2023 (4) TMI 1110 - AT - Income Tax

Addition u/s 69A - search seizure operation u/s 132 - assessee could not explain the source of cash found at the business premises of the assessee on the date of search - CIT (A) deleted partial amount holding the same to be available on the date of search as per books of account of the company and Director of the company and sustained the balance amount - HELD THAT - A perusal of the assessment order shows that the Assessing Officer basically made the addition on the basis of the statement of the Accountant Shri Tikaram Sharma. However, it is neither coming from the assessment order nor from the order of the CIT (A) or from the Paper Book filed by the assessee as to whether the statements of the Directors of the assessee company were recorded or not and whether they have been asked any question or not on this issue either during the course of search or during the course of assessment proceedings especially when Mr. Ramesh Agarwal, on behalf of all family members and the companies had declared Rs.100 crores as undisclosed income. Since the facts in the instant case are identical to the facts of the case in the case of Ankit Biscuits (P) Ltd 2023 (3) TMI 1233 - ITAT HYDERABAD we deem it proper to restore the issue to the file of AO with a direction to adjudicate the issue afresh in the light of the direction given in the case of Ankit Biscuits (P) Ltd and in the light of the declaration of additional income of Rs.100 crores by Mr. Ramesh Agarwal on behalf of all family members and the companies as additional income. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Whether the addition of Rs. 9,05,120/- under section 69A of the Income Tax Act was justified.
2. Whether the cash found during the search was satisfactorily explained by the assessee.

Summary:

Issue 1: Addition of Rs. 9,05,120/- under Section 69A of the Income Tax Act

The assessee appealed against the order of the CIT (A) confirming the addition of Rs. 9,05,120/- made by the Assessing Officer (AO) under section 69A of the Income Tax Act. The AO had made this addition on the grounds that the assessee could not satisfactorily explain the source of cash found during a search operation on 15.11.2018. The CIT (A) deleted Rs. 6,98,473/- but sustained the balance amount of Rs. 9,05,120/-.

Issue 2: Explanation of Cash Found During Search

During the search, cash amounting to Rs. 16,03,550/- was found. The assessee explained that this cash was from the personal books of the directors and their family members. However, the AO was not satisfied with this explanation, noting inconsistencies and lack of substantiation in the records provided by the assessee. The AO added the entire amount as unexplained cash under section 69A.

The Tribunal noted that the AO's addition was primarily based on the statement of the company's Cash Assistant, who could not explain the discrepancy. The Tribunal also observed that it was unclear whether the statements of the directors were recorded or if they were questioned about the cash during the search or assessment proceedings.

The Tribunal referred to a similar case (Ankit Biscuits (P) Ltd) where the issue was remanded to the AO to verify the statements of the directors. Following this precedent, the Tribunal restored the issue to the AO with directions to adjudicate afresh, considering the statements of the directors and the additional income declaration of Rs. 100 crores by Mr. Ramesh Agarwal.

Conclusion:

The Tribunal allowed the appeal for statistical purposes, directing the AO to re-examine the issue, providing the assessee an opportunity to be heard, and to decide the issue based on facts and law. The order was pronounced on 25th April 2023.