2017 (9) TMI 672 - HC - Income Tax

Addition u/s 69A - unexplained source of cash - assessee had sent a cash to one Riyaz Lokhandwala through Angadia firm namely M/s. Rameshkumar Ambalal and Company which was allegedly misappropriated by the employee of the Angadia - Held that - Learned counsel for the appellant may be correct in contending that the statement of a person recorded by the police authority under section 161 of Cr.P.C would have limited utility. Had this statement been the sole basis for making the addition, we would certainly have examined the issue further. However, the Assessing Officer had other independent and reliable material linking the amount to the appellant. The statement of the partner of the Angadia firm was recorded on oath in which he had stated that the amount was handed over by the assessee to the firm s Bilimora office for delivery at Mumbai. He had in fact produced one out of the two receipts stated to have been issued. There was absolutely no reason for the partner of the firm to make out a false case of the ownership of the amount. In fact the entire issue came to light only when the amount was allegedly misappropriated by the employee of the Angadia which forced the Angadia to file a police complaint. The fact that the FIR was filed at a police station in Mumbai would further suggest that the amount was actually in transit as per the instruction of the sender and would have been misappropriated after it reached Mumbai. - Decided against assessee.

Summary

Issues:
Appeal against Income Tax Appellate Tribunal's judgment confirming addition under section 69A of the Income Tax Act, 1961.

Analysis:
The appellant, an assessee, filed a return of income for the assessment year 2006-07, which was taken into scrutiny. During scrutiny, it was discovered that the appellant had sent a cash amount of ?15,06,500 to a recipient through an Angadia firm, where the amount was allegedly misappropriated. The Assessing Officer investigated the source of the cash, and the Angadia firm's partner confirmed receiving the sum from the appellant for delivery. Despite initial denial by the appellant, subsequent statements and evidence linked the cash to the appellant.

The Assessing Officer, after considering all evidence, added the amount to the appellant's income as unexplained investment. Both the CIT(Appeals) and the Tribunal upheld this decision. The appellant argued that a statement recorded by the police should not be relied upon, but the Tribunal dismissed this argument. The High Court noted that the Assessing Officer had reliable material linking the cash to the appellant, including statements from the Angadia firm's partner and the circumstances of the misappropriation.

The High Court emphasized that the entire issue revolved around the evidence and its evaluation, with no legal questions at hand. Despite the appellant's contention regarding the police statement, the High Court found no reason to doubt the Assessing Officer's conclusion based on the reliable material available. Therefore, the tax appeal was dismissed, affirming the addition of the cash amount to the appellant's income under section 69A of the Income Tax Act, 1961.