Case Law Details
Abdul Muqeet Mohammed Vs DCIT (ITAT Hyderabad)
The Hyderabad Income Tax Appellate Tribunal (ITAT) partly allowed the assessee’s appeal and granted substantial relief in a case concerning addition of cash found in his possession under Section 69A of the Income Tax Act. The Tribunal also condoned a delay of 104 days in filing the appeal after accepting the assessee’s explanation that the delay occurred due to technical difficulties relating to PAN-Aadhaar linkage and the consequent inability to obtain a Digital Signature Certificate (DSC) in time. The Tribunal noted that the assessee had paid the appellate filing fee within the prescribed limitation period, demonstrating his intention to pursue the appeal.
The dispute arose after cash amounting to ₹19,79,950 was found and seized from the assessee on 09.08.2018. Following requisition proceedings under Section 132A, the Assessing Officer (AO) called upon the assessee to explain the source of the cash. As the AO was not satisfied with the explanation provided, the entire amount was treated as unexplained money under Section 69A and added to the assessee’s income. The addition was subsequently upheld by the Commissioner of Income Tax (Appeals).
Before the Tribunal, the assessee contended that he and his three sons were engaged in business activities and were regularly filing income tax returns. It was submitted that the assessee had declared income of ₹17,64,712 during Assessment Years 2016-17 to 2019-20, while his three sons had declared incomes of ₹13,56,807, ₹12,49,300, and ₹12,54,455 respectively during the same period. The assessee further explained that his wife was suffering from cancer and eventually passed away on 12.11.2018. Since the cash was seized approximately three months before her death, it was argued that the family had accumulated savings over time to meet her medical expenses. Affidavits from the assessee’s three sons were also filed, stating that they had contributed their savings to their father for their mother’s treatment.
The Tribunal observed that there was no dispute regarding the fact that the assessee’s wife was suffering from cancer and that the cash was found during the period when she was undergoing medical treatment. It also took note of the affidavits filed by the sons and the income tax returns placed on record, which showed that the assessee and his sons were regular taxpayers. However, the Tribunal found that the assessee had not furnished any specific computation showing the exact accumulation of savings over the years. It also noted the absence of supporting evidence linking the cash to recent customer receipts or withdrawals from bank accounts. Therefore, the Tribunal held that the explanation regarding the entire cash amount could not be accepted solely on the basis of affidavits and returned income.
At the same time, the Tribunal observed that it could not be presumed that the assessee and his sons, who were regular income-tax assessees, had no savings at all. Considering the overall facts, including the family’s declared income, the medical condition of the assessee’s wife, and applying the test of human probabilities, the Tribunal held that savings of ₹3 lakh per person could reasonably be accepted. Accordingly, out of the total cash of ₹19,79,950, the Tribunal accepted ₹12 lakh as explained savings of the assessee and his three sons. The remaining amount of ₹7,79,950 was sustained as unexplained and continued to be taxable under Section 69A. The AO was directed to grant relief of ₹12 lakh and restrict the addition to ₹7,79,950.
As a result, the appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal is filed by Shri Abdul Muqeet Mohammed (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals)-11, Hyderabad (“Ld. CIT(A)”) dated 22.03.2025 for the A.Y.2019-20.
2. At the outset, it is observed that there is a delay of 104 days in filing the present appeal before this Tribunal. In this regard, the assessee has filed an affidavit explaining the reasons for delay in filing the appeal along with a petition seeking condonation of delay. During the course of hearing, the Learned Authorized Representative (“Ld. AR”) submitted that the order passed by the Ld. CIT(A) is dated 22.03.2025. However, the assessee came to know about the said order only when the same was received by post on 18.05.2025. The Ld. AR further submitted that considering the date of receipt of the order as 18.05.2025, the appeal ought to have been filed on or before 31.07.2025. In this regard, the assessee had already paid the appellate filing fee of Rs.10,000/- on 18.06.2025, i.e., well within the period of limitation prescribed for filing the appeal. The Ld. AR further submitted that due to non-linking of PAN and Aadhaar on account of slight difference in the name appearing in the records, the assessee could not obtain the Digital Signature Certificate (“DSC”) in time and consequently the filing of appeal got delayed. It was therefore submitted that the delay occurred due to technical and procedural difficulties and there was neither any deliberate negligence nor any mala fide intention on the part of the assessee in delaying the filing of the appeal. Accordingly, the Ld. AR prayed for condonation of delay and admission of the appeal for adjudication on merits.
