2022 (3) TMI 526 - AT - Income Tax

Unexplained cash transactions - reliance on information from seized pages - During Search operation, revenue officials came across certain loose sheets which contained the details of settlement between the groups - HELD THAT - There was a family settlement between the Ashok Ruia Group and Bharat Ruia Group and it is fact on record that both parties agreed to exchange the shares of companies in which cross holding of shares held between the groups. Accordingly, the Ashok Ruia Group agreed to acquire the share of Phoenix Mills Limited, Galaxy Entertainment Limited, RR Private Limited and Senior Holding Private Limited. CIT(A) has elaborately discussed the various issues in his order and in summary, he came to conclusion that no definite information from seized pages, no inquiry by Investigation wing or the Assessing Officer, no confessional statement available with the department, inconsistent approach of the AO i.e., some other transactions with # has not been treated as cash transactions, no corroboration of evidence to support the theory of # equals cash and no unaccounted cash or undisclosed income which was found. On the basis of the above factual finding by the Ld.CIT(A), we can say that the addition was based on the 'rough working and estimates which is prepared by the staff of the brother of the assessee. The presumption made by the Assessing Officer is not self-sufficient and is contradictory to the other seized papers. Thus, the addition made by the Assessing Officer on account of alleged cash payment on family settlement is factually incorrect and we do not see any reason to interfere with the findings of Ld.CIT(A). Accordingly, we dismiss the ground no.1 raised by the revenue. Undisclosed income - HELD THAT - Addition of ₹.332,415/- based on the cash found during search ie., ₹.18,32,415 and Assessing Officer accepted ₹.15 lakhs, which is out of funds from Scrap Deposit Account, the difference as undisclosed income in the hands of the assessee, observing that assessee could not produce any evidence to substantiate the difference amount. Ld.CIT(A) considered the overall situation and gave relief to the assessee on the basis of his social status and income declared by the assessee over the years. We are incline to agree with the above findings and do not see any reason to interfere with the above. Therefore, the ground no 2 raised by revenue is accordingly dismissed.

Summary

Issues Involved:
1. Addition of ?17,26,55,984/- as unexplained cash payment.
2. Addition of ?3,32,415/- as undisclosed cash under Section 69A of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Addition of ?17,26,55,984/- as Unexplained Cash Payment:

Background:
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) (CIT(A)) which deleted the addition of ?17,26,55,984/- made by the Assessing Officer (AO) as unexplained cash payment. This addition was based on documents seized during a search operation on the Phoenix Group, indicating financial details of a family settlement between two groups.

Revenue's Argument:
The AO presumed that the symbol ‘’ in the seized documents indicated cash payments. The AO added the difference between the highest figure mentioned in the seized documents (?381,39,58,713/-) and the actual payment (?364,00,00,000/-) as unexplained cash payment.

Assessee's Argument:
The assessee argued that the seized documents were rough estimates and not actual transactions. They contended that the symbol ‘’ did not necessarily indicate cash and that the entire consideration was paid through companies, not in the individual capacity of the assessee. They also pointed out inconsistencies in the figures mentioned in the documents and argued that no corroborative evidence was found to substantiate the cash payments.

CIT(A)'s Findings:
- The seized documents contained different figures at various places, which were rough in nature and not matching with the actual payments.
- The AO arbitrarily picked the highest figure without reasoning and failed to apply his mind to the entries recorded in the seized pages.
- Statements from the assessee and other involved parties indicated that the notings were rough calculations and not actual transactions.
- No corroborative evidence was found to support the AO's presumption that the symbol ‘’ indicated cash payments.
- The AO's approach was inconsistent as similar ‘’ entries were not uniformly treated as cash transactions.
- Legal principles dictate that suspicion, however strong, cannot replace legal proof, and documents must be read as a whole, not selectively.

Tribunal's Conclusion:
The Tribunal upheld the CIT(A)'s order, agreeing that the addition was based on rough estimates and presumptions without corroborative evidence. The Tribunal found no reason to interfere with the CIT(A)'s findings and dismissed the Revenue's appeal on this ground.

2. Addition of ?3,32,415/- as Undisclosed Cash Under Section 69A:

Background:
The AO made an addition of ?3,32,415/- as undisclosed cash found during the search, which the assessee claimed as personal savings.

Revenue's Argument:
The AO observed that the assessee could not produce evidence for the cash amount and that it was not reflected in the books of accounts.

Assessee's Argument:
The assessee argued that the cash was personal savings of the assessee and his wife, who had substantial incomes and regularly filed their returns. They contended that the AO's comparison with the balance sheet was incorrect as it only reflected business-related cash.

CIT(A)'s Findings:
- Considering the status of the family and their substantial sources of income, the availability of ?3,32,415/- at the residential premises was not unreasonable.
- The amount was considered personal savings and not unexplained in nature.

Tribunal's Conclusion:
The Tribunal agreed with the CIT(A)'s findings, considering the overall situation, social status, and income declared by the assessee over the years. The Tribunal found no reason to interfere with the CIT(A)'s order and dismissed the Revenue's appeal on this ground.

Final Decision:
The appeal filed by the Revenue was dismissed.