Bengaluru ITAT Upholds ₹23 Lakh Addition: Story of Farmers Leaving Cash in Car Found Incredible

Nayaka Ramanna Rameshbabu Vs JCIT (ITAT Bangalore)

Bengaluru ITAT Upholds ₹23 Lakh Addition: Story of Farmers Leaving Cash in Car Found Incredible

The Bengaluru ITAT upheld the addition of ₹23 lakh under section 69A after cash was found in the assessee’s vehicle during the 2018 Karnataka Assembly elections. The assessee contended that the cash belonged to certain farmers to whom he had merely offered a lift and that he had claimed ownership only of ₹84,500 before the criminal court. He argued that section 69A applies only where the assessee is found to be the owner of the money and relied on the absence of any cash withdrawals, books of account or other evidence linking him to the seized cash.

The Tribunal, however, held that the explanation lacked credibility. It observed that the assessee failed to furnish the identity, addresses or contact details of the alleged farmers and did not produce them before any authority, despite several opportunities and the passage of nearly eight years. The claim that someone would leave ₹23 lakh in another person’s vehicle and never return to claim it was found to be highly improbable. The statutory presumption under section 132(4A) remained unrebutted, and a mere denial of ownership was held insufficient to discharge the burden cast upon the assessee. Accordingly, the Tribunal confirmed the addition of ₹23 lakh under section 69A and dismissed the appeal.

FULL TEXT OF THE ORDER OF ITAT BANGALORE

1. This appeal is filed by Shri Nayaka Ramanna Rameshbabu, [the assessee-appellant], for Assessment Year 2019-20 against the order of the Principal Commissioner of Income Tax (Appeals)-11, Bengaluru [CIT(A)]. By that order, the CIT(A) dismissed the assessee’s appeal against the assessment order passed by the Joint Commissioner of Income Tax (OSD), Central Circle-1(3), Bengaluru [Assessing Officer], under section 143(3) of the Income Tax Act, 1961 [the Act], dated 3 April 2021.

2. The assessee primarily challenges the CIT(A)’s confirmation of the ₹23,00,000 addition under section 69A of the Act, contending that the amount did not belong to him and therefore could not be assessed in his hands.

3. During the Karnataka Assembly Election, 2018, the Flying Squad intercepted a Mahindra XUV 500 bearing registration No. KA-16-M-9504 on 11 May 2018. The vehicle was driven by Shri Mrityunjaya, and cash of ₹23,00,000 was found in it and placed in the safe custody of the Police Department. A warrant under section 132A was thereafter issued by the Principal Director of Income Tax, Panaji, and the cash was seized under the Income Tax Act. Statements were recorded from Shri Mrityunjaya, the driver, and Shri N.R. Ramesh Babu, the vehicle owner. Shri Mrityunjaya stated that he worked as an on-call driver and had been asked by Shri Ramesh Babu to drive the vehicle to Kudligi on that date. After dropping Shri Ramesh Babu and five others at about 12:30 p.m., he went for lunch; on returning, he found the Flying Squad near the vehicle and stated that he knew nothing about the cash. Shri N.R. Ramesh Babu stated that the ₹23,00,000 belonged to farmers to whom he had given a lift, but he could provide only their names and no identities, contact numbers, or addresses. Following the search, the assessee filed his return on 28 November 2020 declaring business income of ₹1,08,090. Although a notice under section 143(2) was issued on 11 January 2021, the assessee did not respond. A further notice asked why the seized amount should not be added to his returned income and why the assessment should not be completed under section 144 of the Act.

4. The assessee responded and provided the details sought. In his submission dated 8 February 2021, he stated that he was travelling in Ballari district, Karnataka, to offer prayers at a temple when he met a few farmers from Kottaru village waiting for a bus. As they were from the same village and had luggage with them, he offered them a lift.

5. After reviewing the assessee’s submissions, the Assessing Officer added ₹23,00,000 to the assessment order dated 3 April 2021.

