Cash found during search belonging to parents- ITAT deleted the addition on account of cash belonging to the parents of the assessee found during search
ABCAUS Case Law Citation:
ABCAUS 2724 (2019) (01) ITAT
The assessee was an individual and search and seizure operation u/s 132 of the income tax act 1961 (the Act) were conducted at the business and residential premises of the assessee.
During the course of search cash was found at the residence of the assessee. Out of the above cash found an addition was made to the total income of the assessee as unexplained cash vide order passed u/s 143 (3) of the Act.
The assessee preferred an appeal before the learned CIT-A.
The assessee explained that the cash belonged to the assessee’s parents, i.e. father and the mother of the assessee which was lying in the premises and was kept by the parents as they were of old age to meet unforeseen exigencies.
The assessee had further explained that the amount had been generated out of the past saving of the mother of the assessee who was a 74 years old person and the father of the assessee was also 80 years old person.
It was further stated that during the course of search in the statement also in answer to question, the assessee stated that these cash belonged to the parents of the assessee. The assessee also submitted that they were assessed to the income tax with the same Assessing Officer (AO) and their case was also reopened by the AO under section 153A of the income tax act.
However the CIT-A rejected the explanation of the assessee and stated that as a legal hair of the father of the assessee the liability to discharge was also based with the appellant and therefore he confirmed the addition on account of cash belonging to the father of the assessee. With respect to the cash belonging to the mother of the assessee, it was held by him that no return of income was filed for the year consideration and therefore the cash found in the course of search was rightly was of the appellant.
The assessee was aggrieved with the order of the Commissioner of income tax (Appeals) and preferred an appeal before the Tribunal.
The assessee submitted that when in their own assessment proceedings the explanation was given by the parents of the assessee, it was accepted and addition has not been made. Therefore there was no reason that such addition is made in the hands of the assessee.
The Tribunal observed that both the parents of the assessee during the course of their assessment proceedings had explained before their AO that cash belonged to them. In the assessment order, no addition was made by the assessing officer in their hands when they have owned it. Also, the assessing officer of the parent of the assessee and the assessee were the same.
The Tribunal, in view of the age of the parents of the assessee, looking at the family status of the assessee, income disclosed by the assessee, fact that father of the assessee was assessed to income tax , the queries raised by the assessing officer of the parents of the assessee in their assessment proceedings and accepted by the assessing officer without making any addition in the hands, stated that there was no merit in confirming the addition in the hands of the assessee with respect to the cash belonging to the parents of the assessee.
Accordingly, the Tribunal reversed the finding of the lower authorities and directed the AO to delete the addition belonging to the parents of the assessee on account of cash found during the course of search.