PREM LATA PANDYA,JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, , JAIPUR

ITA 1471/JPR/2024

AI Insights

The case revolves around a search and seizure operation conducted at Jaipur Airport, where Rs. 24,00,000 in cash was seized from Prem Lata Pandya. Initially, the cash was treated as unexplained income by the Assessing Officer (AO) and taxed at a higher rate under Section 115BBE of the Income Tax Act, 1961. The assessee contested this decision, providing evidence that the cash was withdrawn from various business concerns for settling a family dispute, which was not considered by the lower authorities. The Tribunal, after reviewing the evidence and submissions, concluded that the cash was not unexplained and should be taxed at normal rates, thus partly allowing the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472773 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Other Referred Cases: Uma Maheshwara Rao Chinni Vs Asst CIT, Lakhmichand Baijnath Vs CIT, Daulat Ram Rawatmal Vs. CIT, Jadhav Kangralkar Builders Vs. ACIT, Satara, Ram Swaroop Singhal Vs. ACIT,Sriganganagar, Pr. CIT Alwar Vs. Bajargan Traders, Amitabh B Parekh Navsari Vs. Department of Income Tax, Bajaj Sons Ltd Vs. DCIT, Shri Harish Sharma Vs. ITO, Ludhiana
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: S.L. PODDAR
• Keywords: Business income; Additional evidence; Reassessment proceedings; Income from undisclosed sources; Search and seizure; Deemed to accrue or arise in india
• Section: 143(3); 142(1); 143(2); 64; 48; 153A; 139(1); 68; 69; 69C; 69B; 13; 69A

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ,o Jh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 1471/JPR/2024 fu/kZkj.k o\"kZ@Assessment Year :2019-20 Prem Lata Pandya 302, Raj Mension, D-299, Tulsi Marg Bani Park, Jaipur. cuke Vs. Deputy Commissioner of Income Tax, Central Circle-4, Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.:ACXPJ9951A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Sh. S.L.Poddar, Adv. jktLo dh vksjls@Revenue by: Sh. Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@Date of Hearing : 21/01/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 27/01/2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The present appeal has been filed by the because the assessee is dissatisfied with the order of the learned Commissioner of Income Tax (Appeal), Jaipur-5 [for short “CIT(A)”)] dated 20.11.2024 for the assessment year 2019-20. The said order of ld. CIT(A) arise as assessee had challenged the order dated 23.06.2021 passed under section 143(3) 2 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT r.w.s. 153A of the Income Tax Act, 1961 [ for short Act ] by DCIT, Central Circle-4, Jaipur [ for short AO]. 2. In this appeal, the assessee has raised following grounds: - “1. In the facts and circumstances of the case the learned CIT(A) has erred in confirming the action of the learned AO in making the addition of Rs. 24,00,000/- u/s 69A of the Income Tax Act, 1961 and thereby applying the provisions of section 115BBE of the Income Tax Act, 1961 for levy of tax @ 60% and surcharge thereon @ 25% on offered income for which explanation was furnished before the learned AO. 2. The assessee craves your indulgence to add, amend or alter all or any grounds of appeal before the learned. AO.” 3. Brief facts of the case are that in this case, a search and Seizure action u/s 132A of the I. T. Act, 1961 was carried out at Jaipur airport on 03.09.2018, during the search proceedings, cash of Rs. 24 Lakh seized from the assessee (Smt. Premlata Pandya) and Shri Pradeep Kumar Pandya. 3.1 In this case, the assessee filed his original return of Income on 20.09.2019 for the A.Y. 2019-20 declared total return of Income of Rs. 7,31,460/-. Statutory Notice u/s 143(2) of the Income Tax Act, 1961 issued on 16.03.2020 fixing the hearing on 30.03.2020 by the ITO ward-3(2), Jaipur and thereafter the jurisdiction was transferred to DCIT, Central Circle-4, Jaipur vide order u/s 127 of the Act by the Pr. CIT, Jaipur-1, Jaipur circulated on 11.02.2021. The assessee derives Income from Income from House property, Business of Profession and other source during the year 3 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT under consideration. Thereafter, notice u/s 142(1) of Act along with questionnaire was issued on 06.04.2021 and duly served upon the assessee. After that, a show cause notice issued to assessee on 19.04.2021, asking her to show cause as to why the said an amount of Rs. 24,00,000/- should not be treated as unexplained cash for the year under consideration and added to her income. In response to said show cause notice, the assessee furnished a written reply vide letter dated 21.04.2021. He considered the reply but noted that the assessee has failed to explain the sources of seized cash of Rs. 24,00,000/-. Hence, the seized cash of Rs. 24,00,000/- considered as unexplained and undisclosed income of the assessee. Thus, an amount of Rs. 24,00,000/- was added to the total income of the assessee u/s 69A of the Act for the year under consideration. 