MR. TIKAMDAS ARJUNDAS KHEMCHANDANI, ULHASNAGAR V. ACIT, CC-2, THANE

ITA 1124/MUM/2023

AI Insights

The case involves Mr. Tikamdas Arjundas Khemchandani, who appealed against the order of the CIT (A) - 11, Pune, which upheld the action of the Assessing Officer (AO) in treating Rs. 61 lakhs seized as deemed income under section 69A of the Income Tax Act, 1961. The appellant argued that the cash was business income and had been declared in a belated return, which was not appreciated by the CIT (A). The Tribunal examined the submissions and evidence, including the appellant's contradictory statements and lack of documentary evidence to substantiate the source of the cash, and concluded that the cash was unexplained and should be taxed accordingly.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123467 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-07-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 05-04-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAJESH SANGHVI LD
• Keywords: Unexplained investment
• Section: 132; 44AD; 153A; 250; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E”, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 1124/Mum/2023 (A.Y.2020-21) Mr. Tikamdas Arjundas Khemchandani, R. no. 1, BK no. 887, Goal Chakra, Sector-19, Ulhasnagar, Maharashtra 421 003 PAN: APGPK3292R ...... Appellant Vs. ACIT CC -2 6 th floor, R. No. 13, Ashar IT Park, Road No. 16Z, Wagle Indl. Esate, Thane Thane-400 604 ..... Respondent Appellant by : Shri Rajesh Sanghvi Ld. AR Respondent by : Shri Biswanath Das, Ld. CIT-DR Date of hearing : 06/07/2023 Date of pronouncement : 25/08/2023 O R D E R PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of Ld. CIT (A) – 11, Pune, dated 10.02.2023 u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’) for A.Y. 2020-21. The assessee has raised the following grounds of appeal:- 2 ITA No. 1124/Mum/2023 Mr. Tikamdas Arjundas Khemchandani 1. In the facts and circumstances of the case and in law, the Ld. CIT (Appeals) erred in upholding the action of the AO for treating the cash seized of Rs. 61, 00,000/- as deemed income u/s. 69A of the Act, without considering the explanation / submission and past antecedents of the appellant and in imposing a tax u/s. 115BBE on the same. 2. In the facts and circumstances of the case and in law and without prejudice, the Ld. CIT (Appeals) erred by not appreciating or recognizing the belated physical return submitted by the Appellant wherein the amount of 61 lacs was declared as business and tax was paid thereon. 3. In the facts and circumstances of the case and especially in law, the Ld. CIT (Appeals) erred by not appreciating and placing the proper head of income of Rs. 61 lacs, which was declared as business income by the appellant and was treated as unexplained money by the AO. Thus it was a case of difference in head of income. 2. The brief facts of the case are that assessee is engaged in the business of trading cloth, garments and dairy products. He filed original return of income for the year under consideration on 10.01.2021 declared the total income of Rs. 4, 91,880/-. On receiving information from DDIT (Inv.), the cash of Rs. 61 lakhs was seized u/s 132 of the Act on 25.08.2019 from the assessee. Accordingly, the AO made addition of Rs. 61 lakhs u/s 69A on the total assessed income. Being aggrieved by the said order of AO, assessee preferred the appeal before Ld. CIT (A). Ld. CIT (A) observed that assessee himself had admitted that no books of account are maintained and the cash of Rs. 61 Lakh is not entered in his books of accounts and assessee has not filed any evidence suggest that the said cash was earned out of his business. 3 ITA No. 1124/Mum/2023 Mr. Tikamdas Arjundas Khemchandani In view of this Ld. CIT (A) also sustained the addition made by AO. Assessee being further aggrieved with this preferred this appeal before us. 3. We have gone through the order of AO, Order of Ld. CIT (A), statement of assessee before the DDIT (Inv.), Unit 1(1), at Hyderabad Airport. After going through all these documents following facts emerged out of this as under:  Assessee doing the business of imported clothes and garments and sold in India on Retail Basis. In addition to this assessee involved in dairy business at Ulhasnagar having around 30 buffalos at his farm house;  Assessee is a regular income tax return filer with requisite PAN No. and declaring income on presumptive basis and declared turnover of Rs. 28,67,850/-, 30,07,680/- and 18,56,710/- for A.Y.’s 2016-17 To 2018-19 respectively, whereas at the time of giving statement he confirmed a monthly turnover of Rs. 7 To 8 Lacs per month from cloth and dairy business, which itself is highly contradictory;  Assessee has not filed any return u/s. 153A for any of the A.Y.’s between 2014-15 To 2019-20;  As per page no. 69 of the paper book assessee declared bank balance in his three bank accounts amounting to Rs. 4, 14,842/- only as on 31.03.2018. There is no further balance and transaction information by assessee till the date of search action u/s. 132 of the Act, i.e., 25-07- 2019; 4 ITA No. 1124/Mum/2023 Mr. Tikamdas Arjundas Khemchandani  Assessee himself owned the amount of Rs. 61 Lacs, but never produced any evidence to substantiate the source of earning the same as he claimed that no books of accounts are being maintained and returns were filed on presumptive basis;  Assessee further claimed that he visits Bangkok twice in a month on visa on arrival for purchase of cloth and garments in the open market, no evidence is being adduced by the assessee to substantiate his claim;  Assessee stated that he is not able to furnish any detail with regard to sale of cloths and milk, as he sells the same on door to door basis. Assessee further stated that he has not identified any particular property up till at Hyderabad and was visiting Hyderabad to identify the property with huge cash of Rs. 61 Lacs;  Assessment order in the case of assessee was passed u/s. 153A r.w.s. 144 of the Act on 28.09.2021, thereafter assessee prepared a revised computation of income without any claim on presumptive basis and shown net profit of Rs. 62,10,140/- on a total turnover of Rs. 95,06,240/- in cloths and garments business only.  