The Indore bench of Income Tax Appellate Tribunal (ITAT) has recently held that physical cash found during survey is residual amount of cash withdrawn from firm against imprest account for expences.
Assessee Sudhir Kumar clubbed as a part of Sagar Group’ of Bhopal. A search procedure conducted on the premises of the Sagar Group. Pursuant to search, AO made assessment under Section 143(3) of the Income Tax Act at a total income of Rs. 5,65,65,450/- after making several additions.
During the course of search proceedings, the authorities found physical cash available with the assessee.
AO asked the assessee to explain the source of physical cash, it was submitted that the impugned cash was the residual amount of cash withdrawn from the firm against imprest account for expenses. AO did not accept the reply of the assessee .
During first-appeal,CIT(A) deleted addition by accepting assessee’s explanation after examination of cash-book produced by assessee which showed available cash balance of Rs. 13,50,334/
Aggrieved by the order, revenue filed an appeal before the tribunal.
The tribunal bench observed that the assessee has made an identical explanation before both of the lower authorities i.e. the impugned physical cash was out of withdrawals made from the firm for imprest a/c of expense.
It was also determined that the assessee has also placed on record the copy of the cash-book of the firm which has been verified by CIT(A) according to which the firm had a total cash balance of Rs. 13,50,334/- on the date of search.
The two-member bench of Chandra Mohan Garg, (Judicial Member) and Bhagirath Mal Biyani, (Accountant Member) dismissed the appeal filed by the revenue and deleted the addition made by the AO.
Sumeet Neema counsel appeared for the assessee .P.K. Mishra, counsel appeared for revenue.
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