6. The assessee appealed before the CIT(A). The delay of 147 days was condoned. On merits, the CIT(A) noted that the assessee had not furnished details of the farmers alleged to own the cash. A warrant under section 132A had been executed in the name of Shri Mrityunjaya, the driver, who stated that he was an on-call driver engaged by the assessee on the date of seizure and had no knowledge of the cash. The assessee stated that the cash belonged to farmers who had taken a lift in his car, but he could provide only their names and no further particulars. As the assessee failed to explain the source of the cash found in the vehicle, the Assessing Officer treated it as undisclosed income under section 69A. The assessee submitted that he had no cash withdrawals or documented receipts showing ownership of the ₹23,00,000 and had never claimed it as his own. He argued that section 69A applies only where the assessee is found to be the owner of money; that he did not maintain books of account and had declared income under section 44AD; and that, before the Senior Civil Judge, he had claimed only the car and ₹85,000, not ₹23,00,000, as belonging to him. He further contended that the Assessing Officer’s findings rested on surmises and conjectures and that his bank statement showed no cash withdrawal during the relevant period.

7. Referring to section 132(4A) of the Act, the CIT(A) held that the statutory presumption could be displaced only by contrary corroborative evidence. The assessee, who had declared income of ₹1,08,019 under section 44AD, did not maintain books of account, and therefore had no cash book showing any cash deposits or withdrawals. His bank statement also reflected no withdrawals in the days preceding the seizure. The CIT(A) held that a mere denial of ownership was insufficient to discharge the assessee’s burden of proving that the seized cash was not his. Relying on CIT v. Naresh Kumar Agarwala, 331 ITR 510 (Delhi), the CIT(A) further held that the burden would shift to the Department only after the assessee established that the presumption against him was incorrect. The addition was accordingly confirmed by order dated 21 January 2026.

8. Aggrieved by the order, the assessee is in appeal before us. The learned Authorised Representative reiterated the submissions made before the lower authorities and contended that the cash belonged to the farmers, not to the assessee. Since the assessee had furnished the names of the farmers who allegedly left the cash in his car, it was argued that the addition of ₹23,00,000 under section 69A in his hands was unsustainable and had been wrongly confirmed.

9. The learned Departmental Representative supported the orders of the lower authorities. He submitted that ₹23,00,000 was found in the assessee’s car during the election period, and the assessee failed to explain its source or identify the person for whom it was allegedly carried. He contended that the claim that a farmer had taken a lift and left the cash in a bag in the car was unsupported and lacked credibility, as no evidence regarding the alleged farmer was produced. Relying on the CIT(A)’s order confirming the addition under sections 132(4A) and 69A of the Act, he argued that the Assessing Officer’s order suffered from no infirmity. He further submitted that a mere denial of ownership, without identifying the person who allegedly kept the money in the car, did not discharge the assessee’s burden. Since the cash was found during the Karnataka Assembly Election on 11 May 2018, he submitted that it appeared to be election-related money and urged that the addition be confirmed.

10. We have considered the rival submissions and reviewed the orders of the lower authorities. The record shows that, on 11 May 2018, during the Karnataka Assembly Election, the Flying Squad intercepted the assessee’s vehicle and found cash of ₹23,00,000 in it. The assessee claimed that the cash belonged to farmers. However, he neither furnished their names and addresses during assessment nor produced them for verification. It is inherently improbable that anyone would leave such a substantial amount in a vehicle, forget it, and never claim it. Despite being asked by the Assessing Officer to provide particulars of the alleged farmers, the assessee failed to do so.

11. The Assessing Officer recorded the relevant facts and made the addition as follows:

9. Unexplained cash:

9.1 During Karnataka Assembly Election, 2018, on 11.05.2018, the flying squad at Kudligi intercepted a vehicle, Mahindra XUV 500 bearing registration No.KA-16-M9504 driven by a person by name Shri Mrruthyunjaya and caught with a cash of Rs.23,00,000/- and the cash was kept at the safe custody of Police Department at Kuligi Police Station. Consequently, Warrant u/s 132A was issued by the Pr. DIT, Panaji and the same was seized by execution of warrant u/s 132A of the Income-tax Act, 1961.

9.2 Statements of Shri Mruthyunjaya, driver of the vehicle and Sri Ramesh Babu N R, owner of the vehicle, were recorded. Shri Mruthyunjaya, resident of Rampur Village, Tq: Molakalamuru, District: Chitradurga, stated that he works as a driver on call and that he accepts the job whenever he gets calls for driver requirement. Shri Mruthyunjaya further stated that on 11.05.2018, he was called by Shri Ramesh Babu, who owns a Mahindra XUV 500 vehicle, bearing registration number KA 16 M 9504 to drive the said vehicle to Kudligi. He has further stated that Shri N.R. Ramesh Babu and 5 others came in the vehicle and after dropping them at Kudligi at 12.30 PM, he went to have lunch on road side and when he returned from lunch, the flying squad were near the vehicle and after checking the vehicle found the cash of Rs.23,84,500/-. He further stated that he does not know anything about the cash found in the vehicle.

