ITAT confirms addition for cash seized by police not explained satisfactorily

Sri. P.P.Sharafuddin Vs. ITO (ITAT Cochin)

The amount of Rs. 14 lakh was seized by the police from the assessee on 03.03.2008. At the time of seizure, the assessee did not mention that the amount seized belongs to his uncle. Because of the suspicious behavior and lack of explanation on the part of the assessee, the police seized the amount and same was produced before the Judicial Magistrate. Later it was claimed by Sri. Abdul Sathar, uncle of the assessee that the money belonged to him.

It was stated by Sr. Abdul Sathar that the amount sized from the assessee on 03.03.2008 is out of the withdrawals made by him on various dates. The Assessing Officer and the CIT(A) have found that the withdrawals made by the uncle of the assessee is in the month of September to November 2007 and the seizure is in the month of March, 2008. As rightly pointed out by the CIT(A), no prudent businessman would keep such a huge amount of cash in his custody for such a long time.

The Assessing Officer has also found that Sri. Abdul Sathar, the uncle of the assessee was a businessman having business connection in Kasargod and Mumbai and could have easily transferred the money from Kasargod to Mumbai through banking channels.

There is no direct nexus between the withdrawal of the amount from bank account of Sri. Abdul Sathar and the seizure of amount from the assessee on 03.03.2008, hence it cannot be concluded that the assessee has properly explained the source of money that was seized from his custody by the police. If Rs. 14 lakh does not actually belonged to the assessee, the assessee need not worry about the taxation of the same because assessee cannot be fastened with a tax liability of more than Rs. 14 lakh.

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