PARAG SURESH VAKHARIA,NAGPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), NAGPUR

In its appeal, the assessee has raised following grounds:–

During the course of hearing, when the case was called for, neither the assessee nor any of its authorised representative appeared before us to assist the Bench in disposing of the appeal filed by the assessee. However, we proceed to dispose of this appeal ex–parte qua the assessee appellant and after hearing the learned Departmental Representative and on the basis of material available on record.

The only issue involved in this appeal relates to the addition of ` 1,40,000, on account of unexplained money under section 69A of the Income Tax Act, 1961 ("the Act").

Facts in Brief:– The assessee is engaged in the business of sale and purchase of used cars filed its return of income on 31/03/2021, disclosing total income at ` 3,08,600. A search and seizure action under section 132 of the Act was conducted in assessee’s case in connection with M/s. Swami Fuels Pvt. Ltd. During the course of search proceedings, a sum of ` 8,97,700, in cash was found at the residence of the assessee. The assessee stated in his statement recorded under section 132(4) of the Act that ` 2,15.000, belongs to used car business and ` 5,60,000, belongs to Swami Fuels Pvt. Ltd., and the remaining amount of ` 1,22,900, belongs to assessee’s family members. The assessee submitted that the assessee is into cash driven business of sale and purchase of used cars. Though, in this business, the assessee generated cash of ` 2.15 lakh and tax has also been paid. The assessee submitted that there are five members in his family from their accumulated savings and 3 Parag Suresh Vakharia ITA no.57/Nag./2023 withdrawals of the family members which was handed by the Late Shri Suresh Vakharia. The Assessing Officer considering the submissions of the assessee rejected the same and the addition was made for ` 7 lakh, by treating it as unexplained money under section 69 of the Act which was added to the total income of the assessee. Aggrieved, the assessee carried the matter in appeal before the first appellate authority.

The learned CIT(A) deleted the addition of ` 5,60,000, while accepting it to be belongs to Swami Fuels Pvt. Ltd., as the assessee has produced acceptance letter from the said company. However, the learned CIT(A) confirmed the addition of ` 1.40 lakh, as the assessee could not provide any reasoning for the same.

The learned Departmental Representative relied upon the order passed by the learned CIT(A).

Having heard the submissions of the learned Departmental Representative, perused the material available on record and gone through the orders of the authorities below, we find that once the learned CIT(A) has accepted the amount of ` 5.60 lakh and the remaining amount of ` 1.40 lakh was confirmed without there being any cogent reason. We further find that nether the learned CIT(A) nor the Assessing Officer has denied the explanation of the assessee that he is into the business of sale and purchase of used cars and, therefore, generally cash would have been generated. Under these circumstances of the case, in our considered opinion, the learned CIT(A) was not justified in confirming the remaining amount of ` 1.40 lakh.

In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on 18/09/2024