KOTHARI BIPIN MILAN,HYDERABAD V. ACIT, CENTRAL CIRCLE 2(3), HYDERABAD

ITA 1387/HYD/2024

AI Insights

The case involves Kothari Bipin Milan, who was intercepted by police during the GHMC Elections in 2020, leading to the seizure of Rs. 18,65,000 in cash. The cash was handed over to tax authorities, and the assessee was unable to provide satisfactory evidence to explain the source of the cash during subsequent assessments. The Assessing Officer added the entire amount as unexplained cash under section 69A of the Income Tax Act, 1961, and taxed it at special rates under section 115BBE. The CIT (A) upheld this decision, which was later confirmed by the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 26882 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SM-A
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C.A GHANSHYAMLAL UPADHYAY
• Keywords: Business income; Corroborative evidences
• Section: 143(3); 69A; 234B; 139(4)

Judgement Text

" ITA No 1387 of 2024 Kothari Bipin Milan Page 1 of 10 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ SM- A‘ Bench, Hyderabad Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.1387/Hyd/2024 (िनधाŊरण वषŊ/Assessment Year: 2021-22) Shri Kothari Bipin Milan HYDERABAD PAN:AHBPK8344D Vs. A.C.I.T Central Circle 2(3) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: C.A Ghanshyamlal Upadhyay राज̾ व Ȫारा/Revenue by:: Mrs. Vishnu Priya, DR सुनवाई की तारीख/Date of hearing: 06/03/2025 घोषणा की तारीख/Pronouncement: 12/03/2025 आदेश/ORDER Per Vijay Pal Rao, Vice President This appeal by the assessee is directed against the order dated 29/10/2024 of the learned CIT (A)-12, Hyderabad for the A.Y.2021-22. 2. The assessee has raised the following grounds of appeal: “1. On fact, in the circumstances of the Case and in law, the Ld. Commissioner of Income Tax- Appeals -12, Hyderabad; The CIT A; erred in upholding the order of the ITA No 1387 of 2024 Kothari Bipin Milan Page 2 of 10 Ld. Assistant Commissioner of Income Tax, Central Circle 2(3) Hyderabad; the A. O.; both collectively referred to as the Authorities below; erred to frame the impugned order which is bad in law and in total disregard of the facts and circumstances of the case including inter alia the statement of the appellant before the authorities and the CBDT directives regarding investigation of sources of income. 2. On fact, in the circumstances of the case and in law, the Authorities below erred in upholding the assessment making an addition u/s 69A of the Act to the extent of Rs. 18,65,000 in absence of any incriminating cogent material but based only on seizure of the said cash by authorities without considering the statement explaining the nature and source of same by the appellant. 3. On fact, in the circumstances of the case and in law, the Authorities below erred in rejecting the explanation of the appellant on the source of cash deposits as the legitimate and the only known source of income i.e. the business income of the appellant by passing a vague order. 4. On fact, in the circumstances of the case and in law, the Authorities below erred in invoking the provisions of section 115BBE of the Act without weighing not appreciating that the Appellant has discharged the primary onus cast upon him under section 69A of the Act without discharging the secondary onus shifted on them to prove otherwise. 5. On fact, in the circumstances of the case and in law, the Authorities below erred in invoking the provisions of section 115BBE. By treating Rs 18,65,000 as unexplained money under section 69A and taxing the same at special rates instead of rate applicable to the profit element embedded in the business income clearly mentioned by the Appellant during the course of recording the statement. 6. On fact, in the circumstances of the case and in law, the Authorities below erred in assessing the entire cash of Rs 18,65,000 instead the profit element embedded therein as done by your appellant in the return of income filed. 7. The Assessing Officer erred in charging interest under section 234A Rs 102004 234B of Rs 180720 and Rs 2466 under section 234C without treating the amount of Rs ITA No 1387 of 2024 Kothari Bipin Milan Page 3 of 10 18,65,000 seized by them as amount of taxes paid on the date of seizure and thereby causing double jeopardy on your appellant. 8. The aforesaid grounds are alternative and without prejudice to one another. 9. The appellant seeks the leave to add, alter, modify amend or delete any or all, as the case may be, the grounds of appeal.” 3. The assessee is an individual and was intercepted by the Police during the GHMC Elections, 2020. During the course of vehicle checking of the assessee, a cash of Rs.18,65,000/- was found being carried by the assessee near Charkandil X Road, Hyderabad on 20/11/2020. The Police Authorities seized the cash and handed over to the Tax Authorities. The Dy. Director of Income Tax (Investigation) recorded the statement of the assessee. The assessee filed return of income u/s 139(4) of the I.T. Act, 1961 on 24/02/2022 admitting total income of Rs.6,72,280/-. In the return of income, the assessee offered the income by estimating the profit @ 20% on the said cash of Rs.18,65,000/- apart from its regular business income of Rs.4,25,000/-. The Assessing Officer while framing the assessment u/s 143(3) of the Act, has made an addition of the entire cash of Rs.18,65,000/- as unexplained cash u/s 69A of the Act as against the estimated profit offered to tax by the assessee at Rs.3,73,000/-. 