4. Aggrieved by the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised, the relevant findings of the ld. CIT(A) are reiterated here in below:- “Decision 4.21 have considered the facts of the case and written submission of the appellant as against the observations/ findings of the AO in the assessment order for the year under consideration. 4 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT a) During the search and post search proceedings, the appellant has also accepted that the cash amount of Rs. 24 lakh pertains to her and not recorded in her books of accounted. b) In this regard, during assessment proceeding, she has filed an affidavit that the cash seized in her possession is not recorded in her books of accounts and her unexplained income./ B c) During search or post search when she was asked to substantiate claim with evidences, she was unable to produce any documentary evidences in support of cash seized in her possession and she has failed to prove the source of cash of Rs. 24 Lakh. d) After given the ample opportunities, the appellant has not produced any evidences in support of cash seized of Rs. 24 Lakh Moreover, she was also unable to prove the source of cash of Rs. 24 Lakh is from her books of accounts. Thus, it was an undisputed fact that the cash of Rs. 24 Lakhs was undisclosed income of the assessee for the year under consideration. e) During the assessment proceedings, in response to the show cause, the appellant herself accepted that an amount of Rs. 24 Lakhs belongs to her unaccounted and undisclosed income and she offered this amount for taxation for the year under consideration. f) During the assessment proceedings, the appellant submitted copies of ITR with its enclosures ie. Computation of income, Balance sheet, P & L Accounts and copies of documents related to deductions of chapter VIA of the ITRs for verification. From the verification of said submission, it was clear that the cash seized amounting to Rs. 24 Lakhs was remained as unexplained. g) Therefore, the AO had correctly made the addition of cash seized amounting to Rs. 24 Lakhs to the total income of the assessee u/s 69A of the Act. h) Section 69A of the Income Tax Act, 1961 is as under: Where in any financial year the assessee is found to be the owner of any money bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable articles recorded in the books of account if any, maintained by him for any source of income, and the assesse offers no explanation about the nature and source of acquisition of the money offered by him is not in the of the assessing officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. 5 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT i) Section 115BBE reads as under: 115BBE (Tax on income referred to in section 68 or section 69 or section 65A or section 69B or section 69C or section 69D. (Inserted by Act 23 of 2012, section 47 (w.e.f. 1-4-2013)] [(1) Where the total income of an assessee, - (a)includes any income referred to in section 68, section 69, section 69A, section 698, section 69C or section 69D and reflected in the return of income furnished under section 139; or (b)determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), The income-tax payable shall be the aggregate of- (i)the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent, and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).J (2)Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance for set off of any loss) [inserted by Act 28 of 2016, section 53 (w.e.f. 1-4-2017).] shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) (and clause (b)] [Inserted by Finance Act, 2018 (Act No. 13 of 2018), dated 29.3.2018.] of sub- section (1).] [Inserted by Act 8 of 2011, section 17 (w.e.1. 1-4-2012).) j) Section 115BBE has been introduced w.e.f. AY 2013-14 with an intention to tackle with people who shows their black income as white by paying less tax. k) The appellant had relied upon various case laws but the facts of the present case are different from the case relied. The relied case laws are related to unaccounted cash related to business income. In the present case, the appellant had not able to prove along with supportive evidences that the cash seized was related to any business income. Merely stating that seized cash is unaccounted business income is not acceptable. Until the appellant proves with supporting document the unaccounted cash will be remains from unexplained sources and will attract section 115BBE. l) Recently in April 2024, in the case of Uma Maheshwara Rao Chinni Vs Asst CIT ITA No. 895/Coch/2022-Cochin ITAT holds that once the Assessee is unable to substantiate the source of the seized cash or admits being sourced from 6 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT unspecified persons, Section 69A would automatically