Tax worked on above profits declared were paid on 28.09.2021 itself and return was filed electronically on 10.01.2021 and verified on 30.03.2021. Assessee is paying taxes on 28.09.2021 and date of verification as per computation and return was 27.09.2021, which confirms intentions of the assessee to defeat the scheme of law. 4. Though subsequently the assessee came up with a case that the aforesaid cash of Rs. 61 Lacs was the sale proceeds of the goods sold during his 5 ITA No. 1124/Mum/2023 Mr. Tikamdas Arjundas Khemchandani trading activities of cloth and garments and out of the said amount, the assessee had also made various payments towards purchase of the cloth to various suppliers, the assessee had not produced a single document and/or evidence to establish and prove his above case. Even before the appellate stage also, the assessee could not produce any evidence to substantiate his above case. Considering the above facts and circumstances both the Assessing Officer as well as the Commissioner (Appeals) rightly held that the entire amount of cash found was an unaccounted income and was rightly added to the total income of the assessee under section 69A. 5. The fact that when it was case and/or defence on behalf of the assessee that the cash found with the assessee was undisclosed income from the business of trading in cloth, in that case, it was for the assessee to establish and prove by leading evidences and producing relevant material and documentary evidences that the aforesaid cash found was his undisclosed income with respect to the undisclosed business of trading in cloth. 6. The onus is upon the assessee to prove the source of alleged cash found. When unexplained investment / unaccounted sales are not substantiated, the entire investment is to be added under Section 69A of the IT Act. It is undisputed facts on record that cash amounting to Rs. 61 Lacs was found and seized from the assessee by the department in lieu of interception by the Airport Authorities. It is evident from the record that the appellant had made contradictory statement before the department in explaining the disputed 6 ITA No. 1124/Mum/2023 Mr. Tikamdas Arjundas Khemchandani cash seized to the extent of Rs. 61 lakhs being carried for the purchase of property at Hyderabad Initially, the source of the aforesaid cash was stated out of business income and personal savings before the Airport Authorities and DDIT (Investigation) and later before the Assessing Officer, he stated the cash pertains to the business income of the assessee Further the assessee could not provide any documentary evidence regarding his intentions to buy property at Hyderabad, had the source of money being genuinely from business, the same would have been part of the drawings/withdrawals in the cashbook as the money was not taken for business purpose but for personal purpose, because no one will accumulate and retain that much of cash with him. It is further noted that there was no requirement to carry such amount of cash from Hyderabad when the same can be easily withdrawn from the bank accounts or transferred. There is no instance adduced by the assessee in his support of cash withdrawal from any of his bank accounts. Scheme of presumptive taxation u/s. 44AD of the Act is for the benefit of small traders etc. by exempting them from maintenance of books, tax audit etc. but that does not mean that in the guise of presumptive scheme of taxation assessee is free from all charges of carrying huge cash without having any evidence of earning from regular business and absence of banking trail etc. 7. In the present proceeding constitutes an afterthought which has no evidentiary value in absence of supporting corroborative documentary evidences. The department argued that even if, it is presumed that the cash seized pertains to the business cash, it is required to be supported with 7 ITA No. 1124/Mum/2023 Mr. Tikamdas Arjundas Khemchandani documentary evidences to substantiate that the cash has been withdrawn from the cash book/Bank Book of the assessee on the date of the seizure or previous day. It has been rightly treated by the Commissioner (Appeals) as undisclosed income of the appellant under section 69A of the Act after considering both factual evidence such as no cash withdrawals from cashbook and circumstantial evidence of sales purchase, list of customers, bank transactions etc. The assessee failed to file any documentary evidence or judgment in rebuttal to the contention and citation discussed by the Commissioner (Appeals) while arriving at the decision in confirming the action of the Assessing Officer. In view of that matter, there is no infirmity or perversity in the decision of the Commissioner (Appeals) in confirming the addition of Rs. 61 lakhs as unexplained money under section 69A of the Act and taxed accordingly under section 115BBE of the Act. 8. In the result, Appeal of the assessee is Dismissed. Order pronounced in the open court on 25 th day of August, 2023. Sd/- Sd/- (AMIT SHUKLA) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, दिन ांक/Dated: 25/08/2023 Sr. PS (Dhananjay) 8 ITA No. 1124/Mum/2023 Mr. Tikamdas Arjundas Khemchandani Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकर आयुक्त CIT 4. दवभ गीय प्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, Mumbai 5. ग र्ड फ इल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, Mumbai