Section 69A Additions Justified If Cash Found During Search Wasn’t Traced to Wife & Mother’s Bank a/c as Claimed by Assessee

Case Details: Anuj Sood vs. PCIT (Central-1) - [2024] 168 taxmann.com 463 (Delhi)

Judiciary and Counsel Details

• Vibhu Bakhru & Ms Swarana Kanta Sharma, JJ.
• Prakash Shah, Mihir Deshmukh, Rajat Mittal & Suprateek Neogi, Advs. for the Petitioner.
• Aseem Chawla, SSC & Ms Pratishtha Chaudhary, Adv. for the Respondent.

Facts of the Case

The assessee filed the return of income for the relevant assessment year. Subsequently, a search operation was conducted on the assessee’s premises. Cash was found and seized from the assessee’s premises during the search operation. The Assessing Officer (AO) issued a notice to the assessee to explain the source of such cash.

In response, the assessee explained the source of the cash. It was contended that a part of the cash belonged to the assessee, and the remaining amount belonged to his mother and wife. The assessee also furnished the bank statements of his mother and wife to substantiate the claim.

However, the AO was not satisfied with the explanation and made additions to the assessee’s income. The matter reached the Delhi High Court.

High Court Held

The High Court held that the assessee contended that the source of cash was duly established by the material placed on record. However, the assessee had sought time to file an additional affidavit to reflect that his mother and his wife had disclosed the cash of Rs. 19,36,000 and Rs. 15,84,000 in their returns, and withdrawals from the bank supported the same.

The additional affidavit filed by the assessee encloses his mother’s bank statements for the period from the Financial Year (FY) 2012-13 to FY 2017-2018. The assessee has sought to adopt a simplistic approach by simply totalling cash deposits and cash withdrawals. However, if the initial deposit itself is in cash, the source of the same would require to be explained.

More importantly, there was no explanation as to why the assessee’s mother retained a high balance of cash in hand when household drawings were only Rs. 2,40,000 for each year during the first two financial years (FY) 2012-13 and 2013-14.

It is apparent that the assessee’s explanation for the cash in hand was far-fetched. There was no credible explanation as to the cash found on the date of the search. According to the assessee, part of the cash found on the premises during the search operation was withdrawn five to six years earlier. It is also relevant to note that the cash found on the premises cannot be traced to the bank accounts. The assessee has to travel six years prior to the date of the search for explaining cash withdrawal without any credible explanation for the same

Therefore, the assessee failed to prove the cash found on the premises during the search operation. Thus, the additions made by the AO were confirmed.

List of Cases Reviewed

• Anuj Sood v. PCIT I.T.A. No.288/Del/2021 order dated 24.07.2023 (Para 23) Affirmed.