2023 (10) TMI 84 - AT - Income Tax

Addition u/s 69A r.w.s. 115BBE - Cash found from the assessee by ADCP(Narcotics), Ludhiana and later on seized by the Department - unexplained source of cash - assessee by way of alternate contention submitted that where the AO has accepted the assessee s return of income disclosing income and taking the same into consideration and tax filings for earlier years, the source of cash so found and seized stand justified in terms of present and past savings of the assessee - HELD THAT - As there is no contradiction in the alternate submission so made by the assessee before the Ld. CIT(A). Once the AO has recorded a finding that the cash so seized belongs to the assessee and not to any third person and rejected the initial explanation so furnished by the assessee, then in such a scenario, the onus shifts back on the assessee to explain the source of such cash found and seized from the possession of the assessee. In such a scenario, where the assessee came forward with an alternate submission that cash so found and seized is from his past earnings as duly reflected in his tax filings as accepted by the tax authorities and past savings which have been accumulated therefrom, the said explanation has to be examined based on material available on record and cannot be summarily dismissed as has been done in the present case by the CIT(A). The tax filings for the year under consideration as well as for the earlier years are very much part of record and as far as claim of past savings and availability of cash in hand, the AR has submitted the details and which can be verified by the authorities. Therefore, we agree with the submissions of the AR that the alternate contention was not rightly appreciated by the Ld. CIT(A) and we deem it appropriate to set-aside the matter to the file of the CIT(A) to examine the alternate contention a fresh as per law after providing reasonable opportunity to the assessee. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Natural Justice and Sufficient Opportunity
2. Addition under Section 69A without Inquiry
3. Acceptance of Past Returns and Availability of Cash

Summary:

1. Natural Justice and Sufficient Opportunity:
The assessee contended that the assessment was against natural justice as sufficient opportunity was not provided. The Tribunal noted that the assessee was given multiple opportunities to submit evidence but failed to do so. The assessee argued that the statement of a key witness was not confronted to him timely, which hindered his ability to produce evidence. The Tribunal found that the Ld. CIT(A) did not address these contentions adequately and remanded the matter for re-examination.

2. Addition under Section 69A without Inquiry:
The assessee argued that the addition of Rs. 11,65,000/- under Section 69A was made without proper inquiry and ignoring circumstantial evidence. The AO had requisitioned and seized the amount based on information from ADCP (Narcotics), Ludhiana. The assessee claimed the money belonged to third parties, but the AO found the story concocted and rejected it. The Tribunal noted that the AO's findings were based on the principle of human probabilities and upheld the addition initially but remanded for further examination.

3. Acceptance of Past Returns and Availability of Cash:
The assessee claimed that the cash was from his past savings, as his income for the last six years was accepted by the AO. The Tribunal noted that the assessee provided details of past income and savings, which were not adequately considered by the Ld. CIT(A). The Tribunal found no contradiction in the alternate submission regarding past savings and remanded the matter for fresh examination of this contention by the Ld. CIT(A).

Conclusion:
The Tribunal allowed the appeal for statistical purposes, setting aside the matter to the file of the Ld. CIT(A) to re-examine the alternate contention of the assessee regarding the source of cash based on past savings and tax filings, after providing reasonable opportunity to the assessee. The order was pronounced in the open Court on 04/07/2023.