To be added is the unexplained cash that was discovered throughout the search process

Fact and issue of the case

This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-19, Chennai, dated 28.08.2019 and pertains to assessment year 2017-18.

The assessee has raised the following grounds of appeal:

“1. The CIT(A) is erred in upholding the assessment order which is against law, facts and circumstances of the case.

2. The CIT(A) is not correct in upholding the order in making addition of Rs. 9,39,460/-, without considering the affidavits filed by the assessee and his family members,

3. The CIT(A) is not correct in upholding the levy of interests u/s. 234A, 234B and 234C.

4. Your appellant reserves his right to adduce any additional or alternate ground at the time of hearing.

5. In the circumstances it is prayed to set aside the assessment order or to delete the addition of Rs. 9,39,460/-and to delete the interests levied u/s. 234A, 234B and 234C of the I.T. Act and render justice.”

The brief facts of the case are that, a search was conducted u/s. 132 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), in the group case of M/s. Kirtilal Kalidas Jewellers Pvt. Ltd on 12.09.2016. The appellant was working as Assistant Vice-President, Retail Operations in the company. During the course of search, the assessee’s residence was also covered and found that he had in possession of cash amounting to Rs. 10,39,460/-. The assessee was called upon to explain source, for which he did not given any satisfactory explanation. Hence, cash found amounting to Rs. 10 lakhs was seized and deposited into PD Account. Consequent to search, the case was taken up for assessment and during the course of assessment proceedings, the assessee could not explain source for cash found to be in possession, although, he claims that he had received gift from his wife amounting to Rs. 7,75,000/- and also received a sum of Rs. 3 lakhs from his father Shri. Ramalingam. The AO, made additions towards cash seized during the course of search proceedings as unexplained money u/s. 69A of the Act. The assessee carried the matter in appeal before the first appellant authority. During the course of appellant proceedings, the assessee explained that source for cash found during the course of search was, out of gift received from his wife Smt. Hanspriya and also amount received from his father Shri. Ramalingam. The Ld. CIT(A), after considering relevant submissions of the assessee opined that, the assessee could able to explain source to the extent of Rs. 1 lakh and thus, allowed relief to the extent of Rs. 1 lakh and balance amount of Rs. 9,39,460/- has been confirmed. Aggrieved by the CIT(A) order, the assessee is in appeal before us.

Observation of the court

None appeared for the assessee. We have heard the Ld. DR and perused relevant material available on record. We find that during the search in the residential premises of the assessee, a sum of Rs. 10,39,460/- cash was found and seized. The assessee could not explain source for cash deposits. However, during the course of assessment proceedings, the assessee has took a different stand and argued that his wife derives income from tuition fee and agricultural income and out of said source, she had given a sum of Rs. 7,75,000/- gift on 25.08.2016.

The assessee, further claimed that he had received a sum of Rs. 3 lakhs from his father Shri. Ramalingam. Although, the assessee claims to have received gift from his wife, but he could not substantiate his claim with necessary evidence, except stating that she had withdrawn some amount from her bank account. The Ld. CIT(A), after considering withdrawal from bank and subsequent deposits opined that assessee could able to explain source from his wife Smt. Hanspriya to the extent of Rs. 1 lakh only. Therefore, allowed relief to the assessee to that extent. In respect of amount received from his father Shri. Ramalingam, the assessee could not establish source for amount claimed to have been received from his father. Even before us, assessee could not file any evidence to justify source for cash found and seized during the course of search. Therefore, we are of the considered view that there is no error in the reasons given by the ld. CIT(A) to sustain additions made towards cash found during the search and thus, we are inclined to uphold the findings of the Ld. CIT(A) and dismiss appeal filed by the assessee.

In the result, appeal filed by the assessee is dismissed.

Order pronounced in the court on 15th February, 2023 at Chennai.