Rs. 7.5 Cr Seized Cash Allegedly Meant for Inter-Branch Transfer Not Satisfactorily Explained: ITAT Upholds S. 69A Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, upheld an addition of Rs. 7.5 crore under Section 69A of the Income Tax Act after finding that the assessee failed to satisfactorily explain the source and transportation of the seized cash.

The assessee, Shiv Shakti Traders, was engaged in the liquor business through multiple vends and shops. During a vehicle check conducted by local police authorities , cash amounting to Rs. 7.5 crore was recovered. The cash was found in possession of two persons stated to be transporting the amount on behalf of the assessee.

During the assessment proceedings, the assessee claimed that the cash represented sale proceeds collected from various liquor vends and was being transported for inter-branch business purposes. It was also submitted that there was no legal restriction on carrying cash.

However, the Assessing Officer found several inconsistencies in the explanation and observed that transportation of such huge cash was commercially inexplicable, especially when the assessee was regularly depositing cash through bank pickup facilities.

The AO also noted the absence of evidence regarding earlier inter-branch cash transfers and failure of the assessee to furnish records in support of its claim that the seized cash represented business sale proceeds. The amount was accordingly treated as unexplained money under Section 69A and added to the income of the assessee.

The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition after accepting the assessee’s explanation and observing that no incriminating material was found to justify the addition.

Before the Tribunal, the Revenue contended that the assessee had failed to produce evidence supporting the alleged inter-branch cash transfer or justify transportation of such huge cash despite availability of banking and cash pickup facilities.

The Tribunal, comprising Madhumita Roy (Judicial Member) and Naveen Chandra (Accountant Member), noted that the assessee had taken inconsistent stands regarding the source of the cash and failed to produce documentary evidence supporting the alleged inter-branch transfer. It further observed that transportation of Rs. 7.5 crore in cash despite availability of banking and cash pickup facilities was commercially indefensible and that the assessee had failed to furnish records relating to the individual liquor vends from which the cash was allegedly collected.

Accordingly, the Tribunal restored the addition made under Section 69A. The Revenue’s appeal was allowed.

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