‘6kg & 7kg’ Cash Entries Not Proven as ₹13 Lakh: ITAT Reduces Addition to ₹1.30 Lakh Due to Lack of Corroboration [Read Order]
ITAT reduced the ₹13 lakh addition on ‘6kg & 7kg’ seized entries to ₹1.30 lakh and held that no corroborative evidence supported the AO’s interpretation.
ITAT _ addition - Taxscan
ITAT _ addition - Taxscan
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has reduced an addition of ₹13 lakh made on account of cash entries described as “6kg” and “7kg” in seized papers and held that the entries were not supported by corroborative evidence and only ₹1,30,000 could be sustained.
The assessee-respondent, Metarolls Ispat Pvt. Ltd., engaged in the business of manufacturing steel products such as MS Billets and TMT Bars, filed its return of income on 26.12.2020, declaring a total income of ₹19,48,06,480. The return was processed under section 143(1), and the case was selected for complete scrutiny.
During search proceedings, certain loose sheets were seized, which contained notations of “6kg” and “7kg.” The Assessing Officer (AO) interpreted these entries as representing cash payments, equating “1kg” with ₹1 lakh, and accordingly made an addition of ₹13 lakh as unexplained cash expenditure.
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In appeal, the Commissioner of Income Tax (Appeals) (CIT(A)) confirmed the AO’s view and observed that the assessee had not given any plausible explanation for these seized entries.
Before the Tribunal, the assessee argued that the seized paper was a dumb document, that the interpretation by the AO was without any basis, and that there was no evidence to prove that the entries related to cash payments by the assessee.
The Bench comprising R.K. Panda (Vice President) and Astha Chandra (Judicial Member) noted that there was no material to justify treating “kg” as representing lakhs of rupees. At the same time, it was also observed that one of the entries of ₹1,30,000 was specifically mentioned in the seized document, which the assessee could not explain satisfactorily.
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The Tribunal held that since no corroborative material was brought on record by the AO to substantiate that the seized document represented the cash payment of ₹13 lakh, the addition of ₹13 lakh sustained by the CIT(A) cannot be accepted. However, the addition of ₹13 lakh sustained by the CIT(A) cannot be accepted, the addition to the extent of ₹1.30 lakh is justified.
Accordingly, the ITAT restricted the addition to ₹1,30,000 and deleted the balance.
The assessee was represented by Rahul Kaul along with Anand Partani and Darshan Gattani, while Amol Khairnar along with Ramnath P. Murkunde, represented the department.
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