The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that the income tax addition under Section 69 of the Income Tax Income Tax Act, 1961 is not permitted without examining and finding fault in cash book produced by an assessee.
The assessee furnished original return of income filed under Section 139(1) of the Income Tax Act before the AO decaling total income of Rs.3,18,43,450/-, the same was processed under Section 143(1) of the Income Tax Act as the search was initiated in the case of the assessee. The case was picked up for ‘compulsory scrutiny’ and notice under section 143(2) of the Income Tax Act was issued.
The assessment order came to be passed under Section 143(3) r.w.s 153A of the Income Tax Act by computing the income of the of the assessee at Rs.3,32,61,550/- as against the return income of the assessee at Rs.3,18,43,450/- by making an addition of Rs.14,18,100/- under Section 69A of the Income Tax Act in respect of the cash found during the search.
The counsel for the assessee argued that the cash found during the search amounting to Rs.14,18,110/- belongs to assessee and his family members and the cash found during the course of search was available in the cash book of the assessee and his family members which has been made available to the AO. The AO while passing the assessment order erroneously made the addition observing that the assessee failed to reconcile the cash found during the search and the that the addition has been made with the erroneous findings without considering the cash book produced by the assessee and other details.
The DR submitted that the cash book produced by the assessee is an afterthought and maintaining of cash book is not mandatory for the individual, therefore, the assessee cannot rely on such document and relying on the findings and conclusion of the lower authorities sought for dismissal of the appeal.
A Two-Member Bench comprising N K Billaiya, Accountant Member and Yogesh Kumar, Judicial Member observed that “In our considered opinion, the findings given by the CIT(A) on the cash book is baseless and perverse. The assessee having been produced the cash book and explained the cash found during the search and seizure operation contending that the cash found during the search are belongs to family members and considering the fact that even the Panchnama drawn during the search proceedings containing the names of the Assessee and other family members and the A.O. who has examined the cash book has not found fault on the same on the merit of it, in our considered opinion, the authorities have committed error in making/sustaining the addition.”
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