apply, Holds that offering such income under the head Inccome from Other Sources' is inconsequential as for attracting deeming provision of Section 69A and higher tax-rate under Section 115BBE; ITAT holds that once the Assessee hos himself admitted and of non- explanation of the source of income and therefore, Revenue is fully justified in regarding the same as unexplained, both as to its nature and source, Relies upon the SC judgment in Prakash Chand Lunia wherein the SC confirmed the application of Section 115BBE for deemed incomes, ITAT rejects the additional evidence filed by the Assessee in the form of 33 affidavits from his employer, friends and relatives claiming to be owners of seized cash due to delay in furnishing the evidence and contradiction with Assessee's ITR; Holds that the only manner in law in which the Assessee could amend his ITR, is by filing a revised ITR, which is Impermissible in reassessment proceedings; Further observes that the Assessee having admitted the income, \"the only issue that arises is of it being assessable u/s 56, Le., as returned, or uls. 69A, as assessed, with the tax rate being consequential. The plea for admission of additional evidence is not maintainable, both on facts and in law.\" Thus, dismisses the Assessee's appeal. m) Further, Section 115 BBE was inserted by Finance Act 2012 w.e.f 01.04.2013 with an intention to tackle with people who shows their black income as white by paying less tax. Therefore any income for which assessee would not be able to explain the source, the taxability on such income will as per the provisions of section 115BBE of the 1.T.Act, 1961. Section 115BBE of the I.T.Act, 1961 has provided for 30% tax on Income referred to in Sections 68, 69, 690, 698, 69C and 69D. The same was amended by the 2nd Amendment Act, w.e.f. 01.04.2017, enhancing the rate to 60% Hence there was no new liability created and the rate of tax merely stood enhanced which is applicable to the assessments carried on in that year. The enhanced rate applies from the commencement of the assessment year, which relates to the previous financial year. The enhancement of tax under Section 11588E was made effective only from 01.04.2017; the commencement of the assessment year 2017- 2018 In the instant case AO has made addition u/s 69A of the Income Tax Act, 1961 for the AY 2019-20, thus the AO had correctly applied section 1158BE of the IT Act, 1961. Considering the above discussion, the AO had made correctly applied the section 115BBE for taxing the addition made on account of seized cash of Rs 24 lakh as the source of cash remains unexplained and the appellant had not proved with evidences that the same is out of any business income what she claimed. The tax rate applied by the AO u/s 11500E is hereby upheld and the ground of appeal is dismissed. 5. The second ground of appeal is that the appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal during the course of appellate proceedings. The appellant has not added or altered, amend or withdraw any of the above-mentioned grounds of appeal. Accordingly, such mention by the appellant in its ground is treated as general in nature, no needing any specific adjudication and is accordingly treated as dispose off. 7 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT 6. In the result, the appeal is treated as dismissed.” 5. Feeling dissatisfied with the above finding of the ld. CIT(A) the assessee filed the present appeal before this tribunal on the grounds as reiterated herein above. To support the grounds so raised the ld. AR appearing on behalf of the assessee has placed reliance on the written submission which reads as under:- “The assessee is an individual, having income under the head \"house property\", \"business & profession\" and \"other sources\". The assessee is engaged in the business of trading rubber bushes used in submersible pumps and trading of fabrics. For the assessment year 2019-20, the assessee filed return declaring total income of Rs.7,31,460/- on 20/09/2019. A copy of the return of income along with computation of income is available on Paper Book Page No.1-5. In the case of the assessee, a sum of Rs. 24,00,000/- was seized at Jaipur Airport on 03/09/2018 when the assessee was coming from Kolkata.In her statement recorded on 04/09/2018, it was deposed by her that she was not in a position to explain the source of the amount and her husband was competent to explain the entire issue. She was even unable to state about her own business activities or about her bank accounts. However, later on, statement of her husband, Shri Pradeep Kumar Pandya was recorded on 4/9/2018. In his statement, he was also unable to explain the source of cash and stated that he would furnish evidences later on regarding the source of the seized cash of Rs. 24,00,000/-. Copy of statement of both of assessee, Smt. Premlata Pandya and her husband, Shri Pradeep Kumar Pandya are available on Paper Book Page