9.3 Statement was also recorded from Shri N.R. Ramesh Babu, the owner of the Mahindra XUV 500 vehicle bearing registration number KA 16 M 9504, who has stated that the cash of Rs.23.00 lakhs belonged to the farmers and he offered lift to the farmers during his trip. When enquired about the identities, contact numbers and address of the farmers, Sri Ramesh Babu responded that he only knows the names of the farmers and unable to provide any other information regarding farmers. Since the cash was found in the vehicle owned by Shri N R Ramesh Babu and he was unable to explain the source of the cash satisfactorily, the same was treated as undisclosed income of Shri N R Ramesh Babu.

9.4 During the course of assessment proceedings, the assessee vide his submission dated 08.02.2021 has stated that the assessee was travelling to Kotturu Village in Bellary District of Karnataka to pray at Kottureshwara Temple. On the way, he met few farmers belonging to the Kotturu Village waiting to catch a bus to the village. Seeing that farmers were of the same village and they had luggage with them, the assessee offered to give them a lift.

9.5 On the way to Kotturu Village, they stopped near Kuligi Town for some refreshments. At the same time, a flying squad reached the place and started inspecting the vehicle. During inspection, the flying squad found Rs.23,00,000/- in one set of bags and Rs.84,500/- in another set of bags. Both the driver and the assessee were about the Rs.23,00,000/- cash, as they were found from the bags of the farmers. Rs.84,500/- belonged to the assessee and it was from his savings. Asssessee has filed a copy of the order passed by Hon’ble Sr. Civil Judge and JMFC, Kudligi wherein the assessee’s claim is only Rs.84,500/-, in support of his contention. Accordingly, the assessee has contend that the cash of Rs.23,00,000/- never belonged to him and therefore explaining the source of cash does not arise.

9.6 The submission of the assessee is considered but not acceptable for following reasons: When the flying squad at Kudligi intercepted the vehicle, a cash of Rs.23,00,000/- was found from the vehicle which was driven by Shri Mruthyunjaya. Shri Mruthyunjaya in his statement recorded has stated that on 11.05.2018, he was called by Shri Ramesh Babu, who owns a Mahindra XUV 500 vehicle, bearing registration number KA 16 M 9504 to drive the said vehicle to Kudligi. He has also stated that, Shri N.R. Ramesh Babu and 5 others came in the vehicle and after dropping them at Kudligi at 12.30 PM, he went to have lunch on road side and when he returned from lunch, the flying squad were near the vehicle and after checking the vehicle found the cash of Rs.23,84,500/-. In the statement recorded from Shri N.R. Ramesh Babu, Shri Ramesh Babu has stated that the cash of Rs.23.00 lakhs belonged to the farmers and he offered lift to farmers during the trip. However, when enquired about the identities, contact numbers and address of the farmers, Sri Ramesh Babu responded that he only knows the names of the farmers and unable to provide any other information regarding farmers. Since the cash was found in the vehicle owned by Shri N R Ramesh Babu and he was unable to explain the source of the cash satisfactorily, the same is treated as unexplained money of Shri N R Ramesh Babu substantively and protectively in the hands of Shri M. Mruthyunja, who was driving the vehicle at the time of cash seizure. Accordingly, an amount of Rs.23,00,000/- is added back to the returned income as unexplained money u/s 69A of the I.T. Act in the hands of Shri N.R. Ramesh Babu substantively and protectively in the hands of Shri M. Mruthyunjaya. (Addition: Rs.23,00,000/-)

12. Ld. CIT(A) dealt with the issue as follows:

“Written Submissions:

The appellant herein seeks the leave of the learned Commissioner of Income Tax (Appeals) to file the following written submissions in support of grounds of appeal.

1. Facts of the Case

1.1. The appellant is an individual who is engaged in the business of trading in construction materials such as jelly and m-sand and declares profit w/s 44AD of the Income Tax Act, 1961. The appellant filed its return for AY 2019-20 on 28.11.2020 declaring a total income of Rs. 1,08,090/-.

