2015 (8) TMI 1510 - AT - Income Tax

Addition on protective basis - amount was recovered from the common residence of the assessee and the locker in the joint name of the assessee and his wife - cash belonged to the assessee and was rightly added in the hands of the assessee on substantive basis - HELD THAT - The assessee had not operated the said bank locker after 16th February, 2003 and till the date of search therefore, the cash found during the course of search in the said bank locker belonged to Smt. Vineeta Singh and not to the assessee. CIT(A) was not justified in treating the cash of ₹ 5,20,000/- ( ₹ 2,20,000/- ₹ 3,00,000/-) found during the course of search in the hands of the assessee particularly when his wife claimed that the said cash belonged to her. Accordingly, we delete the addition of ₹ 4,60,000/- which was directed by the ld. CIT(A) to be made in the hands of the assessee on substantive basis. Another addition on account of amount found from locker no. 294 Syndicate Bank in the name of Smt. Vineeta Singh jointly with her domestic servant, the ld. CIT(A) although stated at page no. 40 of the impugned order that this cash of ₹ 16,33,000/- would be treated as belonging to Smt. Vineeta Singh as the assessee Shri Tribhuvan Singh is not party, however, inadvertently it has been mentioned that the addition to that extent can be made in the name of the assessee on substantive basis. Addition can be made in the hands of the assessee on substantive basis is wrong particularly when the ld. CIT(A) himself accepted that the locker no. 294 Syndicate Bank was in the name of Smt. Vineeta Singh wife of the assessee jointly with her domestic servant and the assessee Shri Tribhuvan Singh was not party to that and the cash of ₹ 16,33000/- would be treated as belonging to Smt. Vineeta Singh. The observation of the ld. CIT(A) that this amount should be treated in the hands of the assessee was wrong. Accordingly, we direct the AO to delete this addition also from the hands of the assessee. - Decided in favour of assessee.

Summary

Issues:
1. Sustenance of addition of Rs. 4,60,000 made by the Assessing Officer.
2. Ownership and justification of cash found during search operation.
3. Treatment of cash found in bank lockers jointly held.

Analysis:

Issue 1 - Sustenance of addition of Rs. 4,60,000:
The appellant contested the addition of Rs. 4,60,000 made by the Assessing Officer. The CIT(A) deleted an amount of Rs. 4,81,916 but upheld the addition of Rs. 4,60,000 on a substantive basis out of the total addition of Rs. 21,53,000. The appellant challenged this decision on the grounds that the cash found did not belong to them. The CIT(A) allowed a deduction of Rs. 60,000 from the total amount found, considering it as cash balance from past savings. The appellant argued that the amounts found were not theirs and provided affidavits to support their claim.

Issue 2 - Ownership and justification of cash found during search:
The cash amount found during the search operation was a key point of contention. The cash recovered from the residential premises and bank lockers was claimed to belong to the wife of the assessee. Statements from the wife and the assessee indicated that the cash was not owned by the assessee but by the wife. The wife explained that the cash was sourced from her mother-in-law's pension and her son's salary. The wife's statement clarified that the cash seized did not reflect in any accounts and was either hers or held in trust. The Tribunal found that the cash belonged to the wife based on the statements and the operation of the bank locker.

Issue 3 - Treatment of cash in joint bank lockers:
Regarding the cash found in the joint bank lockers, the Tribunal observed that the lockers were operated by the wife and not the assessee. The Tribunal determined that the cash in the joint lockers belonged to the wife and not the assessee. The Tribunal directed the Assessing Officer to delete the addition made in the name of the assessee for the cash found in the joint bank lockers.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the cash found during the search operation belonged to the wife based on the evidence and statements provided. The Tribunal directed the deletion of the additions made in the hands of the assessee, considering the ownership and justification of the cash found during the search.