No. 6-18. During the course of assessment proceedings, assessee submitted a detailed reply dated 13/04/2021. A copy of this letter dated 13/4/2021 is available on Paper Book Page No.19-41. In this letter, it was submitted that the amount of Rs. 24,00,000/- was withdrawn from various business concerns of the group and was taken for settlement of a family dispute going on at Giridih, Jharkhand with her brothers and her family. As the matter could not be sorted out, he was returning with the cash and unluckily was intercepted by the Income Tax Authorities. Since she was not feeling normal due to the dispute going on with her brothers, she was unable to state these facts at the time of seizure of cash. However, her husband 8 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT had stated that evidences shall be furnished later on regarding the source of Rs. 24,00,000/-. Alternately, sensing the adverse mindset of the Assessing Authority at the time of assessment proceedings, it was considered appropriate in the fitness of things to offer the amount of Rs. 24,00,000/- as unaccounted business income. However, the Learned Assessing Officer has completed the assessment treating the amount of Rs. 24,00,000/- as unexplained u/s 69 A of the Income Tax Act, 1961 and has also wrongly applied provisions of Sec. 115BBE. Against the order of the Learned Assessing Officer, the assessee preferred appeal before the Learned CIT(A). The Learned CIT(A) has confirmed the action of the Learned Assessing Officer in applying the provisions of section 115BBE of the Income Tax Act, 1961. Against the order of the Learned CIT(A), the assessee has preferred appeal before your honour. The individual grounds of appeal are discussed hereunder :- Ground No. 1 – In the facts and circumstances of the case the Learned CIT(A) has erred in confirming the action of the Learned AO in making the addition of Rs. 24,00,000/- u/s 69A of the Income Tax Act, 1961 and thereby applying the provisions of section 115BBE of the Income Tax Act, 1961 for levy of tax @ 60% and surcharge thereon @ 25% on offered income for which explanation was furnished before the learned AO. It is submitted that in the case of the assessee, a sum of Rs. 24,00,000/- was seized at Jaipur Airport on 03/09/2018 when the assessee was coming from Kolkata. In her statement recorded on 04/09/2018, it was deposed by her that she was not in a position to explain the source of the amount and her husband was competent to explain the entire issue. She was even unable to state about her own business activities or about her bank accounts. However, later on, statement of her husband, Shri Pradeep Kumar Pandya was recorded on 4/9/2018. In his statement, he was also unable to explain the source of cash and stated that he would furnish evidences later on regarding the source of the seized cash of Rs. 24,00,000/-. Copy of statement of both of assessee, Smt. Premlata Pandya and her husband, Shri Pradeep Kumar Pandya are available on Paper Book Page No cited supra. During the course of assessment proceedings, assessee submitted a detailed reply dated 13/04/2021. A copy of this letter dated 13/4/2021 along with copy of ledger is available on Paper Book Page No cited supra. In this letter, it was submitted that the amount of Rs. 24,00,000/- was withdrawn from various business concerns of the group and was taken for settlement of a family dispute going on at Giridih, Jharkhand with her brothers and her family. As the matter could not be sorted out, he was returning with the cash and unluckily was intercepted by the Income Tax Authorities. Since she was not feeling normal due to the dispute 9 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT going on with her brothers, she was unable to state these facts at the time of seizure of cash. However, her husband had stated that evidences shall be furnished later on regarding the source of Rs. 24,00,000/-. Alternately, sensing the adverse mindset of the Assessing Authority at the time of assessment proceedings, it was considered appropriate in the fitness of things to offer the amount of Rs. 24,00,000/- as unaccounted business income. However, the Learned Assessing Officer has completed the assessment treating the amount of Rs. 24,00,000/- as unexplained u/s 69 A of the Income Tax Act, 1961 and has also wrongly applied provisions of Sec. 115BBE. The action of the Learned Assessing Officer is not in accordance with law. The Learned Assessing Officer did not consider the reply of the assessee dated 13/4/2021. There is no discussion of this reply in the assessment order. The source of Rs. 24,00,000/- was explained as under in the aforesaid letter, the relevant part is scanned below. 