1.2. On 11.05.2018 the appellant along with a driver Mr. Mruthunjaya, who were travelling to Kotturu Village in Bellary District of Karnataka to pray to Kottureshwara Temple. On the way the appellant met few farmers belonging to the Kotturu Village waiting to catch a bus to the village. Seeing that farmers were of the same village and they had luggage with them, the assessee offered to give them a lift. On the way to the Kotturu Village, they stopped near Kudligi Town for some refreshments. At the same time, a flying squad reached the place and found Rs. 23,00,000/- in one set of bags and Rs. 84,500/- in another set of bags. However, the farmers ran away from the said place. The appellant was not aware of the of the cash of Rs. 23,00,000/-. The sum of Rs.84,500/- belonged to the assessee and it was from his savings.

1.3. Subsequent to the search action on 11.05.2018, the group case was notified to this office by the Principal Commissioner of Income tax, Bangalore-1, Bangalore in F.No. 153/Centralisation/PCIT-1/2020-21 dated 14.12.2020. 1.4. 1.5. Based on the above the learned assessing officer issued notices u/s 143(2) and 142(1) of the Income-Tax Act, 1961 (the Act) seeking certain information/documents on the same and to show cause why the sum of Rs. 23,00,000/- should not be added as income protectively in the hands of the assessee. In response, Shri D.R. Venkatesh, Chartered Accountant and the Authorized Representative of the assessee, appeared from time to time and furnished the details called for. The details called for were submitted during the course of assessment proceedings and were examined. In the submissions it was also stated that that the cash seized was neither accrued in the hands of the assessee not has the assessee enjoyed the income and the cash belonged to the farmer who were given lift by the appellant. Upon consideration of the submissions made by the appellant the learned assessing officer passed an order u/s 143(3) the Act dated 03.04.2021 treating the amount as unexplained money w/s 69A of the Act and assessed the sum of Rs. 23,00,000/- as total income and levied tax w/s 115BBE of the Act at the rate of 60%.

Submissions 2.

Ground No 2.3 & 4: The sum of Rs. 23,00,000/- does not belong to the assessee. 2.1. Addition cannot be made u/s 69A of the Act. 2.1.1. It is submitted that the facts show that on 11.05.2018 a flying squad intercepted the appellant’s vehicle and found Rs.23,00,000 in one bag and Rs.84,500 in another. The appellant was unaware of the Rs.23,00,000, while the Rs.84,500 was from his personal savings. The Assessing Officer nonetheless treated the entire Rs.23,00,000 as unexplained income under section 69A.

2.1.2. The AO has produced no evidence that the Rs.23,00,000 belonged to the appellant. It is undisputed that the appellant had no knowledge of this cash. The law is clear that Section 69A applies only where the assessee is shown to be the owner of the seized money.

2.1.3. The appellant categorically states that the sum of Rs. 23,00,000/- does not belong to him. The cash belonged to the farmers to whom the appellant had given a lift. It is submitted that to invoke the provisions of section 69A of the Act, it may be broken down into the following essential parts:

a) The assessee must be found to be the owner;

b) He must be the owner of any money, bullion, jewelry or other valuable articles;

c) The said articles must not be recorded in the books of account, if any maintained,

d) The assessee is unable to offer an explanation regarding the nature and the source of acquiring the articles in question; or the explanation, which is offered, is found to be, in the opinion of the Officer, not satisfactory:

e) If the aforesaid conditions are satisfied, then, the value of the bullion, jewelers or other valuable article may be deemed as the income of the financial year in which the assessee is found to be the owner;

f) In the case of money, the money can be deemed to be the income of the financial year.

2.1.5. It is further submitted that Section 69A of the Income Tax Act specifically uses the phrase “where in any financial year the assessee is found to be the owner of any money…”. It means mere possession is not enough; the revenue must prove the assessee is the legal owner. The Hon’ble Supreme Court in the case of D.N. Singh v. CIT (Supreme Court) 150 taxmann.com 301 (SC) held that for Section 69A to apply, it is indispensable that the Assessing Officer (AO) must find that the assessee is the owner of the article. In this case the Court distinguished between a “carrier” (or bailee) and an “owner.” A person who is merely carrying goods (or money) for someone else does not become the owner of those goods.

