Addition U/s. 69A based on part of statement which suited AO not sustainable

Vijay L. Bhawe Vs. Asst. CIT (ITAT Mumbai)

Addition U/s. 69A based on part of statement which suited AO not sustainable

Assessee has been claiming right from the stage of the assessing officer that assessee is having sufficient amount of cash withdrawals since last many years. The point worth noting here is that this fact was stated by the assessee in his statement also at the time of search. Learned assessing officer has chosen to rely only upon that part of statement which suited him and ignored the remaining one. It is well accepted position of law that in the income tax proceedings theory of approbation and re probation is not applicable. The revenue authorities are not expected to blow hot and cold together. The assessing officer appears to have followed the rule of “head I win tail you lose”, whereas the revenue authorities are expected to work in fair and transparent manner. Before making any addition, it is expected from the assessing officer that all the facts and circumstances, pleadings and evidences before the assessing officer would be taken into account. The statement of the assessee should be read in its entirety, particularly when it is being used against the assessee. Thus, in our considered view, the revenue authorities were duty bound to consider the aspect of source of cash claimed to be out of the withdrawal from banks and other means. It is noted from the perusal of the orders of the lower authorities that assessee had submitted that total amounts of withdrawals during the last 7 years by the assessee’s family stood at Rs. 127.25 lakh. Under these circumstances, amount of cash found at the time of search of Rs. 6,36,900 is easily explained and covered therein. The apprehension of the lower authorities that there were huge expenses, other household expenses and marriage expenses which might have been made from these withdrawals is certainly not out of context but no evidences were found during the course of search indicating that entire withdrawals were exhausted in meeting household, marriage and other expenses. Thus, we cannot ignore the availability of cash on account of huge amount of withdrawals from the bank just on the basis of doubts and surmise, especially when no contrary material has been brought on record. In our view, the assessee has duly explained the availability of cash of Rs. 6,36,900 found at the time of search out of the cash available on account of withdrawals made by the assessee and his family members in the current year as well as during the last 7 years. We find that addition made by the assessing officer is not sustainable and therefore same is directed to be deleted.

Addition under section 69A only in assessee’s hands for Unaccounted jewellery found from possession of different family members is not  sustainable

It is noted that jewellery has been found from the separate and personal possession of 8 family members and has been recorded accordingly in the Punchnama as well as Valuation Report prepared by the Departmental Valuer at the time of search. Further, all the family members are major and separately assessed and separate income tax and wealth tax return are filed by the family members. No allegation has been made and no evidences have been brought on record by the assessing officer to show that investment was made by the assessee in acquiring jewellery on behalf of all the family members. Under these circumstances, in our opinion, law does not permit to make entire addition on account of difference found in the jewellery recovered and jewellery disclosed in wealth tax returns/books of accounts, in the hands of assessee only. Under these circumstances, we find it appropriate to send this issue back to the file of the assessing officer with the direction that assessing officer is permitted to make addition only with respect to the jewellery found from the assessee that too only for the amount which remains unexplained. The assessee is free to submit requisite details and documentary evidences to explain the source of the jewellery found from his possession. The assessee is also free to submit before the assessing officer, copies of judgments and CBDT circular which have been relied before us to explain the jewellery found from its possession. The assessing officer shall give adequate opportunity of hearing to the assessee before deciding this issue afresh and shall also consider the submissions, evidences and judgments as may be placed by the assessee before the assessing officer. Thus, with these directions grounds raised by the assessee in this regard are sent back to the file of the assessing officer and may be treated as allowed for statistical purposes.

Author Info

Name: CA Sandeep Kanoi

Qualification: CA in Job / Business

Company: Taxguru Consultancy

Location: Mumbai, Maharashtra

Articles Published: 19,237

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