10 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT 11 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT It is submitted that the assessee was enjoying income as partner having 30% share in the firm M/s Neha Enterprises and also having income as Proprietor of AB Enterprises. The amount of Rs. 24,00,000/- was, therefore, surrendered for tax as unaccounted business income from these business concerns. It is submitted that during the course of search, no document etc. was found and seized establishing any other activity of income by the assessee. The Learned Assessing Officer has not brought any material on record to disprove the submissions of the assessee. Further, it is submitted that the search was conducted at the Airport while she was returning after meeting her brothers with whom a court case was going. On finding the Income Tax authorities, the assessee totally lost her wits and bubbled out in her statement exactly not knowing what she was stating. It is submitted that the plain facts are that the amount of Rs. 24,00,000/- is out of her business income, which could not be recorded in the regular books of accounts. The provisions of Sec. 69 A are not applicable in the case of the assessee. It is relevant to submit that even before the Investigation Authorities, an affidavit was submitted on 19/10/2018 that the seized amount of Rs. 24,00,000/- may be treated as unaccounted business income. A copy of the affidavit was also submitted before the Learned Assessing Officer. However, the Learned Assessing Officer was obsessed with the application of Sec. 115BBE. Considering the aforesaid facts, the Learned CIT(A) is humbly requested to accept the appeal of the assessee and direct the Learned Assessing Officer not to apply the provisions of Sec. 115BBE. The surrender of income of Rs. 24,00,000/- requires to be taxed at the rate of normal income. The assessee is citing the following case-laws which support that income surrendered during search and survey has to be treated as “business income” more so when the ld. AO fails to point out any other source of income of the assessee. (1) Lakhmichand Baijnath Vs CIT (1959) 35 ITR 416 (Hon’ble Supreme Court) : The Hon’ble Supreme Court observed that the credits were found in the business accounts of the assessee and the explanation as to how the amounts came to be received was rejected, such credits can be treated as business income. (2) Daulat Ram Rawatmal Vs. CIT 64 ITR 593 (Hon’ble Supreme Court): When there is nothing on record that the assessee had any other source of income other than business income, it is reasonable to hold that any amount representing secret income arose out of the business of the assessee. (3) Jadhav Kangralkar Builders Vs. ACIT, Satara (ITA No.12106/PUN/2017 (ITAT, B Bench, Pune) dt 26/8/2020 – AY 2013-14 12 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT During the course of survey, additional income of Rs.1,06,32,791/- was offered on the basis of incriminating documents. The Hon’ble ITAT held that the entire income disclosed was attributable to business activity. (4) Ram Swaroop Singhal Vs. ACIT,Sriganganagar (ITA No.145/Jodh/2018 dated 25/05/2018) AY 2014-15 (ITAT, Jodhpur) During the course of survey u/s 133A, assessee offered income of Rs. 10,90,000/- on account of incriminating documents, discrepancy in stock and excess cash found during survey. The assessee disclosed the surrendered income of Rs. 10,90,000/- in the return of income filed for AY 2014-15 as income from business. The Hon’ble ITAT accepted the version of the assessee and held that lower authorities were not justified in taxing the surrendered income u/s 69 of the IT Act. (5) Pr. CIT Alwar Vs. Bajargan Traders (ITA No.258/2017 order dated 22/9/2017 – Hon’ble Rajasthan High Court In this case, unrecorded stock of 70,04,814/-, unrecorded debtors of Rs.11,95,000/-, unrecorded investment in construction of godown Rs.19,20,000/- and excess cash of Rs.7,30,000/- was found during the course of survey. It was held by the Hon’ble High Court that once the income was offered during survey as business income, the same cannot be treated as income from other sources and provisions of Sec. 69 will not be applicable. (6) Amitabh B Parekh Navsari Vs. Department of Income Tax (ITAT Ahmedabad (ITA No.3138/Ahd/2008 dated 21/01/2011 AY 2005-06 In this case, the Hon’ble ITAT upheld the decision of CIT(A) holding as under :- “..The AO has not disputed the fact that the appellant firm had made proper entry in the books of accounts of Rs.67,51,994/- being additional income declaring showing the excess stock of Rs. 62,86,624/- and excess cash found Rs.3,09,370/- and renovation expenses of Rs.1,56,000/- during the course of survey as income from business and part of the book profit as included under the business head accordingly and reflected in the audited Profit and Loss account also. If the AO was of the view that the explanation furnished by the assessee firm regarding excess stock found, excess cash found and renovation expenses which represented business income of the current year, was found to be not acceptable or untrue, the AO should have given reason to dispute the assessee’s version as to the source being other than business income. No material has been brought on record either by the survey party or by the AO to disprove the appellant’s contention regarding the only source of the firm being business income. It has not been brought out on record that the appellant firm is doing some other activities from which such income was earned and the excess stock, excess cash found and the expenditure on renovation of shop represented the income from such other source.” 