2000 (6) TMI 139 - AT - Income Tax

Summary

Issues:
Appeal against deletion of addition of unexplained income of Rs. 3,21,000.

Analysis:
The appeal was filed by the Revenue against the deletion of an addition of Rs. 3,21,000 made on account of unexplained income by the CIT(A). The facts of the case revolved around the apprehension of the assessee by the police with Rs. 3,21,000 in cash, leading to the initiation of action under section 132 of the Income Tax Act. The assessee claimed that the amount belonged to the firm he worked for and was meant for purchasing silver, which could not be done due to higher prevailing rates. The AO considered this explanation unreasonable and held the amount as unexplained income. However, the CIT(A) accepted the contention that the cash belonged to the firm, as evidenced by entries in the cash book and a letter mentioning the amount given to the assessee. The CIT(A) deleted the addition based on the verification during a survey under section 133A, where it was found that the cash balance indicated no change to explain the acquisition.

The Revenue argued that the entire story was fabricated, claiming contradictions in the statements of the assessee and questioning the legitimacy of the ownership of the cash by the firm. They pointed out discrepancies in statements and lack of sales recorded in the books of accounts during a specific period. On the other hand, the authorized representative of the assessee relied on statements recorded under various sections, emphasizing the presence of cash and a letter with the assessee during the police apprehension. They highlighted the survey under section 133A conducted on the same day, which identified the cash book entries supporting the ownership claim. The authorized representative contended that the CIT(A) rightfully deleted the addition, as the assessee had discharged the burden of proof under section 69 and no evidence was presented by the AO to refute the claim.

After hearing both parties and reviewing the evidence, the Tribunal found that the assessee had no substantial means or income apart from salary. The presence of the letter with the cash at the time of apprehension, along with the recorded cash in the firm's books during the survey under section 132, indicated that the amount belonged to the firm and not the assessee. The Tribunal upheld the CIT(A)'s decision, deeming the conclusions drawn as reasonable and declined to interfere with the order. Consequently, the appeal filed by the Revenue was dismissed.