To attract provisions of section 69A sine qua non is “ownership” of money etc. which is not recorded in the books of account not mere presumption- ITAT
ABCAUS Case Law Citation:
ABCAUS 3819 (2023) (11) ITAT
Important Case Laws relied upon by parties:
Common cause v. UOI 77 taxmann.com 245 (SC)
State v. Ganeswara AIR 1963 SC 1850
CIT vs. Anil Bhalla (2010) 322 ITR 191 (Del)
CIT, Delhi (Central)-II v D K Gupta (2008) 174 Taxman 476 (Del)
CIT vs. Atam Valves (P) Ltd. (2009) 184 Taxman 6 (P&H)
Central Bureau of Investigation v. V.C. Shukla (1998) 3SCC 410
In the instant case, the appeal was filed by the Revenue / Income Tax Department against the order passed by the CIT(A) in deleting the addition on account of unexplained cash income.
A search was conducted under section 132 of the Income Tax Act, 1961 (the Act) on the residential premises of the assessee who was a practicing Chartered Accountant.
Subsequently, the assessee filed his return of income which was processed under section 143(1) of the Act.
Consequent to search, notice under section 153A of the Act was issued in response to which the assessee filed another return declaring the same income as in original return of income.
During search a diary was found and seized. The diary contained details of various transactions. The jottings on this page had also details of cash to one name written in short alpha code amounting to Rs. 1.45 crore.
The Assessing Officer (“AO”) asked the assessee to explain source of said cash paid. The assessee replied saying that it contained rough working of fund planning by his brother who was handling the real estate business of the family and it did not indicate any receipt or payment of any amount to any person.
With respect to the amount, it was mentioned that cash of Rs. 1.45 crore meant the liquid funds required for real estate business in the next two months. It was further stated that against said estimation, payments have been made to various parties subsequently. In support, assessee submitted copy of ledger account/bank statements and name of persons to whom payments had been made.
However, the explanation of the assessee was not accepted by the AO. He held that Rs. 1.45 crores was actual cash arranged / paid by the assessee which was available with him. He therefore passed assessment order passed under section 153A/143(3) of the Act and made an addition under section 69A of the Act to the income of the assessee and charged higher tax on this income under section 115BBE of the Act.
On appeal by the assessee, the CIT(A) deleted the addition.
The Tribunal noted that the CIT(A) had observed that the Assessing Officer had not dealt with the statement of the appellant recorded the course of search which had an evidentiary value under the law. There was nothing in the assessment order to substantiate that the assessee had actually made the alleged payments. Further, the
AO had erred in not placing any evidence on record to prove as to how the amount alleged to have been paid i.e manner of payment, what was the source of the said payment and how the said sum was utilised. Further, the AO not dealt with how they were linked to the appellant. The assesse was a practicing chartered accountant earning income from practice and other sources. The AO in its order had not stated as to how the said figures of taxes, instalments and other names are related to the appellant.
The CIT(A) had also criticized the casual approach of the AO in stating that the payments noted on the sheet were actual payment and not in the nature of any planning
The Tribunal observed that Section 69A of the Act had been brought on the Statute Book by the Finance Act, 1964 w.e.f. 1.4.1964. The effect and scope of this provision had been explained by the CBDT in its Circular No. 20, dated 7th July, 1964.
The Tribunal further observed that it was not a case in which the assessee was found to be in possession of the cash of Rs. 1.45 crore in search operation. Therefore, it cannot be presumed that the assessee was the owner of the said cash. To attract the provisions of section 69A sine qua non is “ownership” of money etc. which has not been recorded in the books of account.
The AO had made only presumption that the said cash was ‘available with the assessee’ without bringing on record any material in support thereof. Not only that he went a step further and presumed that the assessee paid the said cash to his brother only on the basis of conjecture and surmises.
The Tribunal noted that the assessee offered explanation duly supported by the documentary evidence which was rejected by the AO in total disregard of all the facts, circumstances and the evidence in the case as ordained by the CBDT in its Circular.
The Tribunal opined that to apply the provisions of section 69A by the AO without satisfying the conditions precedent is not sustainable.
As a result the Tribunal dismissed the appeal of the Income Tax Department as devoid of any substance and merit.
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