefore, it can be said that the assessee has not recorded the cash in its books of accounts and the sources are not substantiated with documentary evidence.

Assessee is therefore filed this appeal stating that mere finding of some amount cannot prima facie be characterised as income in the hands of the assessee, unless it is chargeable to tax and the authorities are not justified in making an addition to the total income of the assessee since it is an established practice to telescope the sources of the earlier years at the instance of expressions/clarifications of the income/expenditure etc.

Per contra, learned DR submitted that the assessee did not produce any book of account to substantiate his plea that the cash that was found at the residence of the assessee could be telescoped the sources of earlier years.

We have gone through the record in the light of the submissions made on either side. There is no denial of the fact that the assessee is a regular Income Tax returns filer and for the assessment years 2017-18, 2018-19 and 2019-20 the assessee declared incomes of Rs.24,16,730/-, Rs.4,33,18,890/- and Rs.92,85,980/-. This Tribunal consistently held that having regard to the common course of natural events, human conduct and public and private business in particular relations to the facts of the case, when the assessee possessed sufficient sources in the shape of income in the earlier years, telescoping is permissible in respect of the cash found during the search out of the income declared from the known sources of the assessee.

In the circumstances, we hold that in view of the huge income of Rs. 4.3 crores the assessee declared in the assessment year 2018-19, it is acceptable to telescope the sources of the assessment year 2018-19 as pleaded by the assessee and there is nothing suspicious in that respect.

We therefore allow the appeal and direct the learned Assessing Officer to delete the addition of Rs. 9,76,500/- under section 69A of the Act. 9. In the result appeal of the assessee is allowed. Order pronounced in the open court on this the 12th day of July, 2024. Sd/- Sd/- (MANJUNATHA G.) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 12/ 07/2024 Pvv/SPS