The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) observed that availability of cash with different companies is sufficient to explain cash found at time of search.
The issue to be decided was whether cross appeals by the Revenue and the assesse are preferred against the order of the CIT (A) – 23, New Delhi dated 24.06.2022 pertaining to Assessment Year 2018-19.
In a unified order for efficiency, cross-appeals were jointly considered concerning unexplained cash discovered during a 2017 search and seizure operation in the SMC group. Rs. 2, 65, 31,500/- was found in E-13/29, Harsha Bhawan, New Delhi. The Accountant’s statement failed to explain the cash, leading the Assessing Officer to designate it as unexplained funds under section 69A of the Income Tax Act.
The assesse counsel Mr. Salil Agarwal argued before the Commissioner of Income Tax (Appeals) that the discovered cash belonged to various SMC group companies, duly recorded in their cash books. Details and accounts were provided, emphasizing the lack of segregation during the search. The CIT (A) recognized the Assessing Officer’s reliance on the Accountant’s inability to explain the entire cash.
The Deputy Commissioner of Income Tax counsel Mr. T.James contends that the assesse presented cash details only during proceedings before the Commissioner of Income Tax (Appeals) [CIT(A)], who accepted them without further verification. Emphasizing the need for scrutiny, the ld. DR suggests returning the matter to the Assessing Officer for thorough examination.
The counsel asserted that the Assessing Officer, who assessed the nine group concerns/companies, had recognized the recorded cash in hand. The counsel argued against revisiting and referring the matter back for verification, considering the Assessing Officer’s prior validation during assessment orders.
After deducting the addition, the total cash with the group concerns is Rs. 2,64,09,136/-. Despite the Assessing Officer’s addition of Rs. 2, 65, 31,500/-, a deficit of Rs. 1, 22,364/- exists. Acknowledging Rs. 5, 71, 500/- for SMC Foods validates sufficient cash, dismissing the revenue’s appeal against the Commissioner of Income Tax (Appeals) CIT [A]. The Deputy Commissioner’s suggestion to return the issue to the Assessing Officer lacks merit, as all relevant details were presented during the assessment proceedings, and the same Assessing Officer accepted the reported cash in hand for all nine group companies. Re-verifying the validated facts is unnecessary and illogical.
The two member bench of the tribunal comprising Astha Chandra, member (Judicial) and N K Billaiya, member (Accountant) concluded that in the result, the appeal of the assesse is partly allowed whereas the appeal of the Revenue is dismissed.
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