3. Per contra, the Learned Departmental Representative (“Ld. DR”) opposed the condonation petition and submitted that the reasons explained by the assessee do not constitute sufficient cause for condonation of delay. Accordingly, the Ld. DR prayed for dismissal of the appeal on the ground of limitation.
4. We have heard the rival submissions and perused the material available on record. We find that the assessee has explained the reasons for delay by way of an affidavit and the explanation furnished by the assessee appears to be bona fide. We further find that the assessee had already deposited the appellate filing fee on 18.06.2025, which clearly demonstrates the intention of the assessee to pursue the appellate remedy within the prescribed time limit. The delay appears to have occurred on account of technical difficulties relating to PAN-Aadhaar linkage and consequent delay in obtaining DSC for filing of the appeal electronically. Further, we find that the Hon’ble Supreme Court, in the case of Vidya Shankar Jaiswal v. CIT (174 taxmann.com 21), has held that a justice-oriented and liberal approach should be adopted while considering applications for condonation of delay. Therefore, considering the facts and circumstances of the present case, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the prescribed period of limitation. Accordingly, the delay of 104 days in filing the present appeal is condoned and the appeal of the assessee is admitted for adjudication on merits.
5. The assessee has raised the following grounds of appeal:
“1. The Ld. CIT(A)’s order is contrary to facts of the case.
2. The Ld. CIT(A) erred in not appreciating the fact that the appellant and his sons had declared reasonable income to explain the cash found.
3. The Ld. CIT(A) failed to appreciate that the appellant’s wife was terminally ill and the money was saved for her treatment.
4. The Ld. CIT(A) failed to appreciate that the cash found was around 35% of the income declared by the family of appellant for which proof was filed.
5. The appellant may be permitted to add, delete, amend any ground with leave of the Hon’ble Tribunal.”
6. The brief facts of the case are that the assessee is an individual deriving income from pan masala and tobacco trade. On 09.08.2018, cash of Rs.19,79,950/- was found and seized from the possession of the assessee by the police authorities and later on requisition under section 132A of the Income Tax Act, 1961 (“the Act”) was made by the Investigation Wing on 10.08.2018. Thereafter, the assessee filed his return of income for Assessment Year 2019-20 on 24.08.2020 declaring total income of Rs.8,35,132/-. Subsequently, the case of the assessee was selected for scrutiny and accordingly notice under section 143(2) of the Act dated 04.02.2021 was issued by the Learned Assessing Officer (“Ld. AO”) to the assessee. During the course of assessment proceedings, the Ld. AO called upon the assessee to explain the source of cash of Rs.19,79,950/- found in his possession. However, the Ld. AO was not convinced with the submissions furnished by the assessee and treated the entire cash of Rs.19,79,950/- as unexplained income under section 69A of the Act and made addition in the hands of the assessee. Accordingly, the assessment under section 143(3) of the Act was completed by the Ld. AO on 23.06.2021 making addition of Rs.19,79,950/-under section 69A of the Act in the hands of the assessee. Aggrieved by the order passed by the Ld. AO, the assessee had preferred appeal before the Ld. CIT(A). However, the assessee did not respond to the notices issued by the Ld. CIT(A) and accordingly the appeal of the assessee was dismissed vide order dated 20.07.2022. Against the said order, the assessee had preferred appeal before this Tribunal and this Tribunal vide order dated 14.11.2022 in ITA No.574/Hyd/2022 had restored the matter back to the file of the Ld. CIT(A) for fresh adjudication with a direction to provide one more opportunity to the assessee to present his case. Pursuant thereto, the Ld. CIT(A), after considering the submissions of the assessee, was not convinced with the explanation furnished by the assessee and upheld the addition made by the Ld. AO.
