Surajpal Singh Rathod Vs DCIT (ITAT Mumbai)
Cash Found During Search Belonging to Company Cannot Be Taxed in Director’s Hands: ITAT Mumbai Deletes Section 69A Addition
The Mumbai Bench of the ITAT allowed the assessee’s appeal for AY 2021-22 and deleted the addition of ₹3.50 lakh made under section 69A as unexplained money in the hands of an individual director. The addition arose from a search under section 132 conducted on the Rubberwala Group, during which a courier was intercepted at the business premises of RD Telinet Pvt. Ltd., carrying cash of ₹3.50 lakh allegedly meant to be handed over to the assessee, who was a director of the company.
The Tribunal noted that although, during the search, the assessee acknowledged that the cash represented sale consideration of LCD touch combos to a customer, there was no admission that the sale was made in his individual capacity. On the contrary, the material on record clearly showed that RD Telinet Pvt. Ltd. was engaged in the business of trading in electronic goods, whereas the assessee’s personal sources of income were confined to salary and other sources. There was no evidence to suggest that the assessee carried on any independent business activity in electronic goods.
Importantly, the ITAT recorded that no incriminating material was found from the assessee’s residential premises, and that the cash sales corresponding to the impugned amount were duly recorded in the books of RD Telinet Pvt. Ltd. These facts, coupled with the affidavit filed by the assessee disowning the cash as his personal income, established that the amount belonged to the company and not to the assessee individually.
In view of these facts, the Tribunal held that the cash could not be treated as unexplained money of the assessee under section 69A and directed deletion of the addition in full. The appeal was accordingly allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
