Cash Found in Locker During Search belongs to Entire Family, Not Solely belongs to Taxpayer: ITAT deletes Addition u/s 69A [Read Order]

The Tribunal heard the appeal filed by the assessee against the order dated 28.03.2024 passed by the Commissioner of Income Tax (Appeals)-54, Mumbai [“CIT(A)”] for the assessment year (A.Y) 2022-23.

The Assessee, Shailendra Rameshchandra Rathi, an individual engaged in consultancy business and deriving income from house property and other sources, filed his income tax return for the A.Y 2022-23 on 31.07.2022 and declared total income of ₹31,75,280/–.

On 23.09.2021, a search and seizure action under section 132 of the Income Tax Act, 1961 was conducted whereby, cash aggregating to ₹15,01,150/– was found from locker No. 6114 maintained with Axis Bank, Kothrud Branch, Pune, of which ₹10,00,000/– was seized. The Assessing officer treated ₹14,99,471/– as unexplained cash under section 69A of the Income Tax Act, 1961

The Assessee explained that the cash was composed of cumulative household savings and balances of family members, including his wife, his father, his mother, his sister-in-law, and also the partnership firm M/s Allegiance Developers LLP, along with customary gifts accumulated over the years.

Clarity, Commentary, Compliance — All in One! Click here

The Commissioner of Income Tax (Appeals) [CIT(A)], in an order dated 28.03.2024, partly allowed the appeal, accepting explanations for some family members and the firm, but sustained an addition of ₹11,14,117/- made under section 69A of the Income Tax Act on account of alleged unexplained cash found during the course of search.

The CIT(A) rejected cash balances belonging to the assessee’s father, Rameshchandra Rathi (₹4,00,000/–) and his wife, Gunjan Rathi (₹3,67,589/–) on the sole ground that they were not filing income tax returns, though remained silent on accumulated gifts ₹3,46,528/–.

The Assessee, represented by Nishit Gandhi, regarded the order of the CIT(A) being factually erroneous and legally untenable. It was explained that both the father and the wife of the assessee were indeed filing their returns of income tax for A.Ys. 2021-22 and 2022-23 was produced before both the authorities. Thus, the explanation remained unrebutted.

The Counsel further stated that section 69A is a deeming provision and in the present case, there was neither such dissatisfaction recorded nor any contrary material brought on law. Thus, the Addition should be deleted.

Tax Rules Simplified, Practice Amplified! Click here

The Revenue Counsel, on the other hand, represented by R A Dhyani, relied on the orders of the lower authorities and submitted that the cash found in the locker was in the name of assessee. Hence, the onus was on him to prove to the satisfaction of the Assessing Officer.

The Two-Member Bench comprising Amit Shukla, Judicial Member and Arun Khodpia, Accountant Member heard and reviewed the matter.

After hearing and reviewing the submissions, the Tribunal found that CIT(A)’s conclusion regarding the father and wife of the assessee not filing income tax returns were factually incorrect as their income-tax returns for A.Ys. 2021-22 and 2022-23 along with balance sheets, profit and loss accounts, and cash books were on record, reflecting the claimed cash balances.

The Tribunal noticed that possession was joint and the explanation was detailed, documented and consistent with human probability with no contrary material from the Revenue and it was observed that the Lower authorities had not recorded any adverse finding or dissatisfaction regarding the accumulated gifts.

Thus, the Tribunal directed to delete the entire sustained addition of ₹11,14,117/–, allowing assessee’s appeal. The Order was pronounced on 28th October, 2025.

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