7. Aggrieved by the order of the Ld. CIT(A), the assessee is again in appeal before this Tribunal. During the course of hearing, the Ld. AR submitted that the only effective issue arising out of the present appeal is with regard to the addition of Rs.19,79,950/- made under section 69A of the Act. The Ld. AR submitted that the assessee along with his three sons are engaged in regular business activities and are regularly filing their returns of income. In this regard, the assessee has placed on record copies of income tax returns of the assessee as well as his three sons for Assessment Years 2016-17 to 2019-20. The Ld. AR further invited our attention to the details of income shown by the assessee and his three sons during the aforesaid years placed at page nos. 21 and 22 of the paper book and submitted that the assessee had shown total income of Rs.17,64,712/- during the Assessment Years 2016-17 to 2019-20, whereas his three sons namely, Shri Mohammed Abdul Quavi, Shri Mohammed Abdul Ghani and Shri Mohammed Abdul Basith had shown total income of Rs.13,56,807/-, Rs.12,49,300/- and Rs.12,54,455/-respectively. The Ld. AR further submitted that the wife of the assessee was suffering from cancer during the relevant period and ultimately, she expired on 12.11.2018. He submitted that the cash was seized on 09.08.2018, i.e., approximately three months prior to the death of the wife of the assessee. It was submitted that due to the medical emergency of his wife, the assessee along with his three sons were accumulating funds from their savings over a long period for meeting medical expenses and the cash of Rs.19,79,950/- represented such accumulated savings. The Ld. AR further submitted that the assessee has also filed affidavits of his three sons wherein they have categorically affirmed that they had accumulated amounts from their past savings and handed over the same to their father for meeting medical expenses of their mother. Accordingly, the Ld. AR submitted that the assessee had satisfactorily explained the source of cash found in his possession and therefore the addition made under section 69A of the Act deserves to be deleted.
8. Per contra, the Ld. DR relied upon the orders of the lower authorities and submitted that the assessee failed to substantiate the source of cash with cogent documentary evidence before the lower authorities and therefore the addition made under section 69A of the Act was rightly sustained by the Ld. CIT(A).
9. We have heard the rival submissions and perused the material available on record. The only issue involved in the present appeal is with regard to the addition of Rs.19,79,950/-made by the Ld. AO under section 69A of the Act on account of cash found in possession of the assessee. We find that there is no dispute with regard to the fact that the wife of the assessee was suffering from cancer during the relevant period and ultimately expired on 12.11.2018. It is also not in dispute that the cash was found and seized on 09.08.2018, i.e., during the period when the wife of the assessee was undergoing medical treatment. Therefore, the existence of medical exigency in the family of the assessee cannot be doubted under the facts and circumstances of the present case. We have gone through the affidavits filed by the three sons of the assessee and on perusal of the same, we find that all the three sons have stated that they had accumulated funds out of their past savings and handed over the same to their father for meeting medical expenses of their mother. We have also gone through the copies of income tax returns filed by the assessee and his three sons placed on record. We further find that the assessee has also placed on record details of income shown by himself as well as his three sons during the relevant years, forming part of written submission of the assessee, placed at page nos. 21 and 22 of the paper book, which is to the following effect:
10. On perusal of the above, it is evident that the assessee as well as his three sons were regularly filing their returns of income. However, at the same time, we find that the assessee has failed to furnish any specific computation demonstrating the exact accumulation made by the assessee and his sons over the years. The assessee has also failed to substantiate the alleged accumulation by linking the same with any recent cash receipts from customers or withdrawals from bank accounts. Therefore, the explanation furnished by the assessee with respect to the entire cash of Rs.19,79,950/-cannot be accepted in toto merely on the basis of general affidavits and returned income. At the same time, it cannot be denied that the assessee and his sons, who are regularly filing their returns of income, would not have any savings at all. Further, we observe that during the demonetization period, the Government itself had accepted cash holding/savings up to Rs.2,50,000/- in the case of each individual irrespective of filing of return of income. In the present case, not only the assessee but also his three sons are regular income tax assessees and are regularly filing their returns of income. We further find that the explanation of the assessee is that the impugned cash represented consolidated savings of the assessee and his three sons accumulated over a period of time for meeting medical exigencies in the family. Considering the overall facts and circumstances of the case, the returned income of the assessee and his sons, the medical condition of the wife of the assessee and applying the test of human probabilities, we are of the considered opinion that accumulation/savings of Rs.3 lakhs per person can reasonably be accepted in the present case. Therefore, out of the total cash of Rs.19,79,950/-, accumulation/savings to the extent of Rs.12 lakhs in the hands of the assessee and his three sons is accepted as explained source. Consequently, the balance amount of Rs.7,79,950/- is sustained. Accordingly, the Ld. AO is directed to grant relief of Rs.12 lakhs and sustain the balance addition of Rs.7,79,950/-.
11. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the Open Court on 29th May, 2026.
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