“cash found during search”
The decision most relied on for cash found during search is CIT v. Indeo Airways Pvt. Ltd. (349 ITR 85), cited in 114 judgments on BharatTax.
Leading authorities on cash found during search
If revenue relies on entries of receipts in seized material, the corresponding expenditure must also be considered unless there is concrete evidence to disregard it. If documents found during a search are considered true and belong to the assessee, entries of expenditure recorded therein are also to be believed.
Where a document found during a search is a copy of a ledger of an assessee company showing payments, the Assessing Officer has prima facie material to suggest satisfaction under section 153C was duly recorded, justifying a notice to the assessee.
Unexplained jewellery found during a search can be added to income, even if the assessee claims it was received back against purchase bills, especially when part of the unaccounted cash is deposited in the bank.
When a large sum of cash is found during a search, and the assessee fails to substantiate their claim that it belongs to an organization, the cash is treated as the assessee's own and added to their income under section 69A.
Evidence found during a search and seizure operation under section 132(4) can be used to make additions under sections 68, 69, and 69A, even if the assessee's statement is retracted.
When assessing a partnership firm, the Assessing Officer can inquire into the source of credits introduced by partners, but cannot be compelled to investigate the 'source of the source' of those partners' funds under Section 68.
The addition of unexplained cash credits under section 68 requires the assessee to prove the genuineness of transactions beyond the banking channel. Incriminating material found during search or survey actions, such as admissions of providing accommodation entries, can be used to support such additions.
Entries found on loose papers during a search cannot, on their own, be considered material for making an addition to income. Such additions require corroborative evidence and proper inquiry.
