The assessee alone can decide whether to keep cash in locker or deposit in bank FDR. ITAT deleted addition made by AO u/s 69A rejecting explanation of assessee
ABCAUS Case Law Citation:
ABCAUS 2811 (2019) (03) ITAT
Important Case Laws Cited/relied upon by the parties
Rajendra Prasad Subhash Chand Vs. UOI 344 ITR 533
ACIT Vs. B. Rajashekharan Nair 329 ITR 123,
This assessee had challenged order of the CIT(A) in upholding the addition u/s 69A of the Income Tax Act, 1961 (the Act) made by the Assessing Officer (AO) for cash found in the locker.
The assessee was an individual. A Search action was carried out u/s 132 of the Act in the business premises of the assessee. The assessee was an employee of a business Group having salary income.
Subsequent to the search, a notice u/s 153A of the Act was issued to the assessee to file returns of income. In response to the notice u/s 153A of the Act. The assessee filed returns of income and regular return was filed for relevant assessment year.
The AO noted that during the course of search and seizure operations substantial cash was found in two bank lockers in the name of the assessee and his wife. The AO asked the assessee to explain the sources of the amount found in the lockers during the course of search.
It was submitted by the assessee by written reply that the cash found in the bank locker was savings of the assessee and his spouse retained for assessee’s daughter’s marriage. It was explained that the said amounts were deposited in the locker out of the savings of his wife and himself in more than 5 years.
The AO however rejected the explanation given by the assessee as not acceptable on the ground that at the time of search, assessee had not reconciled the cash found with the books of accounts and the explanation now given stating that the cash was past savings of his families was self-serving and afterthought.
The Assessing Officer (AO) opined that if there would have been cash balance in cash book as on date of search, the assessee could have explained the same at that time only but the assessee had not satisfactorily explained before the search party in respect of cash found in the locker.
Accordingly, the AO assessed entire cash u/s 69A of the Act and completed the assessment.
On appeal, the CIT(A) confirmed the order of the AO by observing that the explanation given by the assessee was not convincing for the reason that a person would go, operate the locker and keep cash there from time to time, whereas depositing cash in the bank or making a FDR is a better and easier option which earns interest also.
The Tribunal noted that in the course of search, in the statement was recorded u/s 132(4) of the Act, the assessee had submitted that the amount kept in the locker was past savings of the assessee and his wife for the purpose of performing his daughter’s marriage. Even during the course of the assessment proceedings also, the assessee submitted before the AO the very same facts.
The Tribunal further noted that the assessee before the AO had submitted that he and his wife had filed return of income for last five years by declaring income enough to cover those savings out of which the cash was deposited in the locker.
The Tribunal observed that the AO after considering the explanation of the assessee was of the opinion that the assessee had not given any satisfactory explanation for keeping the amount in the locker and the CIT(A) confirmed the order of the AO and rejected the explanation of the assessee on the ground that the assessee should have deposited it in the bank instead of keeping it in the locker, if at all he deposited in the bank should have earned the interest, therefore, his explanation was rejected.
The Tribunal also noted that the CIT(A) simply rejected the explanation given by the assessee without giving any proper reasons when the assessee had filed returns of income which were accepted. His wife had also filed returns of income and the same were also accepted and the assessee had submitted that out of savings the amounts are kept in the locker.
The Tribunal opined that the assessee had fully explained the sources and he had discharged the burden casted upon him.
The Tribunal stated that the AO without giving any basis, rejected the explanation of the assessee which was not correct. Regarding the observation made by the CIT(A), the Tribunal opined that the assessee alone is the person who has to decide himself whether to keep the money in the locker or deposit in the bank.
The Tribunal opined that the assessee had decided to keep money in the locker to perform his daughter’s marriage and explained the sources. In view of the above, the order passed by CIT(A) had to be reversed.
Accordingly, the order passed by the CIT(A) was reversed and the appeal was allowed.