Seized Cash Once Taxed in Brother’s Hands cannot be Taxed Again: ITAT remands ₹4L Cash Addition [Read Order]

The Patna Bench of the Income Tax Appellate Tribunal ( ITAT ) partly allowed the appeal, holding that the same seized cash cannot be added twice, once in his hands and again in the hands of his brother, without verification.

The Tribunal therefore set aside the order of the Commissioner of Income Tax (Appeals) (CIT(A)) and remanded the matter to the Assessing Officer (AO) for proper verification.

The assessee, Mithilesh Kumar Choubey, had filed his return of income declaring ₹6,56,250, and the case was taken up for scrutiny following a search and seizure operation under Section 132 of the Income Tax Act, 1961 conducted on 06.10.2020.

During the search, cash of ₹6,80,000 was found from the bedroom of the assessee. The AO passed an assessment order on 30.03.2022, making an addition of ₹5,64,700 as unexplained cash.

In appeal, the CIT(A) examined the assessee’s claim that his income from the sale of agricultural produce involved substantial cash receipts. The CIT(A) restricted the addition to ₹4,00,000, granting partial relief, and also directed the AO to correct the income figure taken in the assessment order.

Before the Tribunal, the assessee submitted that the same addition of ₹5,64,700 had already been made in the case of his brother, Rakesh Kumar Chaubey, whose premises had also been covered in the same search. The assessee argued that this resulted in a double addition of the same cash, which was illegal and against natural justice. He requested that the matter be sent back for verification.

The Bench comprising Sonjoy Sarma (Judicial Member) and Rakesh Mishra (Accountant Member) observed that for the same cash found and seized, addition cannot be made in the hands of two assessees.

The Tribunal held that the issue required verification of the assessment order and appellate order in the brother’s case to confirm whether the addition was already accepted there.

Accordingly, the Tribunal set aside the CIT(A)’s order and remanded the matter to the AO, directing him to verify the assessment records of the brother. If the addition has been accepted by the brother, the AO must delete the ₹4 lakh addition sustained by the CIT(A) in the assessee’s hands.

The appeal was thus partly allowed for statistical purposes.

The Revenue was represented by Rajat Datta.

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