2016 (5) TMI 1146 - AT - Income Tax

Addition u/s 69A - whether the assessee has explained source and genuineness of the seized amount having been belonging to its sister concern during the assessment proceedings? - Held that - No plausible explanation has come on record during the assessment proceedings or thereafter as to why the cash book, subsequently relied upon by the assessee, has not been produced before the AO particularly when the assessee company along with its sister concern was operating from the aforesaid office Moreover when the cash book of the year under consideration was suppressed by the assessee intentionally at the time of search and seizure, as is evident from the copy of panchnama, nor produced the same during the assessment proceedings, earlier cash books produced by the assessee company are of no support to its case. The assessee has failed to prove the source of the cash of ₹ 70,00,000/- found and seized from its premises on the basis of search and seizure conducted on 12.08.2007. So, the CIT (A) has rightly dismissed the assessee s appeal.

Summary

Issues:
1. Addition made under section 69A of the Income-tax Act, 1961
2. Acceptance of explanation regarding seized cash belonging to sister concerns
3. Scope of interference in findings by lower revenue authorities

Analysis:

1. Addition made under section 69A of the Income-tax Act, 1961:
The appellant, a real estate development company, challenged the addition of ?70,00,000 to its income under section 69A of the Income-tax Act, 1961. The Assessing Officer (AO) initiated assessment proceedings as the appellant failed to provide evidence for the seized cash during a search operation. The appellant claimed the cash belonged to four different companies, but the AO found the explanation unsatisfactory, leading to the addition. The Commissioner of Income Tax (Appeals) upheld the addition, stating the appellant failed to produce relevant documents during the search. The Tribunal, after examining the facts, affirmed the lower authorities' decision, emphasizing the lack of evidence regarding the source of the seized cash.

2. Acceptance of explanation regarding seized cash belonging to sister concerns:
The appellant contended that the seized cash belonged to sister concerns, providing cash book details for the period before the search. However, the lower authorities found the explanation inadequate due to missing signatures on documents and inconsistencies in deposit dates. The Tribunal concurred with the lower authorities, highlighting the failure to produce the cash book for the relevant period and discrepancies in deposit dates, leading to the dismissal of the appeal.

3. Scope of interference in findings by lower revenue authorities:
Upon reviewing the documents and proceedings, the Tribunal found no grounds to interfere with the AO and CIT (A)'s findings. The Tribunal noted the absence of a plausible explanation for not producing the cash book, lack of signed documents, and discrepancies in deposit dates. Additionally, the Tribunal pointed out that the appellant failed to demonstrate the source of the seized cash, ultimately upholding the dismissal of the appeal based on the evidence presented.

In conclusion, the Tribunal upheld the addition of ?70,00,000 to the appellant's income, emphasizing the lack of substantiated evidence regarding the source of the seized cash, and dismissed the appeal accordingly.