2.1.6. The relevant portion of the judgement is reproduced below for your reference.

39. To apply Section 69A of the Act, it is indispensable that the Officer must find that the other valuable article, inter alia, is owned by the assessee. A bailee, who is a common carrier, is not an owner of the goods. A bailee who is a common carrier would necessarily be entrusted with the possession of the goods. The purpose of the bailment is the delivery of the goods by the common carrier to the consignee or as per the directions of the consignor. During the subsistence of the contract of carriage of goods, the bailee would not become the owner of the goods. In the case of an entrustment to the carrier otherwise than under a contract of sale of goods also, the possession of the carrier would not convert it into the owner of the goods.

2.1.7. In the assessee’s case, the assessee was merely a “carrier” giving a lift to the farmers. The money was in their possession/bags. Applying this SC judgment, the assessee cannot be treated as the owner just because the goods/money are in their vehicle. Appellant only claimed only car and Rs. 84,500 as his money.

2.2.1. That the learned Commissioner of Income Tax (Appeals) has overlooked а crucial piece of evidence, namely the order passed by the Senior Civil Judge and JMFC, Kudligi. This judicial order, emanating from an independent legal proceeding, specifically records the claim made by the assessee. It is pertinent to note that the appellant claimed only a car and an amount of Rs. 84,500/-, The absence of any claim by the Appellant for the larger sum of Rs. 23,00,000/- in a formal judicial proceeding is a strong indicator that the said amount was not considered by the Appellant to be his own.

2.2.2. It is submitted that the appellant filed an application under Section 457 of the Criminal Procedure Code (CrPC), stating that the car found was his property and that the sum of Rs. 84,500/- also belonged to him. This application gave rise to a contemporaneous court record (Senior Civil Judge and JMFC, Kudligi) establishing that the appellant owned only Rs. 84,500/-. The statement of facts, reflecting this record, explicitly notes that of the two sums found, “the sum of Rs. 84,500 belonged to the assessee and it was from his savings,” whereas “the appellant was not aware of the cash of Rs. 23,00,000.”

2.2.3. Importantly, this admission by the appellant was never rebutted by the Department. However, the Assessing Officer treated the entire Rs. 23,00,000 as the appellant’s income, contrary to the fundamental requirement of Section 69A of the Income-tax Act, 1961, which applies only to unexplained money of the assessee. In the absence of any evidence to the contrary, the appellant’s uncontested assertion that only Rs. 84,500/- belonged to him must, therefore, be accepted.

2.3. Addition rests on assumptions without evidence.

2.3.1. That the impugned addition of Rs. 23,00,000/- is based on a mere assumption and conjecture, without any factual foundation. The Revenue has not brought on record any material to establish a direct link between the appellant and the said cash. An assessment cannot be based on surmises, conjectures, or suspicion, however strong. The Hon’ble Supreme Court in the case of Omar Salay Mohamed Sait vs. CIT (1959) 37 ITR 151 (SC), emphasized that suspicion, however strong, cannot take the place of evidence. The Revenue’s case appears to be built on the premise that since the cash was found in a certain vicinity, it must belong to the Appellant. This is a flawed line of reasoning. The Revenue has failed to conduct proper investigations to ascertain the true owner of the funds or to establish any nexus between the appellant’s financial activities and the seized cash. The burden of proving that the cash belongs to the assessee is on the department, and this burden has not been discharged.

2.4. Bank statements show no withdrawals of Rs. 23,00,000/-

2.4.1. It is submitted that a thorough examination of the appellant’s bank statements would reveal a complete absence of any substantial cash withdrawals that could explain the possession of Rs. 23,00,000/-. In the ordinary course of financial transactions, a person possessing such a large amount of cash would typically have either withdrawn it from their bank account or received it through documented channels. The lack of corresponding withdrawals from the appellant’s bank accounts strongly militates against the Revenue’s assertion of ownership. This objective evidence from the bank records serves as a crucial piece of corroboration for the appellant’s denial of ownership. The Revenue has failed to reconcile the alleged possession of cash with the Appellant’s documented financial transactions, thereby failing to establish a credible link.

