2012 (7) TMI 759 - AT - Income Tax

Addition as unexplained cash - CIT(A) deleted the addition - Held that - It is an admitted fact that assessee company has accepted the fact that the cash belong to the company. Hence, once when the amount has been assessed in the hands of assessee company no infirmity in the CIT(A) s finding that addition in the hands of the assessee on protective basis is not required. The documents seized during the survey operation from the premises of the assessee show difference between cash balance as per the cash book & the ledger account of the imprest account - The books of account maintained in the computer emanated during the course of search support the contention of the assessee in respect of the transactions made through the imprest account & how the imprest account is merged with the final accounts. There was a cash withdrawal of Rs.30,00,000/- just a month before the cash found - as revenue has failed to bring anything on record which could show that money withdrawn from bank was spent somewhere else. The purpose for which the money was carrying out to Goa is well explained. Additions made only on the basis of statements recorded during operation u/s 133A may be liable to be quashed in absence of any corroborative evidence - There was no doubt about the fact that the seized money was belonging to the assessee only. The proceedings u/s 153C r.w.s. 153A has to be taken in the case of assessee only.

Summary

Issues Involved:
1. Delay in filing the appeal by the revenue.
2. Deletion of the addition of Rs.50,00,000/- made by the AO as unexplained cash.
3. Validity of the assessment proceedings under section 153C read with section 153A of the Income-tax Act, 1961.

Detailed Analysis:

1. Delay in Filing the Appeal by the Revenue:
The Tribunal acknowledged the delay in filing the appeal by the revenue. After hearing both sides, the Tribunal condoned the delay and admitted the appeal for decision on its merits.

2. Deletion of the Addition of Rs.50,00,000/- Made by the AO as Unexplained Cash:
The revenue contested the deletion of the addition of Rs.50,00,000/- made by the AO, arguing that the cash found with an employee of the assessee was unexplained. They highlighted the gap of about a month between the cash withdrawal from the bank and the seizure of the cash, and the presence of additional cash of Rs.30,02,750/- at the assessee's premises during the survey. The revenue also pointed out inconsistencies in the statements of the employees regarding the source and timing of the cash.

The assessee argued that the cash was intended for payment for a plot allotted by Info Tech Corporation of Goa Ltd. and was duly explained in their books of accounts. The CIT(A) had deleted the addition, finding the assessee's explanation plausible and supported by evidence. The Tribunal upheld the CIT(A)'s decision, noting that the cash balance as per the books was sufficient to cover the amount found, and the revenue failed to disprove the assessee's explanation or provide any material evidence to the contrary.

3. Validity of the Assessment Proceedings under Section 153C Read with Section 153A of the Income-tax Act, 1961:
The assessee challenged the validity of the assessment proceedings under section 153C read with section 153A. The Tribunal noted that a search operation was conducted on the employee carrying the cash, who stated that the money belonged to the assessee. A subsequent survey at the assessee's premises corroborated this claim. The Tribunal found that the proceedings under section 153C were correctly initiated in the assessee's case, as the cash was clearly belonging to the assessee. The CIT(A) had not commented on this ground since relief was granted on other grounds. The Tribunal found no necessity to adjudicate this ground further, given the sustained relief on other grounds.

Conclusion:
The appeal by the revenue was dismissed, and the cross objection filed by the assessee was also dismissed. The Tribunal upheld the CIT(A)'s deletion of the addition of Rs.50,00,000/- and validated the assessment proceedings under section 153C read with section 153A.