Sanjay Kumar Khandelwal, Delhi V. ACIT, Central Circle-31, New Delhi

ITA 43/DEL/2023

AI Insights

The case involves Sanjay Kumar Khandelwal, a businessman engaged in wholesale trading of metals and retail trading of various items, who appealed against the order of the CIT(A) confirming the additions made by the Assessing Officer under section 69A of the Income Tax Act, 1961. The additions pertained to cash and silver items found in a locker belonging to the assessee during a search operation. The assessee argued that the cash represented business proceeds and the silver items were ancestral property. The Tribunal, after reviewing the evidence and submissions, ruled in favor of the assessee, leading to the deletion of the additions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121721 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 04-07-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 04-01-2023
• Other Referred Cases: Ananthakrishan Vasudev Aithal Vs. ITO, Rakesh Kumar Babulal Agarwal Vs. PCIT, J.M. wire Industries Vs. CIT, Mayank Ratibahi Patel Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift
• Section: 132; 153A; 205; 143(2); 69A; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”, NEW DELHI BEFORE SHRI C. M. GARG, JUDICIAL MEMBER Dr. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA No.43/Del/2023 Assessment Year: 2019-20 Sanjay Kumar Khandelwal, 3747, Gali Jamadar, Pahari Dhiraj, Delhi – 110 006. PAN: AAIPK1803H Vs ACIT, Central Circle-31, New Delhi. (Appellant) (Respondent) Assessee by : Shri Rohit Agarwal, CA Revenue by : Shri H. K. Choudhary, CIT-DR Date of Hearing : 05.07.2023 Date of Pronouncement : 18.09.2023 ORDER PER Dr. B. R. R. KUMAR, AM The present appeal has been filed by the assessee against the order of ld. CIT(A)-30, New Delhi dated 07.12.2022. 2. Following grounds have been filed by the assessee in this appeal: “1. That the order under appeal holding additions of Rs.19,98,208/-u/s 69A of the Income Tax Act, 1961 is bad in law and perverse as the facts and submissions of the appellant have not been considered in the right perspective. 2. That the learned Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘Id. CIT (A)’) has erred in law as well as on the facts of the case by confirming the addition of Rs. 19,98,208/- as made by the Id. A.O. u/s 69A of the ITA No.43/Del/2023 2 Income Tax Act, 1961 and the various findings made are based on assumptions, presumptions and are devoid of any supporting material on record and the various submissions made by the appellant and the facts on record have not been considered in right perspective thereof. 3. That the authorities below have erred in law as well as on the facts of the case by making and confirming the addition of seized cash of Rs. 18,00,000/- u/s 69A of the Income Tax Act, 1961, ignoring the submission of the appellant that the said cash was duly recorded in the books of account the said amount represented the business sale proceeds of the appellant and therefore the addition u/s 69A is totally illegal & unwarranted as the same has been made without rejecting the books of account of the appellant. 4. That the authorities below have erred in law as well as on the facts of the case by making and confirming the addition of silver bar and coins amounting to Rs.1,98,208/- u/s 69A of the Income Tax Act, 1961, ignoring the submission of the appellant that the said silver bar/coins was the ancestral property and has been inherited from his mother.” 3. The assessee is an individual carrying on the business of wholesale trading of metals & metal scrap and retail trading of multiple items i.e. spices, shyamji masala, meetha soda, good rice etc. under the name & style of M/s H.P. Metals. The assessee filed his ITR for the year under consideration on 30.09.2019, declaring an income of Rs.4,31,910/-. 4. During the year under consideration, a search and seizure operation was carried out u/s 132 of the Act, on the business premises of M/s Fakeerchand Lockers and Vaults Pvt. Ltd., on 31.10.2018 and 17.12.2018. In the search operation, one locker number 149 was found allotted in the name of assessee. Hence, a search warrant was issued upon the assessee, for locker operation, which was executed on 06.12.2018. In the said locker, cash amounting to Rs. 18,00,000/- and silver bar & coins worth Rs. 1,98,208/- were found and seized on 06.12.2018. 5. Consequently, the assessee was issued notices u/s 153A of the Act, for six assessment years. The year under consideration, being the search year, was opened for scrutiny assessment by issuing notice u/s 143(2) of the Act, on 28.09.2020. During the course of the assessment proceedings the assessee submitted that the cash of Rs. 18,00,000/-, as found in the locker ITA No.43/Del/2023 3 was the business cash in hand of the proprietary concern of the assessee, namely, M/s HP Metals. The silver was explained to have been inherited from the mother of the assessee who expired in April 2017. 6. The assessment proceedings for the year under consideration were completed vide assessment order dated 06.04.2021, wherein, the Assessing Officer didn’t accept the explanation given by the assessee and made the following additions:-  The cash of Rs. 18,00,000/-, u/s 69A of the act,  The silver coins and bar worth Rs. 1,98,208/-, u/s 69A of the Act. 7. Aggrieved, the assessee filed an appeal before the Ld. CIT(A). During the course of the first appellate proceedings the submissions as made before the A.O. were reiterated. The appeal of the assessee was decided by the Ld. CIT(A) vide order dated 07.12.2022, wherein the order of the A.O. was upheld. 