13 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT (7) Mansfield & Sons Vs.CIT (1963) 48 ITR 254 (Hon’ble Calcutta High Court) Where a credit entry is found in the business accounts of an assessee and the explanation as to how the amount came to be received is rejected by the IT authorities and the amount is taken to be income from an undisclosed source, such income can be treated as business income if the assessee has no other source of income. (8) Bhuwan Goyal Vs. DCIT Cen.Circle, Ludhiana (ITA No.1385/Chd/2019) ITAT, Chandigarh dated 28/09/2020 The Hon’ble ITAT held that surrender of income of Rs.4.64 crores during the course of search on the basis of a pocket diary was to be treated as business income of the assessee and the ld. CIT(A) was not justified in directing to apply provisions of Sec. 69/155BBE. (9) Shri Harish Sharma Vs. ITO, Ludhiana (ITA No.327/Chd/2020) order dated 11/5/2021 ITAT, Chandigarh In this case, during the course of survey, a note book was found containing entries of cash collection of Rs.10 lacs. The assessee surrendered the same and filed return of income accordingly. The AO treated the declared amount of Rs. 10 lacs as unexplained u/s 68 and applied the provisions of Sec. 115 BBE. The ld. CIT(A) confirmed the action of the ld. AO. However, the Hon’ble ITAT held that provisions of Sec. 68 were not applicable and the income declared by the assessee was to be treated as business income on which provisions of Sec. 115BBE were not applicable. (10) Bajaj Sons Ltd Vs. DCIT (ITA No.1127/Chd/2019 AY 2017-18 dated 25/5/2021) ITAT Chandigarh In this case, the Hon’ble ITAT held that provisions of Sec. 68, 69, 69A. 69 B, 69 C are not attracted on the surrendered income to cover any discrepancy as the AO could not point out any discrepancy. It was also held that provisions of Sec. 115BBE could not be invoked in the matter. The Learned CIT(A) has rejected the claim by saying that the appellant had not proved with evidence that the same is out of any business income what she claimed. In this regard it is submitted that there is no evidence with the AO or with the department that the assessee is having any other income other than business income. During the course of search also no any such evidence was found that the assessee is having any unaccounted income from other sources. The assessee has explained the source that it is out of withdrawal from various bank accounts. But to purchase peace of mind and avoid prolonged litigation the assessee has offered this income as business income. In such circumstances 14 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT section 115BBE is not applicable. The explanation given by the assessee was not found false and not controverted by the revenue in any way. Therefore, the business income should be accepted. Ground No. 2 – The assessee craves your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing. Not pressed Your Honor is requested to decide the appeal in favour of the assessee by considering the grounds and submissions made above and oblige.” 6. To support the contention so raised in the written submission, reliance was placed on the following evidence / records : Sr. No. Particulars Page No. 1. Copy of return of income filed on 20/9/2019 with computation of income 1-5 2. Copy of statement of Pradeep Kr. Pandey and Premlata Pandey dt. 4/9/2018 6-18 3. Copy of letter dated 13/4/2021 submitted before the Assessing Officer and copies of cash book of concerns from where amount of Rs. 24,00,000/- were withdrawn 19-41 4. Copy of written submission made before the learned CIT(A) 42-54 7. While arguing the present appeal ld. AR of the assessee fairly submitted that on the first part of the grounds of appeal challenging the addition of Rs. 24,00,000/- made by ld. AO and confirmed by the Ld. CIT(A), he did not intend to contest and on that part of the ground but at the same time, ld. AR of the assessee contested before us that the addition cannot be considered as per provisions of Section 69A of the Act, and 15 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT thereby levy of rate of tax u/s 115BBE of the Act cannot be made looking to the fact that the source of cash found has already been explained by the assessee in the assessment proceeding which was not controverted. Ld. AR of the assessee further, submitted that the assessee vide submission dated 15.04.2024 filed with the ld. AO, categorically submitted as under:- “1. That when the assesse was