2024 (11) TMI 535 - HC - Income Tax

Unexplained money u/s 69A rws 115BBE - Cash amount recovered during the raid - source and ownership of the cash amount recovered - HELD THAT - The assessee s explanation for the cash in hand is far-fetched. There is no credible explanation as to the cash found on the date of the search. According to the assessee, part of the cash found in the premises during the search operation conducted on 31.01.2018 was, in fact, withdrawn five to six years earlier during the FYs 2012-13 and 2013-14. It is also relevant to note that during FY 2014-15, the household drawing (expenses) was Rs. 2,60,000/- and the opening cash in hand as on 01.04.2014 is reflected as Rs. 31,37,000/-. Yet, Rs. 1,10,000/- was withdrawn from the bank during the said period. Clearly, there would have been no reason to withdraw this amount if the assessee s mother had Rs. 31,37,000/- in her possession as claimed. It is apparent from the above that the cash found in the premises cannot be traced to the bank accounts. The assessee has to travel six years prior to the date of the search for explaining cash withdrawal, without any credible explanation for the same. As fot the petitioner s wife is concerned, the petitioner has not produced her bank accounts to establish the source of the said funds (Rs. 15,84,000/-), which the assessee claimed belonged to his wife. As observed above, the question whether the source of the cash has been explained is, essentially, a question of fact. In the given facts, we are also unable to accept that the findings of the learned ITAT are perverse. No such question of law has been projected by the assessee as well. Decided against assessee.

Summary

Issues Involved:

1. Legitimacy of the addition of Rs. 37,20,100/- as unexplained income under Section 69A read with Section 115BBE of the Income Tax Act, 1961.
2. Alleged procedural lapses in the assessment process, including the absence of a Document Identification Number (DIN).
3. Adequacy of evidence provided to substantiate the source of the cash seized.

Issue-Wise Analysis:

1. Legitimacy of the Addition as Unexplained Income:

The primary issue revolves around the addition of Rs. 37,20,100/- to the assessee's income as unexplained money under Section 69A read with Section 115BBE of the Income Tax Act, 1961. The Assessing Officer (AO) concluded that the assessee failed to substantiate the source of the cash seized during a search operation, despite being given multiple opportunities. The assessee claimed that portions of the cash belonged to his mother and wife, but this explanation was rejected by both the Commissioner of Income Tax (Appeals) [CIT (A)] and the Income Tax Appellate Tribunal (ITAT) due to lack of supporting evidence. The CIT (A) emphasized that the income tax returns of the family members did not justify the source of the cash, and self-serving affidavits were insufficient to explain the cash in their hands. The ITAT upheld these findings, noting the absence of convincing evidence such as bank withdrawals or disclosed earnings to support the claim.

2. Alleged Procedural Lapses:

The assessee argued that the assessment order was void ab initio due to the absence of a Document Identification Number (DIN), as mandated by CBDT Circular No. 12/2019. However, the court found no merit in this contention, noting that the presence or absence of a DIN is a factual question, not a substantial question of law. Furthermore, this issue was not raised before the CIT (A) or ITAT, weakening the assessee's position.

3. Adequacy of Evidence to Substantiate Cash Source:

The assessee contended that the cash found during the search was duly accounted for and supported by confirmations and affidavits. However, the court observed that the cash flow statements provided did not credibly explain the source of the cash. The bank statements and cash flow analysis for the assessee's mother showed inconsistencies, such as unexplained initial cash deposits and unnecessary withdrawals despite high cash balances. The court found the explanation that cash was retained over several years without credible justification to be far-fetched. Similarly, the assessee failed to produce bank statements for his wife to substantiate the claim that Rs. 15,84,000/- belonged to her. The court concluded that the source of the cash remained unexplained, affirming the findings of the ITAT and CIT (A).

Conclusion:

The court dismissed the appeal, concluding that no substantial question of law arose from the case. The findings of the ITAT were upheld as they were based on factual determinations, and the explanations provided by the assessee were deemed insufficient to overturn the assessment of the cash as unexplained income.