2.5. No books of account or records show such cash.

2.5.1. The appellant does not maintain any formal books of accounts. This fact is significant because individuals dealing with substantial amounts of cash, especially for business or investment purposes, typically maintain proper records. The absence of books of accounts further supports the appellant’s contention that he was not involved in transactions of such magnitude and did not possess or manage such a large sum of cash. If the appellant were indeed the owner of Rs. 23,00,000/-, it would be reasonable to expect some form of recordkeeping, however rudimentary. The Revenue’s failure to consider this aspect and draw appropriate inferences therefrom demonstrates a lack of appreciation of the factual matrix.

2.5.2. The appellant did not maintain any cash ledger or accounts to justify possession of Rs.23 lakh. As a small business taxpayer under section 44AD, he was not required to keep detailed books, and in fact has no record of this cash. The department produced no vouchers, diary entries, inventory records or any books showing receipt or transfer of Rs.23 lakh. Courts have repeatedly held that undocumented figures in search reports cannot replace evidence.

2.6. No criminal proceedings or evidence links the cash to the appellant.

2.6.1. That it is imperative to note that no criminal proceedings have been initiated against the appellant in connection with the said sum of Rs. 23,00,000/-. This absence of criminal action further reinforces the appellant’s stand that the money was not his and was not involved in any illicit activities attributable to him. Furthermore, the appellant has consistently maintained that the amount was kept farmers and did not belong to him. This explanation, though denied by the revenue, has not been disproved with any concrete evidence. The Revenue has merely rejected the explanation without providing any counter-evidence to establish the appellant’s ownership. The principle of natural justice and fair play demands that an explanation, unless proven false with cogent material, cannot be summarily dismissed. The Revenue cannot merely substitute its suspicion for evidence.

2.6.2. There is a complete absence of any corroborative evidence to link the appellant to the Rs. 23,00,000/-. No statements from third parties, no documents, no entries in any alleged books of accounts, and no financial transactions of the appellant to support the Revenue’s claim. The addition is based solely on a presumption that has not been backed by any material facts. In light of the foregoing submissions, it is humbly prayed that the Commissioner of Income Tax (Appeals) may be pleased to quash the addition of Rs. 23,00,000/- made in the hands of the Appellant and allow the appeal.

6.0 Considering the facts and appellant’s submission, the grounds of appeal filed by the appellant for the relevant AY are decided below.

6.1 Ground nos. 1 for AY 2019-20 are general ground and do not need specific adjudication.

6.2 Ground Nos. 2, 3 & 4 relate to the addition made by the AO an amount of Rs.23,00,000/-. The AO’s findings are summarized as under:

1) The appellant was unable to provide details about the farmers who were stated to be owners of the money by the appellant. A search warrant u/s 132A was executed in the name of the driver of the vehicle, A Mahindra XUV 500, Sri. Mruthyunjaya. The driver stated that he works as a driver on call and on that day when the cash was seized, he was called for duty by the appellant. He stated that he does not know anything about the cash. The appellant’s statement was also recorded. He stated that cash belonged to the farmers who had asked for a lift in his car and he does not know any other details about them except their names. As the appellant was not able to explain the sources of the cash found in his vehicle, the same was treated as undisclosed income of the appellant u/s 69A of the Act.

6.3 During the assessment proceedings, the appellant stated that he was on his way to offer prayers at Kottureshwara Temple and he saw some villagers waiting to catch a bus. Since they belonged to the same village of Kotturu and had luggage with them, he offered them a lift. They, after sometime stopped for refreshments. By then, the flying squad deployed during elections reached the place and after inspection of the vehicle, found Rs23,00,000/- in one bag and Rs84,500/- in another bad. The appellant also filed a copy of the order passed by the Senior Judge and JMFC, Kudligi wherein the appellant’s claim was only Rs84,500/-. The cash of Rs23,00,000/- never belonged to him, it was contended.

6.4 The AO did not accept the submissions of the appellant as the cash was found in the appellant’s vehicle and he had not offered any satisfactory explanation about the source of the same. He did not provide any information about the farmers except for their names. Hence, he treated the amount of Rs.23,00,000/- as unaccounted money on substantive basis in the hands of the appellant and protectively in the hands of the Driver, Sri. Mruthunjaya.