traveling from Kolkata to Jaipur on 04.09.2018. The assesse was intercepted by the income tax department a cash of Rs. 24,00,000/- was seized. Statement of the assesse was recorded. The cash seized was recorded in the regular books of accounts of the assesse. was There a family dispute in In-laws of the assessee. Smt. Premlata Pandya wife of the assessee was co-owner/successor of properties held at District Giridih with her brothers. Her brothers do not want to give the share of Smt. Premlata Pandya. In this regard a case No. 29 of 2014 was also going on in Court of Civil Judge-l, (Senior Division)-Giridih. The assessee and his wife Smt. Premlata Pandya withdraw the cash from his, her wife and her son's proprietorship firm to settle the dispute. But the same was not settled and they return with the cash lying with them. The details of cash withdrawn made by the assessee and his wife at the time of going to Kolkata on 21.08.2018. the details of withdrawal made from each firms are as under:- Name of the firm Cash withdrawal by Amount of cash withdrawal Prem Construction Prop. Rishabh Pandya Prem Lata Pandya 737000 Rishab Enterprises Prop. Pradeep Pandya Pradeep Kumar Pandya 1150000 A.B. Enterprises Prop. Premlata pandya Prem Lata Pandya 530000 Neha Enterprises (partnership firm) Praddep Kumar Pandya 40000 Total cash available with the assessee and his wife Smt. Prem Lata Pandya 2457000 Copies of cashbook of the above firms were submitted before the investigation wing. So the amount of Rs. 24,00,000/- was taken by the assesssee for settling the disputes and payment to the given to the other relatives. But since the dispute 16 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT was not settled and the assessee has return along with this cash amount of Rs. 24,00,000/- which have been seized at Jaipur Airport. The above cash seized was fully explained and source of which are regular sales and bank withdrawals of the above firms where the money was withdrawn. However to purchase peace of mind and avoid further waxed litigation we are ready to offer this income as our business income earned by unaccounted activities. You are also requested to adjust the tax liability out of seized cash of Rs. 24 Lakhs. We have also made this offer before the investigation of officer and submitted an affidavit in this regard on 19.10.2018. Copy of which is enclosed herewith. The counsel of the assesse has forgotten to include this income at the time of filing of return u/s 139(1) of the IT Act. Now you are requested to accept this offer of income and not to initiate penalty proceedings as well as tax the income at normal rates. Kindly accept our proposal/officer and oblige.” As the assessee though explained the source of cash available with him, ld. AO and that of ld. CIT(A) did not discuss and submission so filed on 15.04.2021 and the facts stated in that letter was not controverted. The assessee already submitted that with a view to buy the peace he surrendered that amount for taxation purpose but the source of cash cannot be considered as unexplained. Considering that specific details placed on record and the assessee did not want to context the addition on merits but considering the source of availability of cash the same cannot be considered as unexplained and subjected to levy at special rate as per provision of section 69A of the Act r.w.s 115BBE of the Act. The assessee vide statement recorded on 04.09.2020 vide Question No. 10 (APB at page 11) categorically submitted that he will submitted documentary evidence about the source of cash fund in her possession she never disclosed that 17 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT as undisclosed income. The ld. AO did not prove otherwise explanation given by the assessee; the reply of the assessee so filed has never been considered and the facts cited in their submission so placed on record. The assessee submits details of the source of cash fund from the various concerns as listed in assessee’s submission filed on 15.04.2004 that the contention was not controverted by the lower authorities at the time of confirming the addition. As is evident vide para 4.2(b) of the order of the ld. CIT(A) wherein Ld. CIT(A) noted that she has filed an affidavit that the cash seized in her possession is not recorded in her books of account and her unexplained income. Thus, the assessee has also supported her arguments by filing affidavit which has not been controverted. Considering that facts on record and relying on the decision cited he stated that the provision of section 69A of the Act cannot be made 8. Per contra, ld. DR supported the order of the lower authorities and vehemently argued that once the assessee is found in possession of cash that is very well covered from the provisions of section 69A of the Act and the assessee before the Bench also not contesting the addition so made will liable her as per the provision of section 69A r.w.s. 115BBE