2018 (8) TMI 1254 - AT - Income Tax

Additions u/s 68 - unexplained cash found in the suitcase while travelling in train - assumption and presumption - Held that - The authorities have acted merely on suspicion. On the contrary, the father-in-law of the assessee has categorically owned up the money. The authorities below without appreciating the evidences submitted by the father-in-law of the assessee, proceeded to make addition and confirmed the same. The Ld. Counsel for the assessee has taken us through various documents demonstrating that wife of the assessee was in process of purchasing a property. It is also on record that father-in-law of the assessee was having sufficient money to give such gift to his daughter. - Additions so made deleted - Decided in favor of assessee.

Summary

Issues:
1. Addition of cash under section 68 of the Income Tax Act, 1961.

Analysis:
The appeal was against the addition of cash under section 68 of the Income Tax Act, 1961. The assessee was found in possession of a significant sum during a train search. The assessing officer did not accept the explanation that the cash belonged to the father-in-law and added it to the assessee's income. The Commissioner of Income Tax (Appeals) upheld the addition. The assessee argued that the cash was a gift from the wife's family, supported by various documents. The appellant also presented evidence of land ownership and other financial transactions to justify the source of the cash. The authorities acted on suspicion without adequately considering the evidence provided. The father-in-law admitted to owning the money, and documents showed the wife's intention to purchase property. The Tribunal concluded that the assessing officer and CIT(A) did not properly evaluate the explanation and based their decision on suspicion. Consequently, the addition was directed to be deleted, and the appeal was allowed.

This case highlights the importance of thoroughly evaluating evidence and explanations provided by taxpayers before making additions based solely on suspicion. The Tribunal emphasized the need for authorities to consider all relevant facts and circumstances to make informed decisions in tax matters.