2014 (3) TMI 959 - AT - Income Tax

Unexplained cash found during the course of search - CIT(A) deleted the addition - Held that - Assessing Officer ignored the details and explanation submitted by the assessee during the assessment proceedings and wrongly observed that the assessee had failed to submit explanation and bifurcation for additional income of ₹ 24 lakh. Further AO ignored and not considered details and explanation submitted by the assessee in reply to questionnaire dated 15.10.2010 which is not a fair practice. On the other hand, from the findings of the Commissioner of Income Tax(A), we clearly observe that the he had decided the issue in favour of the assessee and deleted the addition on logical conclusion by holding that when the assessee has himself voluntarily offered an amount of ₹ 24 lakh as his additional income from undisclosed sources, then without any further evidence on record to prove that this disclosed amount of ₹ 24 lakh does not include within itself the cash found of ₹ 10,50,000, the Assessing Officer does not have sufficient ground to make further addition to the income of the assessee as it would result in taxing the same cash twice, firstly by the appellant voluntarily offering the addition of ₹ 24 lakh and secondly by treating the same cash amount of ₹ 10,50,000 as income of the assessee from undisclosed sources. - Decided against revenue.

Summary

Issues:
1. Addition of unexplained cash found during a search
2. Failure to submit explanation for additional income disclosed
3. Validity of deletion of addition by Commissioner of Income Tax(A)

Analysis:
Issue 1: The appeal involved the addition of Rs. 10,50,000 as unexplained cash found during a search. The Assessing Officer seized cash during a search at the assessee's premises, and the assessee provided explanations for the source of the cash. However, the Assessing Officer added the amount to the income as undisclosed sources. The Commissioner of Income Tax(A) deleted this addition, noting that the cash found was part of the additional income disclosed by the assessee. The Commissioner held that taxing the same cash twice would be inappropriate, as the assessee had voluntarily disclosed the additional income. The Tribunal upheld the Commissioner's decision, emphasizing that the Assessing Officer failed to consider the explanations provided by the assessee and had no grounds for further addition.

Issue 2: The second issue involved the failure of the assessee to submit an explanation for additional income of Rs. 24 lakh and the manner in which it was derived. The Assessing Officer initiated penalty proceedings due to the lack of explanation. However, the Tribunal noted that the assessee had submitted a detailed explanation to the Assessing Officer, which was not considered in the assessment order. The Tribunal found that the Assessing Officer's observation of non-submission of explanation was incorrect, as the assessee had provided a clear explanation for the additional income. The Tribunal upheld the deletion of the addition by the Commissioner of Income Tax(A) on this issue.

Issue 3: The final issue revolved around the validity of the deletion of the additions by the Commissioner of Income Tax(A). The Revenue contended that the Commissioner's decision lacked justification and should be set aside. However, the Tribunal disagreed, stating that the Commissioner's decision was logical and based on the facts presented. The Tribunal found no reason to interfere with the Commissioner's order and dismissed the appeal of the Revenue.

In conclusion, the Tribunal upheld the deletion of the additions made by the Assessing Officer, emphasizing the importance of considering the explanations provided by the assessee and avoiding double taxation of the same income. The Tribunal found no grounds to overturn the Commissioner's decision and dismissed the appeal of the Revenue.