8. Aggrieved by the order of the ld. CIT(A), the assessee filed appeal before the Tribunal. 9. Heard the arguments of both the parties and perused the material available on record. Addition of Rs. 18,00,000/- Cash: 10. Documents relied upon by the ld. AR during the arguments before us are as below: 1. The sum of Rs. 18,00,000/- found in the locker no. 149, was duly recorded in the cash book of the proprietary concern of the ITA No.43/Del/2023 4 Appellant, namely, M/s H.P. Metals. Copy of the said cash book is placed at page no. 86 to 117 of the paper book. 2. The revenue did not point out any deficiency in the books of accounts of the appellant. The audited balance sheet and profit and loss account of the appellant have been duly been accepted by the authorities below. 3. Copy of the ITR filling proof, computation of income, audited balance sheet and tax audit report of the appellant for the year under consideration is placed at Page no. 22 to 44 of the paper book. 4. The appellant at the very first instance when he was asked to explain the cash found in the locker has submitted that the same is his business cash in hand of his proprietary concern, namely, M/s HP Metals, and has duly been recorded in his books of accounts. This fact is evident from the statement on oath of the appellant as recorded by the Investigation wing, wherein the appellant also filed his cash book. 5. All the sales were duly supported by the sale bills issued by the appellant to various parties. Copies of which are placed at Page No. 496 to 785 of the paper book. 6. Copy the sale register for the year under consideration is placed at Page nos. 467 to 495 of the paper book. 7. All the sales are duly supported by stock movement. The item wise stock register for the relevant year is placed at Page Nos. 1 to 163 of the 2 nd paper book. 8. No deficiency has been pointed out by the Ld. A.O. or the Ld. CIT(A) in the Stock register for the year under consideration. Item wise summary of all the stock items of the whole year is placed at page Nos. 118 to 122 of the paper book. ITA No.43/Del/2023 5 11. In the present case the cash of Rs. 18,00,000/-, found in the locker was duly recorded in the audited books of accounts of the appellant. Hence, the provisions of section 69A of the Act, cannot be applied in the present case. 12. The ld. AR placed reliance on the following judicial pronouncements:  Ananthakrishan Vasudev Aithal Vs. ITO (Bang. ITAT) 147 taxmann.com 376  Rakesh Kumar Babulal Agarwal Vs. PCIT (Guj) (2022) 136 taxmann.com 329  J.M. wire Industries Vs. CIT (Delhi HC) (2012) 205 Taxmann 134  Mayank Ratibahi Patel Vs. ITO (Ahd. ITAT) (2023) 146 Taxmann.com 470 13. The ld. DR argued that, 1. The assessee claimed cash sales of Rs.17,54,668/- in the period of 11 days i.e. from 20.10.2018 to 30.10.2018 which is exorbitantly higher than the average cash sales shown by the assessee during remaining part of the year. 2. The cash invoices submitted by the assessee have been found to be non-genuine as in some of them, names of the purchasers were maintained and in others they were not. 3. The assessee has operated the said locker several times during the year and month of October, but only two credit entries have been recorded in cash books with narration “Locker A/c” which are dated 23.10.2018 to 30.10.2018 of Rs.4 lacs and Rs.14 lacs respectively. At no other instance, the assessee has recorded any entry in Locker A/c. No ledger of locker account maintained by the assessee. It shows that the assessee has recasted/manipulated the cash book only to explain the cash found in the locker. 14. Rebutting the arguments of the ld. DR, the ld. Counsel for the assessee submitted that the assessee is in the retail business of sale of gur, rice, ITA No.43/Del/2023 6 masala and other edible and fancy items and the sale was high during the festive season of the month of October. It was submitted that all the cash sales have been duly entered in the cash book which have been part of the audited books submitted before the revenue authorities. Referring to the stock book consisting of 161 items such as Chilli powder, masala, coriander powder etc., the ld. AR submitted that the entire stock have been tallying with the regular books as well as the cash book and hence, the sources cash found has been duly explained. 15. Having gone through the opening stock, purchase ledger, sales register, sale invoices, cash book, stock register and the copy of the Assessment Order passed u/s 153A for A.Y. 2018-19 and the audited books for that year reflecting the closing stock, we hold that the assessee has generated cash of Rs.18 lacs by the way of cash sales which was sufficient to explain the sources of the cash found in the locker. Hence, we direct that the addition made by the Assessing Officer and confirmed by the ld. CIT(A) be deleted. Addition of Rs. 1,98,208/- Silver Items: 16. The assessee explained that the silver items and the silver coins found at the locker of worth Rs.1,98,209/- pertain to the family members and also the deceased mother which have been purchased and received as gifts over a period of time. It was submitted that it is customary that the silver coins are purchased on various festive occasions and also received as gifts. We find that keeping in view the Indian traditions, the explanation offered by the assessee as plausible, hence, we hold that no addition is called for on this account. ITA No.43/Del/2023 7 17. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 18.09.2023. Sd/- Sd/- (C. M. Garg) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 18/09/2023 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR