2016 (8) TMI 962 - HC - Income Tax

Addition on account of unexplained cash - Held that - As asserted by the learned counsel for the Revenue that the Department has disputed the books of accounts of the Assessee, the passage from the impugned order of the ITAT states to the contrary. There is not a single line in the memorandum of appeal before this Court to that effect. Learned counsel for the Revenue referred to the decision in Anantharam Veerasinghaiah & Co. v. Commissioner of Income Tax, AP (1980 (4) TMI 2 - SUPREME Court ) which spoke of the inference to be drawn when an intangible addition is to be made to the book profits, on the basis that the amount represented by that addition constitutes the undisclosed income. The facts of the present case are not comparable in any manner to the facts of the above case. Here the explanation offered by the Assessee through the cash flow statement, which has found favour with the ITAT has not been doubted by the Revenue. - Decided against revenue

Summary

Issues:
Appeal against ITAT order deleting addition of ?70 lakhs as unexplained cash.

Analysis:
The case involved an appeal by the Revenue against an ITAT order deleting an addition of ?70 lakhs made by the Assessing Officer (AO) on account of unexplained cash. The Assessee, engaged in trading of computer hardware/software, had filed its return declaring a total income of ?37,95,500 for the Assessment Year 2009-10. Following a search operation at New Delhi Railway Station, a sum of ?45 lakhs was seized, leading to a query to the Assessee regarding ?78 lakhs as unexplained income. The Assessee contended that the seized amount was part of a larger sum already surrendered, preventing double taxation. The AO, however, added ?70 lakhs to the disclosed income, prompting an appeal to the ITAT.

Before the ITAT, the Assessee presented a cash flow chart from its books of accounts to demonstrate that the surrendered cash was the source for the amounts transferred and seized. The ITAT analyzed the breakup of the surrendered amount, highlighting the cash balance and utilization for various transactions. Notably, the ITAT found the Assessee's explanation, supported by the cash flow statement, to be credible and consistent. The Revenue's challenge to the Assessee's books of accounts was refuted by the ITAT, emphasizing the lack of doubt regarding the cash flow statement's accuracy.

In the absence of any discrepancy in the Assessee's explanation and the ITAT's endorsement of the cash flow statement, the High Court upheld the ITAT's order. The Court emphasized the distinction from precedent cases and concluded that no error existed in the ITAT's decision. Consequently, no substantial question of law was identified, leading to the dismissal of the appeal.