of the Act. 18 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT 9. We have heard both the parties and perused the materials available on record. Apple of discord is that whether the cash fund in the possession of the assessee at Jaipur Airport is though explained to have been sourced out of the withdrawal from the various concerns. As we note that though the assessee before us did not contested the addition on its merits but at the same time the explanation so given was contested that though the submission was not considered but considering the evidences placed on record and not controverted that cash so found cannot be considered as unexplained. The assessee not contesting the addition so as to buy the peace of the amount so added but at the same time the income so offered was not out of unexplained sources and therefore, that income so admitted to by peace cannot fall within the meaning of section 69A of the Act. The bench noted that the assessee placed on record the source of cash so found in her possession supported by the evidence before the ld. AO. Ld. AO and CIT(A) did not considered the explanation of the assessee and considered the income as per provisions of Section 69A of the Act and thereby attracting the provisions of Section 115BBE of the Act. Before proceedings further, in the matter we would like to quote to the provisions of Section 69A of the Act:- “Unexplained money, etc. 19 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.” As is very much clear from the records that the assessee has placed on record the details showing the source of cash found in her possession and the provision of section 69A of the Act mandate that when the assessee offers no explanation about the nature of source acquisition of the money then the money so found may be deemed to be the income of the assessee for such financial year. In this case the assessee has already explained the source of the money so found in her possession. The details of cash sourced along with all the details were placed on record vide submission made by the ld. AR of the assessee. Even vide statement recorded which was available before the Assessing Officer and that of the ld. CIT(A) wherein the assessee confirmed that there is no undisclosed income declared by the assessee even in the statement so recorded wherein she stated that he will give a documentary evidence to support the source of cash fund in her possession. Assessee after statement so recorded during 20 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT the course of assessment proceeding dully supported the withdrawal cash from various concerns as listed herein below:- Name of the firm Cash withdrawal by Amount of cash withdrawal Prem Construction Prop. Rishabh Pandya Prem Lata Pandya 737000 Rishab Enterprises Prop. Pradeep Pandya Pradeep Kumar Pandya 1150000 A.B. Enterprises Prop. Premlata pandya Prem Lata Pandya 530000 Neha Enterprises (partnership firm) Praddep Kumar Pandya 40000 Total cash available with the assessee and his wife Smt. Prem Lata Pandya 2457000 There is no discussion in the orders of the lower authorities about the explanation so offered by the assessee as to why the same is not acceptable. Therefore, when the explanation of the assessee so made is based on the evidence of withdrawal of money and they withdrawal was available with her is also supported by an affidavit. Thus, those evidence cannot be brushed aside and the cash so explained though voluntarily offered as income cannot be considered as unexplained money as per provisions of Section 69A of the Act. But since the income so offered and considered as voluntarily even before us by withdrawing the ground of addition we hold that the same cannot be considered as unexplained money as is supported by statement, evidence placed in the assessment 21 ITA No. 1471/JPR/2024 Prem Lata Pandya vs. DCIT order supporting the proof of cash withdrawal which also get supported by an affidavit. Based on these records already available merely the assessee did not contest the addition on merit the same cannot be considered as unexplained money as liable to be taxed u/s. 69A of the Act and therefore, levy as per provisions of Section 115BBE of the Act is not applicable. Considering the facts and circumstances of the case as discussed herein above, therefore second limb of grounds of appeal as referred before us is allowed. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 27/01/2025. Sd/- Sd/- ¼ujsUnz dqekj½ ¼jkBkSM+ deys'k t;UrHkkbZ½ (NARINDER KUMAR) (RATHOD KAMLESH JAYANTBHAI) U;kf;d lnL;@Judicial Member ys[kk lnL; @Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 27/01/2025 *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Prem Lata Pandya, Jaipur 2. izR;FkhZ@ The Respondent- DCIT, Central Circle-4, Jaipur. 3. vk;d jvk;qDr@ The ld CIT 4. vk;dj vk;qDr ¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 1471/JPR/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "