2021 (2) TMI 804 - HC - Income Tax

Addition u/s 69A - Cash found and seized during the course of search - no explanation about the nature and source of the acquisition of money, or in case the explanation offered by assessee is not satisfactory in the opinion of the Assessing Officer, then the value of the money may be deemed to be the income of the assessee - As per assessee amount of cash recovered was advance money received by him for sale of so called land at Faridabad - HELD THAT - The concurrent and consistent findings of fact recorded by the tax authorities rejecting the explanation given by the assessee has resulted in adding the amount in question to the income of the assessee under Section 69A and we do not find any perversity in the same in order to entertain the present appeal. The test of human probabilities applied by the tax authorities buttresses the conclusion drawn by them and justifies the denunciation of the incredulous story portrayed by the Appellant. In Sukh Ram v. ACIT, 2006 (6) TMI 77 - DELHI HIGH COURT this Court has taken the view that for an addition under Section 69A, possession is evidence of ownership, and the presumption of ownership is the strongest in case of cash, because its title can be transferred by mere delivery of possession, and thus onus is on the Assessee to prove that he is not the owner of the currency in his possession. The aforesaid findings are purely findings of fact which have been concurrently accepted by the CIT(A) as well as the ITAT. We cannot reappreciate the evidence, particularly when we see no perversity in the findings of the ITAT. As regards the contention of Mr. Vohra, that the finding recorded by the Assessing Officer that the amount of ₹ 2 crores was for an illegal gratification, contradicts the conclusion drawn by him, we would say that firstly, we perceive no such contradiction. Secondly, on a pointed query raised by the Court, Mr. Vohra refutes that the amount in question was illegal gratification. Thus, the plea of being a conduit is a pretext to evade tax. Thirdly, to our mind, the observations of the tax authorities are on independent examination of the case and not entirely resting on the case which has been set up by the CBI. As far as the Income Tax proceedings are concerned, since the explanation offered by the Appellant has not been found to be satisfactory, the addition is in accordance of law - Decided against assessee.

Summary

Issues Involved:
1. Condonation of delay in refiling the appeal.
2. Legality of the addition of ?2 crores to the appellant's income.
3. Evaluation of the evidence and testimonies presented.
4. Interpretation of Section 69A of the Income Tax Act, 1961.

Detailed Analysis:

1. Condonation of Delay in Refiling the Appeal:
The court condoned the delay of 25 days in refiling the appeal for the reasons stated in the application and disposed of the application accordingly.

2. Legality of the Addition of ?2 Crores to the Appellant's Income:
The appeal was directed against the ITAT's order upholding the addition of ?2 crores to the appellant's income. The appellant claimed the amount was an advance for the sale of agricultural land, but discrepancies in the statements and lack of original documents led the Assessing Officer (AO) to reject this explanation. The CIT(A) and ITAT confirmed the AO's findings, leading to the present appeal.

3. Evaluation of the Evidence and Testimonies Presented:
The appellant's explanation for the ?2 crores was inconsistent and unsupported by reliable evidence. The AO noted discrepancies in the statements of the appellant and the alleged buyer, Mr. Rahul Ahuja. The MOU provided was deemed unreliable, and the original document was never produced. The AO concluded the transaction was a sham to cover up the cash found by the CBI. The ITAT agreed, citing significant gaps and contradictions in the appellant's story and the lack of credible evidence.

4. Interpretation of Section 69A of the Income Tax Act, 1961:
The appellant argued that for an addition under Section 69A, the assessee must be found to be the owner of the money. The court held that possession implies ownership under Section 69A, and the appellant's explanation was deemed unsatisfactory. The court noted that the AO is empowered to deem unexplained money as income if the explanation is not satisfactory. The court found no contradiction in the AO's findings and upheld the addition, stating that the appellant failed to discharge the onus of proving the source of the cash.

Conclusion:
The court dismissed the appeal, finding no perversity in the concurrent findings of the tax authorities. The appellant's explanation for the ?2 crores was not credible, and the addition under Section 69A was justified. The court emphasized that possession implies ownership, and the appellant failed to provide a satisfactory explanation for the cash found. The appeal was dismissed, and no substantial question of law was found to merit further consideration.