4. The assessee challenged the action of the Assessing Officer before the learned CIT (A) but could not succeed. ITA No 1387 of 2024 Kothari Bipin Milan Page 4 of 10 5. Before the Tribunal, the learned AR of the assessee has submitted that the assessee has explained the source of the cash found during the Police patrolling as the business turnover of the assessee. The learned AR has submitted that, the assessee is deriving income from house property, income from other sources and income from business of scrap dealing and plastic granules. The assessee did not maintain any books of account and therefore, the income was offered by declaring net profit @ 20% of the said turnover of Rs.18,65,000/-. The learned AR has further submitted that the assessee is a very small businessman and employed the minimum capital in the business of scrap and plastic granules which is the source of earning. Since the assessee is dealing in the business of scraps and plastic granules and dealing with unorganized customer, therefore, the assessee is not maintaining any record of the business transactions. Thus, the learned AR of the assessee has submitted that once the assessee has explained the source of cash as the Revenue from the business of retail business in scrap and plastic granules, which was accumulated and kept at home. On the fateful day, the assessee was carrying the same for depositing in the Deposit Machine but on the way, the police authorities intercepted the assessee’s vehicle and seized the cash. Hence he has prayed that the addition made by the Assessing Officer and sustained by the learned CIT (A) be deleted. ITA No 1387 of 2024 Kothari Bipin Milan Page 5 of 10 6. On the other hand, the learned DR has relied upon the order of authorities below and submitted that, the assessee has failed to explain the source of cash found during the course of regular vehicle checking during the GHMC Elections, 2020. The assessee is not maintaining any books of account or any other records to show that the said cash was generated from the business of trading in scraps and plastic granules. The assessee has reported the normal business income at Rs.4,25,000/- and separately offered the income on the unexplained cash seized during the police interception @ 20% without producing any supporting evidence that the cash was representing the business income of the assessee. 7. We have considered the rival submissions as well as relevant material available on record. On 27/11/2020, the vehicle of the assessee was intercepted by the Police on regular duty in view of the GHMC Elections 2020. During the checking of the vehicle, a cash of Rs.18,65,000/- was found being carried by the assessee. The statement of the assessee was recorded u/s 132(4) by the DDIT (Inv.). The relevant part of the said statement has been reproduced by the learned CIT (A) at page No.6 as under: ITA No 1387 of 2024 Kothari Bipin Milan Page 6 of 10 8. Thus, the assessee explained the source of this cash as generated from his business of retail trading in scrap and plastic granules. If the cash was accumulated and kept at home for a considerable long time, then in the absence of any apparent pressing circumstances or urgent reason to carry the said huge cash in the night at 9.30PM, the explanation of assessee without any substantive evidence does not inspire confidence, has not been explained by the assessee. Further, the assessee has admitted the fact that he is not maintaining any record as well as books of account of any of the business transactions and declared the regular business income at Rs.4,25,000/- and income from the seized cash @ 20% at Rs.3,73,000/- separately in the return of income which itself goes to prove that this cash was not ITA No 1387 of 2024 Kothari Bipin Milan Page 7 of 10 generated from the regular business activity of the assessee. The learned CIT (A) has decided this issue in para 6 to 6.5 as under: ITA No 1387 of 2024 Kothari Bipin Milan Page 8 of 10 ITA No 1387 of 2024 Kothari Bipin Milan Page 9 of 10 ITA No 1387 of 2024 Kothari Bipin Milan Page 10 of 10 9. Even before us, the assessee has failed to refer any supporting evidence to explain the source of the said cash. Hence, in the facts and circumstances as discussed above, we do not find any error or illegality in the impugned order of the learned CIT (A) and the same is upheld . 10. In the result, appeal filed by the assessee is dismissed. Order pronounced in the Open Court on 12th March, 2025. Sd/- Sd/- (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER (VIJAY PAL RAO) VICE-PRESIDENT Hyderabad, dated 12th March, 2025 Vinodan/sps Copy to: S.No Addresses 1 Shri Kothari Bipin Milan, 34-813/1,2,3 SLV Apartments, Barkatpura, Street No.1, Kachiguda, Hyderabad 500027 2 ACIT, Central Circle 2(3) Hyderabad 3 Pr. CIT – Central, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "