2019 (3) TMI 463 - AT - Income Tax

Unaccounted cash in hand - search proceedings - HELD THAT - Assessee have successfully demonstrated with the help of the statement given during the course of search about this relation with these persons, source and bifurcation of cash belonging to these persons and their confirmation letters that sum of ₹ 95,000/- (Rs.30,000 ₹ 50,000 ₹ 15,000) belonged to these persons and not to the assessee. As regards the sum claimed to be owned by the assessee s wife Smt. Vandana Sharma, revenue failed to rebut the contentions of the Ld. Counsel for the assessee that in the case of Smt. Vandana Sharma the Ld.A.O has accepted the cash flow and cash in hand at ₹ 1,52,144/- on the date of search and in such circumstances addition in the hands of the assessee as unexplained cash is devoid of any merits and is uncalled for. As regards the remaining sum of ₹ 3,17,000/- is concerned the assessee has filed the cash flow statement. No defect have been appointed out by the lower authorities in the cash flow statement. It is also brought to the notice that assessee has withdrawn ₹ 7 lakhs from his savings bank account held with State Bank of India on 30.04.2009. CIT(A) has also appreciated this fact in his findings. In this given facts and circumstances of the case, in our considered view cash in hand at ₹ 3,17,000/- also stands explained by view of cash flow statement filed by the assessee. In the result order of CIT(A) deserves to be set aside and the addition of ₹ 5,62,000/- for unaccounted cash in hand needs to be deleted. - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition of ?5,62,000/- as unexplained cash found during the search.
2. Validity of the explanation provided by the assessee regarding the source of the cash.
3. Acceptance of the cash flow statement submitted by the assessee.

Detailed Analysis:

1. Addition of ?5,62,000/- as Unexplained Cash Found During the Search:
The primary issue in this case revolves around the addition of ?5,62,000/- to the total income of the assessee, which was found as cash during a search conducted under Section 132 of the Income Tax Act. The Assessing Officer (AO) was not satisfied with the explanation provided by the assessee regarding the source of this cash and treated it as unaccounted income. This decision was upheld by the Commissioner of Income Tax (Appeals) [CIT(A)], leading to the present appeal before the Tribunal.

2. Validity of the Explanation Provided by the Assessee Regarding the Source of the Cash:
The assessee contended that the cash found during the search belonged to various individuals, including ?50,000/- from Shri Anurag Sharma, ?15,000/- from Shri L.K. Pandey, ?30,000/- from Shri M.S. Pandey, ?1.5 lakhs from his wife, and the remaining amount was cash in hand after withdrawing ?7 lakhs from the bank. The AO rejected this explanation, noting discrepancies in the preliminary and concluding statements of the individuals involved and the lack of supporting evidence.

However, the Tribunal observed that the assessee consistently maintained this explanation from the time of the search. The Tribunal noted that the search team did not specifically question the three individuals about the cash, and the AO did not summon them for further verification despite receiving their confirmation letters. The Tribunal found that the assessee successfully demonstrated that ?95,000/- belonged to these individuals and not to him.

3. Acceptance of the Cash Flow Statement Submitted by the Assessee:
The assessee also provided a cash flow statement to explain the remaining cash, which included a withdrawal of ?7 lakhs from his bank account on 30.04.2009. The Tribunal noted that no defects were pointed out by the lower authorities in the cash flow statement, and the CIT(A) acknowledged the withdrawal. The Tribunal found that the cash flow statement satisfactorily explained the cash in hand of ?3,17,000/-.

Conclusion:
The Tribunal concluded that the assessee provided a satisfactory explanation for the entire amount of ?5,62,000/-, and the addition made by the AO was not justified. The order of the CIT(A) was set aside, and the addition of ?5,62,000/- was deleted. The appeal of the assessee was allowed. The judgment was pronounced in the open court on 28.02.2019.