2019 (4) TMI 404 - AT - Income Tax

Admission of the additional ground - cash found in search - year of taxability - search action on the bank locker of the assessee was carried out on 09/09/2010 - addition in AY 2009-10 - Whether any addition for the unexplained cash found could be made in the assessment year corresponding to the previous year in, which the locker was searched or other year - HELD THAT - There is no dispute as far as date of search on the locker owned by the assessee is concerned, which is 09/09/2010. The date of search falls in previous year 2010-11 and the corresponding assessment year is 2011-12. There is nothing on record to show that this cash found was out of any income earned by the assessee in the year under consideration. In absence of any explanation in respect of the cash found during the previous year corresponding to the assessment year 2011-12, the addition should have been made only in the assessment 2011-12 and not in the assessment year under consideration. In view of the settled position of law on this issue, we set aside the order of the lower authorities and direct the Assessing Officer to delete the addition in the year under consideration. The additional ground raised by the assessee is accordingly allowed.

Summary

Issues:
1. Challenge against addition of unexplained investment in cash
2. Validity of adding cash seized from locker in a different assessment year

Analysis:
1. The appeal challenged the addition of ?6,92,665 for unexplained investment in cash for the assessment year 2009-10. The assessee contended that the Commissioner of Income Tax (Appeals) erred in confirming the addition without appreciating the explanation and facts provided regarding the source of the cash. The Assessing Officer had added the cash seized from the locker of the Assessee, but the appellant argued that the cash pertained to the assessment year 2011-12, not 2009-10. The appellant sought to admit additional grounds based on legal issues, which were allowed following the Supreme Court's decision in NTPC Vs. CIT.

2. The search and seizure operation revealed cash in the locker of the assessee, leading to the addition of ?6,92,665 as undisclosed income. The Assessing Officer issued a notice under section 153A for the assessment year 2009-10, but the cash found was related to the assessment year 2011-12. The appellant argued that any addition for cash found in the locker should correspond to the assessment year in which the search took place. The Tribunal noted that the search occurred in the previous year 2010-11, making the addition for the cash found in the locker inappropriate for the assessment year 2009-10. As per legal principles, the addition should have been made in the assessment year 2011-12. Consequently, the Tribunal directed the Assessing Officer to delete the addition for the year under consideration, allowing the additional ground raised by the assessee.

In conclusion, the Tribunal allowed the appeal, setting aside the addition of unexplained cash investment for the assessment year 2009-10 due to the incorrect assessment year for the cash seized from the locker. The judgment emphasized the importance of aligning additions with the correct assessment year based on the timing of the search and seizure operations.