2023 (9) TMI 1032 - AT - Income Tax

Addition of unexplained cash u/s. 69 - Whether the addition u/s. 69 is sustainable particularly when both the parties, the appellant and M/s. Eureka Builders has denied such cash payment made by the appellant - HELD THAT - Neither the legal notice issued to the appellant by the said M/s. Eureka Builders has earned any credence from the authorities which ought to have been considered in its proper perspective in view of the particular fact that the creditor itself is denying of receiving the loan of Rs. 50 Lakhs in cash from the appellant. We also find that the denial on the part of M/s. Eureka Builders has been considered by the Ld.CIT(A) to this effect that such might have been for the specific purpose of making its case stronger as the matter was under dispute. This observation, according to us, is merely on surmise and conjectures. The authorities below ought to have considered the entire aspect of the matter is its proper perspective that too on the basis of the documents placed before them. Whereas, in this particular case the documents mainly the legal notices were not been considered in its true sense. Neither we find, any other iota of evidence in support of such observation made by authorities below against the appellant so as to substantiate the addition made u/s. 69 to the impugned amount - Hence we do not find any cogent reason in making such addition particularly when both the parties in dispute are denying the repayment of loan of Rs. 50 Lakhs by cash. Decided in favour of assessee.

Summary

Issues:
The judgment involves the issue of addition of Rs. 50 Lakhs on account of unexplained cash u/s. 69 of the Income Tax Act, 1961 for A.Y. 2011-12.

Summary:
The appellant, a trading-retailers company, filed its return of income for A.Y. 2011-12. Subsequently, a search u/s. 132 of the Act was conducted in related cases, leading to the discovery of incriminating documents regarding a cash payment of Rs. 50 Lakhs to M/s. Eureka Builders. The appellant denied making this payment, stating it was a tactic to rebut a legal notice for recovery. The Ld.AO added the amount to the total income, upheld by the Ld.CIT(A), prompting the appeal.

The appellant contended that no cash payment was made, supported by seized materials and legal notices from M/s. Eureka Builders. They argued that the amount was shown as payable in their books due to litigation. The Ld.Counsel emphasized that the addition was based on a fabricated entry and urged for its deletion.

The Ld.DR supported the addition, citing the entry in the appellant's accounts as proof of cash payment. However, the Tribunal found that both parties denied the payment, and the legal notices contradicted the assertion of actual cash transfer. The authorities failed to consider these crucial documents, leading to the deletion of the addition as unsupported by evidence.

Ultimately, the Tribunal allowed the appeal, ruling the addition of Rs. 50 Lakhs as unexplained cash to be unsustainable due to lack of credible evidence.