Aabid Ali Khan Vs ACIT (Delhi High Court)
Cash Seizure Case: HC Cuts Addition to Actual Seized Amount, Rejects Inflated Estimate
Delhi High Court partly allowed the assessee’s appeal in a case involving cash seizure of ₹68.47 lakh linked to alleged unaccounted income.
The assessee claimed that ₹80.42 lakh was pooled from 17 persons (family/friends) for a property deal that failed. However, the AO, CIT(A), and ITAT rejected this explanation, holding that:
- The story of pooling funds from 17 persons lacked credibility,
- Cash withdrawals were spread over months and didn’t match the claimed amounts,
- No contributors were produced for verification, and
- Use of cash instead of banking channels was unexplained.
Thus, the explanation was treated as unsubstantiated, and addition under Section 69A was justified.
However, the High Court identified a critical flaw:
- The AO rejected the assessee’s version of ₹80.42 lakh, yet still added the same amount, instead of restricting addition to the actual seized cash of ₹68.47 lakh.
- This was held to be perverse and contradictory, since once the explanation is rejected, it cannot be selectively relied upon.
Key ruling:
- Addition restricted to ₹68.47 lakh (actual seized cash)
- Balance addition deleted
Bottom line: While the Court upheld that the source of cash was unexplained, it curtailed the addition to the actual incriminating material (seized amount)-reinforcing that additions must align strictly with evidence, not assumptions or inconsistent reasoning.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
