The Income Tax Appellate Tribunal ( ITAT ), Mumbai bench ruled that no addition should be made upon the employee who acts on behalf of the directors of the company.
The assessee,Rohinton Homi Sanga after filing the return of income The assessee was covered under Section 132(1) of the Act on his residential premises as part of the search action initiated at office premises of M/s. Blue Angel Construction Pvt. Ltd., on 27.07.2016 Shri Xerxes Talati and Shri Noshir Talati are the main persons controlling this company.
Consequent to search action notices under Section 143(2) and 142(1) of the Income Tax Act were issued and served on the assessee along with seeking certain clarifications.
The Assessing Officer observed that during search, cash was seized of ₹.33.82 lakhs and gold bars of ₹.5,00,000/- along with documentary evidence and the assessee was asked to explain the sources of above said seized cash and gold bars.
The assessee was examined under Section 131 of the Income Tax Act.The assessee has submitted that the cash seized in his hands during search were belongs to Topworth Properties Pvt. Ltd., (₹.16,00,000/-) and belongs to Shri Noshir Talati (₹.15,00,000/-) and the balance cash of ₹.2,82,000/- was a small savings of his family. The Assessing Officer rejected the submissions and made the additions
Aggrieved, the assessee filed further appeal before the CIT(A) who dismissed the appeal. Thereafter the assessee filed a second appeal before the tribunal.
J.D. Mistry, Counsel for assessee submitted that cash found in his possession during the search belongs to Topworth Properties Pvt. Ltd., and cash of ₹.17,85,000/- out of ₹.15,00,000/- belongs to Shri Noshir Talati which is an advance received on behalf of Shri Noshir Talati towards sale of agricultural land.
Further assessee was a salaried employee and assessee was handling cash on behalf of Directors of M/s. Blue Angel Construction Pvt. Ltd., and its group companies,assessee is all unaccounted cash received from buyers on behalf of the above construction companies.
Sanyogita Nagpal, Counsel for Revenue, submitted that the assessee has not given any satisfactory evidence. The burden of proof was not discharged by the assessee at the time of retraction.
The tribunal observed that the assessee is an employee who handled the cash on behalf of Directors of M/s. Blue Angel Construction Pvt. Ltd., it shows that the assessee himself does not possess any means to earn income on his own. He is just a salaried employee and works under the directions of other Directors.
After reviewing the facts and records, the two-member bench Of Rifaur Rahman, (Accountant member) and Kuldip Singh, (Judicial Member) held that no addition should be made upon the employee who acts on behalf of the directors of the company.
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