2022 (9) TMI 74 - AT - Income Tax

Addition u/s 69A - unexplained money on account of cash found at the residence and from the bank lockers of the appellant during the course of search action u/s 132 - HELD THAT - The provisions of section 132(4) and 132(4A) of the Act has to be read with other circumstantial situations and submissions of the assessee. The statute casts an obligation on the assessee to prove otherwise. As reproduced above in para-7, the amount of cash found at assessee s residence and locker has already been disclosed and considered in the cash flow statement of the company as opening balance in the name of assessee, same cannot be added back to the income of the assessee/appellant. The cash flow statement which has been produced by the company and relied upon by the Department has a very specific reference of the amount found at the residence and locker of the assessee. Ignoring this fact will tantamount to double addition of the same amount. A document has to be relied upon in to-to and piece meal reference is not permissible. If cash flow statement has been accepted in its totality by the Department in the case of company, no addition in the hands of assessee can be made. Statement made under section 132 and cash found with reference to section 132(4A) certainly make assessee rival for taxation but this liability of assessee has to be evaluated with other circumstantial evidences. If assessee is able to prove otherwise, certainly he will get rescue from the provisions of section 132(4) and 132(4A) of the Act. In that situation onus will be shifted on the Revenue to prove otherwise to make assessee liable for tax. We set-aside the additions made by the AO and restore the matter back to the file of AO, with a direction to verify assessee s submission with specific reference to the cash flow statement filed by company and relied upon by the assessee. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
- Addition of unexplained money under section 69A of the IT Act, 1961 based on cash found during a search action
- Dispute regarding ownership of the cash found at the residence and bank lockers of the appellant
- Interpretation of sections 132(4) and 132(4A) of the Act in relation to the burden of proof on the assessee

Analysis:
1. The appellant, a director in a group of companies, had cash amounting to Rs. 3,82,84,000/- found during a search action under section 132 of the Act. The appellant initially admitted ownership of the cash but later claimed it belonged to one of the companies he directed. The Assessing Officer (AO) included this amount in the total income for the Assessment Year (AY) 2015-16. The Ld. CIT (A) upheld this addition, leading to the current appeal.

2. The Ld. CIT (A) heavily relied on the appellant's statement under section 132(4) of the Act, which is admissible as evidence. Sections 132(4) and 132(4A) place a burden on the assessee to prove ownership of cash found during a search. The appellant argued that the cash belonged to the company, supported by various documents and submissions.

3. The appellant presented evidence, including a cash flow statement of the company, to support the claim that the cash found was part of the company's funds. The Ld. CIT (A) acknowledged the submissions but questioned the evidentiary value of post-search documents. The appellant cited legal precedents to argue against double taxation of the same amount.

4. The Tribunal found merit in the appellant's submissions and set aside the additions made by the AO. The matter was remanded to the AO to verify the appellant's claims in light of the cash flow statement filed by the company. The Tribunal emphasized that if the appellant's version is substantiated, relief should be provided, or else the earlier assessment can be restored.

5. Ultimately, the appeal was allowed for statistical purposes, highlighting the importance of evaluating all evidence and circumstances to determine the liability for taxation. The Tribunal's decision focused on ensuring a fair assessment based on the specific facts and legal provisions involved.

6. The judgment demonstrates the significance of providing substantial evidence and legal arguments to support claims in tax disputes, especially concerning the ownership and taxation of assets found during search actions under the Income Tax Act. The burden of proof lies with the assessee, but a thorough analysis of the circumstances and relevant documents can lead to a favorable outcome in appeals before the Tribunal.