6.5 The arguments of the appellant with regards to the cash found of Rs.23,00,000/- rests on two premises:

1) He has no such cash withdrawals or receipts of money through documented channels to state that he was the owner of the money. The appellant never owned up the cash found. Section 69A applies to only those assessees who are found to be the owner of the money. The appellant did not maintain books of account and declared income u/s 44AD of the Act. The cash belonged to the farmers to whom he gave a lift in his car.

2) In the independent legal proceedings before the Senior Civil Judge and JMFC, Kudligi, the appellant claimed only the car and Rs85,000/- and not Rs23,00,000/-. This admission by the appellant was not rebutted by the Department. The AO’s findings are based on surmises and conjectures. Bank statements also do not show any cash withdrawals and the department failed to reconcile the possession of cash with appellant’s documented financial transactions. The appellant did not maintain any record of cash to justify the possession of cash. Based on these findings, no criminal proceedings have been initiated against the appellant. Thus, according to the appellant, there is complete absence of any corroborative evidence to link the appellant to the cash found amounting to Rs23,00,000/-

6.6 I have perused the written submissions of the appellant and the assessment order. It is observed that the appellant had stated that the cash of Rs23,00,000/- did not belong to him. He stated that it belonged to the farmers to whom he offered a lift. But he did not throw any light on their particulars except for knowing their names. The driver’s statement is that the appellant and 5 others were driven by him to Kudligi.

6.7 The presumption is that when any money/bullion or article is found in the possession of a person, the onus is on him to prove that it does not belong to him. Section 132(4A) of the Act is very clear. It is reproduced as under: “(4-A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or things are or is found in the possession or control of any person in the course of a search, it may be presumed- (i)that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;”

6.8 It is a rebuttable presumption provided the appellant provides corroborative evidence to the contrary. A presumption is not a substitute to the evidence, so the AO needs further corroboration to link the seized money to the appellant’s income. The appellant filed return of income declaring an income of Rs1,08,090/- under section 44AD of the Act. He does not maintain any books of accounts. Hence there is no cash book evidencing any cash deposit or withdrawals. The bank account statement also does not state any withdrawal in the days leading to the seizure of cash. However, a mere denial statement by the appellant that the money does not belong to him is not sufficient to shift the onus cast on the appellant to prove that the money seized does not belong to him.

6.9 In a judgement of the Delhi High Court in the case of CIT v. Naresh Kumar Aggarwala ,331 ITR 510, Delhi HC, some documents with respect to purchase of property for a consideration was found in a search conducted and a presumption was framed by the Assessing Officer under Section 132(4A) of the IT Act. In this case, the Delhi High Court ruled in favour of the department distinguishing the Allahabad High Court judgement in the case of Raj Pal Singh Ram,288ITR 498, (AlIHC) on the ground that unlike in the latter’s case, the assessee in the present case did not make any effort to rebut the presumption by giving plausible explanation. The Court further held that a letter submitted by the assessee without any proper explanation to disprove the presumption cannot be considered as reasonable and therefore, upheld the addition made by the Assessing Officer, thus reversing the order of the Tribunal.

6.10 While the appellant did mention in the statement which was recorded by the Investigation wing that he had no knowledge about money, this cannot be considered as a plausible rebuttal to the presumption formed by the Assessing Officer. 6.11 In my opinion the burden to prove will be shifted to the department only when an assessee has proven beyond doubt that the presumptions framed against him are incorrect. A mere statement of denial will not shift the onus. Hence, I find no reason to interfere with the findings of the AO. The Ground Nos. 2 to 4 are dismissed. The substantive addition made u/s 69A in the hands of the appellant are confirmed.”

13. On careful consideration of the facts and the findings of the lower authorities, it is clear that the assessee failed to offer any acceptable explanation for the cash of ₹23,00,000 found in his car. It is highly improbable that a farmer would leave such a substantial amount in the assessee’s vehicle and then make no claim for it. The assessee also failed to provide the names and addresses of the persons who allegedly left the money in his car. Neither before the Assessing Officer, the first appellate authority, nor before us—even after eight years—has the assessee produced evidence to establish to whom the money belonged or its source. He also made no attempt to produce the alleged farmers before the lower authorities. We therefore find no infirmity in the orders of the lower authorities making the addition of ₹23,00,000 under section 69A of the Act in the assessee’s hands.

14. In the result, the appeal filed by the assessee is dismissed.

Order pronounced in the open court on 29^thJune, 2026.