2023 (10) TMI 694 - AT - Income Tax

Cash found during search from the residential premises of the appellant - unexplained money u/s 69A - rejecting the explanation that the said amount of cash belonged to family members of the assessee and of the company Easy Trip Planners Pvt. Ltd., of which the assessee is a director and some cash collected from agents and clients for the company - HELD THAT - The details of cash in hand as on 10.08.2017 as per the books of accounts of the company and cash in hand as per the statement of affairs filed by the family members. Hence, the argument of the ld. CIT(A) that if at all the cash is kept at residence, then the same must be kept separately and not mixed with cash of the family members cannot be accepted. Estimation of expenses is also without any basis. Hence the argument put forth by the CIT(A) that cash do not belong to the company and some expenses must have been incurred is not tenable and hence rejected. Owing to the availability of the cash in the accepted books of accounts of the company as well as accepted statement affairs filed by the family members, we hold that no further addition is required on account of cash found at the premises. Appeal of the assessee allowed.

Issues involved:
The issues involved in this case are related to the assessment of unexplained cash found during a search and seizure operation, the justification of addition of cash under section 69A of the Income Tax Act, 1961, and the treatment of cash belonging to family members and a company.

Assessment of Unexplained Cash:
During a search and seizure operation, cash amounting to Rs. 48,66,000 was found from the residential premises of the assessee. The Assessing Officer (AO) treated a portion of this amount as unexplained money under section 69A of the Income Tax Act, as the assessee failed to provide satisfactory explanations and documents regarding the source of the cash. The AO observed discrepancies in the statements made by the assessee during the search operation and the assessment proceedings, leading to the disallowance of Rs. 43,86,000 as unexplained money.

Decision of the CIT(A):
The Commissioner of Income Tax (Appeals) [CIT(A)] upheld a partial addition of Rs. 18,95,859 out of the total disallowed amount. The CIT(A) considered the cash in hand available with family members as on 31.03.2017 and estimated cash expenses incurred from April 2017 to August 2017. The CIT(A) calculated the cash in hand available with family members as Rs. 29,70,141 as of 10.08.2017, thereby restricting the addition to Rs. 18,95,859.

Arguments Before the Tribunal:
The assessee appealed against the partial addition of Rs. 18,95,859 before the Appellate Tribunal. The assessee reiterated that the cash found during the search belonged to family members as well as the company, Easy Trip Planners Pvt. Ltd. The assessee provided details of cash held by family members and the company, along with explanations regarding the cash management practices of the company, including separate divisions and cash transactions.

Tribunal's Decision:
After hearing arguments from both parties, the Tribunal disagreed with the CIT(A)'s estimation of expenses and the reasoning behind the partial addition. The Tribunal found that the cash found during the search was adequately explained through the cash balances in the books of accounts of the company and the statement of affairs filed by family members. The Tribunal held that no further addition was necessary, as the cash was satisfactorily accounted for in the company's records and the family members' statements.

Conclusion:
Ultimately, the Tribunal allowed the appeal of the assessee, concluding that the addition of Rs. 18,95,859 was not justified given the satisfactory explanations and documentation provided regarding the source and ownership of the cash found during the search operation.

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