Senior Citizen Found with ₹95.89 Lakh Cash on Train Claimed It Belonged to Firm: ITAT Upholds Addition for Lack of Evidence

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) upheld the addition of unexplained cash under Section 69A of the Income Tax Act, 1961, after a senior citizen was found carrying Rs. 95.89 lakh in cash on a train and failed to prove it belonged to a partnership firm.

Shri Chatru, the assessee, aged 60, was intercepted by railway police in February 2020 while traveling from Bhubaneswar to Rajasthan. He was found carrying Rs. 95.89 lakh in cash, which was seized and reported to the Income Tax Department. The department initiated proceedings under Section 132A and issued a notice under Section 153A for the relevant assessment year.

During the proceedings, the assessee argued that the seized cash belonged not to him but to a partnership firm named Meena Construction Works, allegedly formed by ten individuals to purchase second-hand construction machinery. The assessee stated that the cash was pooled by the partners and meant for a deal in Odisha, which eventually fell through. The money was being returned to Rajasthan when it was seized. The assessee submitted a notarized partnership deed and claimed contributions from each partner.

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The Assessing Officer (AO), however, rejected the explanation. The AO argued that the firm was not registered, had no PAN or GST number, and lacked a bank account. The AO also pointed to inconsistencies in the assessee’s statements, the absence of credible documentation, and the lack of evidence supporting the financial capacity of the alleged partners.

The AO assessed the entire amount of Rs. 95.89 lakh as unexplained money under Section 69A and added it to the assessee’s income. Additional amounts were also added under Section 68 for unexplained business income and excess agricultural income.

On appeal before the ITAT, the assessee’s counsel argued that the cash belonged to the firm and not to him individually. They argued that the delay in formalizing the firm’s registration and banking setup was due to his rural background and lack of awareness. They submitted land records, mandi receipts, and prior income returns to support the claim that the partners had sufficient agricultural and business income to contribute the funds.

The two-member bench comprising Rathod Kamlesh Jayantbhai (Accountant Member) and Sandeep Singh Karhail (Judicial Member) observed that while the partnership deed existed, it was neither registered nor supported by proper documentation like PAN, GST, or bank transactions. The tribunal also found that the partners did not provide convincing proof of their ability to contribute the funds. There were contradictions in the statements given to the railway police and the income tax department.

The tribunal explained that since the cash was found in Shri Chatru’s possession and he failed to discharge the burden of proof under Section 69A, the addition made by the AO was justified. The tribunal further upheld additions under Section 68 for business and agricultural income, finding no error in the AO’s assessment. The appeal was dismissed, and the additions made by the AO were confirmed.

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