2017 (3) TMI 880 - HC - Income Tax

Addition of unexplained cash not recorded in the books of account under Section 69A - Held that - It is true that ₹ 6,38,800/was found in cash from the bedroom of the sister of the assessee. As rightly observed by the learned Tribunal, as such nothing is on record that the bedroom was in exclusive possession of the sister. Even otherwise, there are contradiction in the statement of assessee recorded under Section 132(4) of the Act and even the affidavit of the sister of the husband which as such is after three weeks from the date of search and seized. In answer no.9, the assessee has stated that out of amount of ₹ 7 to 8 lakh found to be in cash, ₹ 2.5 lakh belonged to her sister. He has not stated that the amount in cash is found from the bedroom of the sister, entire amount belonged to her sister. The sister in her affidavit dated 4.1.2006 has stated that the amount of ₹ 6,38,800/found in cash from the room where she was sleeping with her husband was received by her from in laws, out of the aforesaid amount, some amount is of Stridhan received from her in laws and the parental house and towards the savings from the labour work by her and her husband. However, it is required to be noted that no further evidence is produced with respect to any share received from her in laws. As observed herein above, even the said affidavit is dated 4.1.2006 i.e. after a period of three weeks. As observed herein above, assessee has stated that out of ₹ 7 to 8 lakh found to be in cash, ₹ 2.25 Lakh belonged to her sister, thus there are material contradiction in the statement of assessee and even the affidavit of her sister. Under the circumstances, however on appreciation of the evidence the learned AO made addition as unexplained cash, it cannot be said that the AO has committed an error. So far as the submission on behalf of the assessee that at the time of search and seizure out of ₹ 9,48,000/, ₹ 6,38,800/which was recovered from the bedroom of the sister of the assessee was returned and not seized and therefore, the aforesaid amount of ₹ 6,38,800/could not have been added in the hands of the assessee as unexplained cash of the assessee is concerned, the aforesaid cannot be accepted. Merely because, at the relevant time aforesaid amount was not seized and returned, it cannot be said that the subsequently during the course of assessment, the aforesaid amount which was found in cash from the premises of the assessee could not have been added as unexplained income in the hands of the assessee. As such, no question of law arise. No reason to interfere with the impugned judgment and order passed by the learned Tribunal and confirmed the addition made by the AO as unexplained cash not recorded in the books of account under Section 69 A - Decided against assessee

Summary

Issues:
1. Dismissal of appeal by Income Tax Appellate Tribunal regarding addition of unexplained cash in the hands of the assessee.
2. Challenge to the confirmation of addition made by the AO and CIT(A) in the High Court.

Analysis:

Issue 1: Dismissal of appeal by Income Tax Appellate Tribunal
The case involved a search and seizure operation under Section 132 of the Income Tax Act, where cash amount was found at the residential premises of the original assessee. An amount of ?6,38,800 was found in the bedroom of the assessee's sister, claimed to be her property. The AO added the entire amount of ?9,48,000 as unexplained cash in the hands of the assessee under Section 69A. The CIT(A) upheld this addition, which was further challenged before the ITAT. The ITAT dismissed the appeal, leading to the present challenge. The assessee argued that the amount belonged to the sister and not the assessee, supported by an affidavit and other evidence. However, the court noted contradictions in statements and lack of concrete evidence regarding the ownership of the cash. The court upheld the ITAT's decision, stating that the AO's addition was justified based on the available evidence.

Issue 2: Challenge to the confirmation of addition made by the AO and CIT(A)
The High Court considered the arguments presented by the assessee's counsel, emphasizing that the amount found in the sister's bedroom was voluntarily returned and not seized during the search. The counsel contended that this amount should not have been added as unexplained cash in the hands of the assessee. However, the court rejected this argument, stating that the subsequent assessment allowed for the addition of the cash as unexplained income, regardless of whether it was initially seized or returned. The court found no reason to interfere with the ITAT's decision and confirmed the addition made by the AO under Section 69A of the Act. Consequently, the court dismissed the present appeal.

In conclusion, the High Court upheld the addition of unexplained cash in the hands of the assessee, rejecting the arguments presented and confirming the decisions of the lower authorities.