2024 (2) TMI 886 - AT - Income Tax

Unexplained money u/s 69A r.w.s. 115BBE - Cash seized in search - HELD THAT - As cash has been transferred prior to the date of search on 29.05.2018, the same was only recorded with a delay of 4 days in the books of respective branches. Either way, the company as a whole did have sufficient cash balance to explain the seized cash of Rs. 13 lakhs on 29.05.2018. We find that there was no negative cash balance on any given day during the year. Admittedly, the cash book submitted by the assessee has not been rejected by the revenue. Hence, there is absolutely no case for the revenue to treat the cash seized as unexplained money warranting addition u/s 69A of the Act. accordingly, the grounds raised by the assessee are allowed.

Summary

Issues involved:
The main issue in this case is whether the cash seized of Rs. 13 lakhs should be treated as unexplained money under section 69A read with Section 115BBE of the Income-tax Act, 1961.

Comprehensive Details:

Issue 1: Treatment of seized cash as unexplained money

The appeal in ITA No.1958/Del/2023 for AY 2019-20 pertains to the treatment of cash seized of Rs. 13 lakhs as unexplained money. The search and seizure action under section 132 of the Act was conducted in "Ritika Pvt. Ltd" group, where cash amounting to Rs. 21,26,180/- was found, out of which Rs. 13 lakhs was seized. The assessee claimed that the cash was transferred from the Kolkata office to the Gurgaon office as an inter-branch transfer. The Assessing Officer treated the seized cash as unexplained money under section 69A read with Section 115BBE of the Act, which was upheld by the ld CIT(A) due to the inability of the assessee to explain the movement of cash from Kolkata to Gurgaon.

Issue 2: Submission of cash reconciliation statement

The assessee provided a cash reconciliation statement showing the balance of cash as per books and as found during the search. The statement indicated that the cash balance remained the same after the inter-branch transfer of Rs. 13 lakhs from Kolkata to Gurgaon. The cash transfer was duly recorded in the books of both branches, with entries made on 02.06.2018, even though the transfer occurred before the search on 29.05.2018. The company had sufficient cash balance to explain the seized cash, and the cash book submitted by the assessee was not rejected by the revenue.

Final Decision:

The ITAT Delhi allowed the appeal of the assessee, emphasizing that there was no negative cash balance on any given day during the year, and the cash seized of Rs. 13 lakhs should not be treated as unexplained money. The grounds raised by the assessee were accepted, and the appeal was allowed.

This summary provides a detailed overview of the judgment, focusing on the treatment of the seized cash as unexplained money and the submission of the cash reconciliation statement by the assessee.