2023 (11) TMI 1297 - AT - Income Tax

Unexplained cash income - additional incriminating material in the form of diary in which details of various cash payment mentioned was found during the course of search on assessee - CIT(A) deleted addition - HELD THAT - Admittedly, it is not a case in which the assessee was found to be in possession of the cash of Rs. 1.45 crore in search operation. Therefore, it cannot be presumed that the assessee was the owner of the said cash. To attract the provisions of section 69A sine qua non is ownership of money etc. which has not been recorded in the books of account. The Ld. AO has made only presumption that the said cash was available with the assessee without bringing on record any material in support thereof. Not only that he went a step further and presumed that the assessee paid the said cash to his brother H.K. Arora only on the basis of conjecture and surmises. The assessee offered explanation for the noting made duly supported by the documentary evidence which has been rejected by the Ld. AO in total disregard of all the facts, circumstances and the evidence in the case as ordained by the CBDT in its Circular (supra). To apply the provisions of section 69A by the Ld. AO without satisfying the conditions precedent is not sustainable. On the facts and in the circumstances of the assessee s case, we have no hesitation in holding that the Ld. CIT(A) was perfectly justified in deleting the impugned addition. In no way his order can be branded as perverse, erroneous and not tenable on facts and in law. Appeal of the Revenue is dismissed.

Summary

Issues Involved:

1. Whether the CIT(A) was justified in deleting the addition of Rs. 1,45,00,000/- on account of unexplained cash income.
2. Whether the order of the CIT(A) is perverse, erroneous, and not tenable on facts and in law.
3. Whether the grounds of appeal are without prejudice to each other.

Detailed Analysis:

1. Justification of Deleting the Addition of Rs. 1,45,00,000/-:

The core issue revolves around the addition of Rs. 1,45,00,000/- made by the Assessing Officer (AO) under section 69A of the Income Tax Act, 1961, which was subsequently deleted by the CIT(A). The addition was based on a diary found during a search operation at the assessee's premises. The AO interpreted the notation "1.45 cash" in the diary as actual cash payment made by the assessee to an individual named HKA. However, the assessee contended that the notation was part of a rough fund planning by his brother, who managed the family's real estate business. The CIT(A) found that the AO had erred by relying on rough notations without corroborating evidence or considering the context provided by the assessee. The CIT(A) noted that the AO did not substantiate the claim with evidence of actual payment or ownership of the cash by the assessee, thus justifying the deletion of the addition.

2. Perverse, Erroneous, and Not Tenable Order:

The Revenue argued that the CIT(A)'s order was perverse and erroneous. However, the Tribunal found that the AO's conclusions were based on assumptions and lacked tangible evidence. The CIT(A) highlighted that the AO did not reference the bank statements or any corroborative material to support the claim that the notations represented actual transactions. The Tribunal agreed with the CIT(A) that the AO failed to demonstrate how the figures in the diary were linked to the assessee's actual financial activities, rendering the CIT(A)'s decision neither perverse nor erroneous.

3. Grounds of Appeal Without Prejudice:

The Tribunal noted that the grounds of appeal were presented without prejudice to each other, which is a common legal practice allowing each ground to be considered independently. The Tribunal focused on the substantive issues raised and found that the Revenue's appeal lacked merit. The Tribunal emphasized that the AO's reliance on a non-speaking document without corroborative material was insufficient to uphold the addition under section 69A.

Conclusion:

The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 1,45,00,000/-, concluding that the AO's findings were based on conjecture and lacked evidentiary support. The Tribunal emphasized the necessity of concrete evidence to substantiate claims of unexplained income under section 69A. The appeal by the Revenue was dismissed, affirming that the CIT(A)'s order was justified and legally sound.