ITAT upholds deletion of Cash Addition, Accepts Joint Family Status & Sale Proceeds as Source [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, has dismissed the appeal filed by the Revenue and upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)] deleting the addition of Rs.1,00,12,500(1 crore) made under Section 69 of the Income Tax Act, 1961. The Tribunal accepted the explanation provided by the assessee regarding the cash found in lockers, recognizing it as part of joint family funds and traced to the sale proceeds of a property owned by a family member.

The respondent, Inderpal Singh, proprietor of Goodwill Elektro Controls, Ludhiana, was subjected to a search and seizure operation on 28 November 2018. During the course of the operation, cash amounting to Rs.1,00,12,500 was found in Locker Nos. 41 and 42 maintained at SBL Sarabha Nagar, Ludhiana, in the names of Inderpal Singh and his wife, Raminder Kaur. The Assessing Officer treated the cash as unexplained and made an addition under Section 69, citing inconsistency in the assessee's statements and the absence of documentary evidence linking the cash to a legitimate source.

All About Trusts & NGOs Click here

Before the CIT(A), the assessee submitted that the cash belonged to the joint family and had been received by Raminder Kaur from her sister-in-law, Moninder Kaur, who had sold a flat in Delhi for Rs.3 crores and received part payment of Rs.1.68 crores in cash. It was explained that this cash was handed over to  Raminder Kaur shortly before the search and was deposited in the lockers on 29 October 2018. The department had already assessed the capital gains on the said property sale in Moninder Kaur’s case and accepted the source of cash.

The CIT(A) accepted the explanation offered, noting that the family lived jointly, operated a common business, and that the jewellery found across lockers was also treated as joint family property by the department. The CIT(A) held that the cash found in the locker could not be considered in isolation and deleted the addition.

Tax Planning – Practical Aspects Click here

The Tribunal, after hearing arguments from both sides, concurred with the CIT(A)'s findings. It noted that no adverse inference had been drawn on similar issues concerning the joint family and that the Revenue had not recorded the statement of Moninder Kaur to refute the explanation. The Bench held that the explanation provided was consistent with the facts and supported by material placed on record.

The order was delivered by the Bench comprising Rajpal Yadav (Vice President) and Krinwant Sahay (Accountant Member).

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates