Case Law Details
Ashok Kumar Agarwal Vs ACIT (ITAT Hyderabad)
The Income Tax Appellate Tribunal (ITAT), Hyderabad, partly allowed the assessee’s appeal arising from additions made on account of unexplained cash and gold bullion found during a search. The Tribunal held that the Assessing Officer’s failure to cite a specific provision under Sections 69 to 69D of the Income-tax Act did not invalidate the additions, as the assessment order clearly recorded the facts and reasons for treating the cash and gold bullion as unexplained.
A search under Section 132 was conducted on 04.06.2019, during which cash of ₹1 crore and 12 gold bars weighing 1,200 grams were found at the assessee’s residence. During the search, the assessee stated that the cash belonged to himself and three proprietary concerns but could produce cash book extracts showing a balance of only ₹6,73,805. He was unable to explain the source of the remaining cash or the gold bullion and admitted additional income of ₹39.84 lakh in respect of the gold. During assessment proceedings, however, the assessee changed his explanation, claiming that the cash belonged to nine family members, including the three proprietary concerns, and produced affidavits from those persons. He also claimed that the gold bars had been purchased in earlier financial years and were recorded in the books of account. The Assessing Officer rejected these explanations due to lack of supporting documentary evidence and added ₹1,39,84,000 as unexplained cash and bullion, taxable under Section 115BBE. The Commissioner (Appeals) confirmed the additions.
Before the Tribunal, the assessee argued that the additions were invalid because no specific charging provision had been invoked and relied on judicial precedents, including CIT v. B.C. Srinivasa Setty. The Tribunal rejected this legal contention, observing that the Assessing Officer had clearly recorded the factual basis for treating the cash and bullion as unexplained. It held that omission to mention the precise section did not vitiate the assessment, and the cited decisions were distinguishable on facts.
On the merits of the cash addition, the Tribunal observed that the assessee had initially explained only ₹6,73,805 as belonging to the three proprietary concerns, supported by contemporaneous cash book extracts. The later claim that the cash belonged to nine family members was supported only by affidavits without any documentary evidence establishing the availability of cash with those persons. The Tribunal held that such affidavits were merely self-serving documents and could not conclusively establish the source of the cash. However, since the cash books of the three proprietary concerns showed an available cash balance of ₹6,73,805 on the date of search, the Tribunal directed the Assessing Officer to delete the addition to that extent. The balance addition of ₹93,26,195 relating to unexplained cash was sustained.
Regarding the 12 gold bars valued at ₹39.84 lakh, the Tribunal held that although the assessee claimed they had been purchased in earlier years and recorded in the books, he failed to produce purchase bills or evidence explaining the source of funds for their acquisition. In the absence of documentary proof, the explanation was rejected, and the addition relating to the gold bullion was upheld. Accordingly, the appeal was partly allowed by granting relief only to the extent of ₹6,73,805 supported by the cash books of the proprietary concerns, while sustaining the remaining additions.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), Hyderabad-11, dated 11.03.2025, and pertains to assessment year 2020-21.
2. At the outset, the Ld.AR of the assessee brought to our notice that the appeal has been filed belatedly by ’91’ days and in order to explain the delay, he drew our attention to the application filed for condoning the delay along with the affidavit supporting the averments made therein. Having gone through the contents of the application for condonation of delay supported by medical documents, we are inclined to condone the delay and proceed to hear the appeal on merits.
3. The brief facts of the case are that the assessee is an individual, who filed his return of income (RoI) for AY 2020-21 on 09.01.2021 declaring total income of Rs.13,25,790/-. A search and seizure operation u/s.132 of the Income Tax Act, 1961 (in short “the Act”) was conducted in the case of the assessee on 04.06.2019. During the course of search, at the residential premises of the assessee an amount of Rs.1 Cr. cash and ’12’ gold biscuits weighing ‘1200’ grams were also found. When assessee was asked about the source of cash, he stated that cash belongs to himself and his family proprietary concerns i.e. M/s. Ankit Industries, M/s. Ankit Marketing & M/s. Brijwasi Industries. The assessee had also furnished cash book of above three firms and as per the cash book which was referred to in Q.No.13 of statement recorded during the course of search cash balance was at Rs. 6,73,805/-. The assessee further stated that he was unable to explain source and supporting documents for the above cash. Similarly, in respect of ’12’ gold bars found during the course of search, he expressed his inability to explain the source and documentary evidence for the gold and admitted, additional income of Rs.39,84,000/- in respect of gold found during the course of search.
4. The case was selected for scrutiny and the during the course of assessement proceedings, the AO called upon the assessee to explain source for cash and ’12’ gold bars found during the course of search. In response, the assessee furnished the list of persons indicating cash balance and filed list of ‘9’ persons including three proprietary concerns referred to during the course of search, and claimed that the cash of Rs.1 Cr. found during the course of search was explained out of cash balance held by ‘9’ persons and in support of his claim, assessee filed affidavits of ‘9’ persons. Similarly, the assessee claimed that ’12’ gold bars found during the course of search were purchased by him for the purpose of his son’s marriage and the same has been recorded in the books of accounts for FY 2008-09, 2015-16 & 2016-17.
5. The AO after considering the relevant submissions of the assessee and also taking note of the explanation with regard to source of Rs.1 Cr. cash found during the course of search observed that, in spite of providing ample opportunities, the assessee has not submitted any documentary evidences including cash book to prove the source for cash found and no break up of cash in the case of family members. The AO further noted that at the time of search, the assessee has claimed that cash found during the course of search was belongs to three proprietary concerns and also furnished cash book extracts and as per the cash book extracts, the total amount available as on 04.06.2019 in the hands of the three proprietary concerns was at Rs.6,73,805/-. In so far as remaining six people, except filing affidavit, the assessee has not furnished any evidence to substantiate the cash balance. Therefore, rejected the explanation of the assessee with regard to source for cash found during the course of search. Further, with regard to gold bullion found during the course of search, the AO observed that, assessee except stating that the same were purchased in the previous years but has not submitted any evidence for purchase of said bullion along with copy of bank statement. The assessee time and again changed his explanation according to his whims and wishes without any documentary evidence. Therefore, observed that, the assessee has not provided any evidence to prove the source for the cash and gold bullion found amounting to Rs.1,39,84,000/-and thus, rejected the explanation of the assessee and added back to the total income treating as unexplained and taxed u/s.115BBE of the Act.
6. Aggrieved by the assessement order, the assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee has filed detailed submissions on the issue which has been reproduced at Para No.5 at Page Nos.14-16 of the order of the Ld.CIT(A). The sum and substance of the explanation of the assessee before the Ld.CIT(A) is that source for cash of Rs.1 Cr. found during the course of search has been explained out of cash balance available with ‘9’ family members for which the assessee has furnished affidavit along with their Permanent Account Number (PAN). The assessee further submitted that, he purchased 12′ gold bars in ‘3’ financial years and the same is recorded in his books of accounts. The Ld.CIT(A) forwarded the written submissions of the assessee along with additional evidence to the AO for its comments and the AO, in the Remand Report dated 28.04.2025 once again rejected explanation with regard to source of cash and gold bullion found during the course of search.
7. The Ld.CIT(A) after considering the relevant submissions of the assessee and also taken note of the statements recorded from the assessee during the course of search observed that, in the statement recorded on 07.06.2019, the assessee confirmed that cash of Rs.1 Cr. and gold bullion of Rs.39,84,000/- represented unexplained money/bullion. Although, during the course of assessement proceedings, the assessee claims that cash belongs to his family members including three proprietary concerns but has not substantiated with relevant documentary evidence except filing affidavit from the people. Further, as per the cash book extract filed by three proprietary concerns i.e., M/s. Ankit Industries, M/s. Ankit Marketing & M/s. Brijwasi Industries, total cash balance as on 04.06.2019 was only at Rs.6,73,805/- and in respect of remaining cash balance no substantive documentary evidence has been furnished. The arguments of the assessee that his statement was recorded by force is also not substantiated by offering any explanation. Since the cash found during the course of search of Rs.1 Cr. has not explained with known source of income, the AO has rightly made addition towards cash balance as unexplained money.
8. In regard to gold bullion seized by the department, although the assessee claims that gold bars was purchased in various previous financial years but during the course of assessement proceedings and appellate proceedings, no bills for purchase of bullion were filed and further source of income for such purchase, etc., was explained. Therefore, observed that merely for the reason order passed by the Commissioner of Customs (Appeals) for release of gold bars would not be tantamount to explaining the source. Therefore, rejected the explanation of the assessee and sustained the additions made by the AO towards cash and gold bullion found during the course of search for Rs.1,39,84,000/-.
9. Aggrieved by the order of the Ld.CIT(A), the assessee is now in appeal before this Tribunal.
10. The Ld. Counsel for the assessee, Mr. Sharad Chandra Toshiniwal, CA, submitted that, the additions made by the AO towards cash and bullion found during the course of search is unsustainable in law, because, the AO has not made additions under any specific head of income and therefore, in view of the decision of the Hon’ble Supreme Court in the case of CIT v. B.C. Srinivas Setty reported in 1981 (2) SCC 460, the additions made by the AO can’t be upheld. The Ld. Counsel for the assessee further submitted that the assessee has explained source of cash deposits found during the course of search out of cash available with ‘9’ family members including three proprietary concerns. The assessee had also furnished affidavit along with confirmations from the parties. The AO summarily rejected the evidence submitted by the assessee and made additions. The Ld. Counsel for the assessee further submitted that `12′ gold bars found during the course of search were purchased in previous financial years and the same has been recorded in the books of accounts. Further, once the purchase is recorded in the books of accounts, the source stands explained. Therefore, the Ld.CIT(A) was erred in observing that the assessee has failed to explain purchase of gold bullion. Therefore, he submitted that the additions made by the AO and sustained by the Ld.CIT(A) should be deleted. In this regard, he relied upon the following judicial precedents:
- Govind Saran Gagan Saran Vs. Commr of Sales tax-Case Laws [in Civil Appeal No.2083 of 1974 dated 26.04.1985]
- Umarcharan Shaw and Brothers Vs. CIT-Case Laws (1959) 37 ITR 271: 1959 SCC OnLine SC 142
- CIT Vs. Orissa Corporation P Ltd-Case Laws [in Civil Appeal Nos.1379-80 (NT) of 1974 dated 19.03.1986
- CIT Vs. Daulat Ram Rawatmull-Case Laws (1973) 3 Supreme Court Cases 133
- Lalchand Bhagat Ambica Ram Vs. CIT-Case Laws (1959) 37 ITR 288 : 1959 SCC OnLine SC 91
- Vinod Solanki Vs UOI and Another-Case Laws [2008] 16 Supreme Court Cases 537 : (2010) 4 Supreme Court Cases (Cri) 36 : 2008 SCC OnLine SC 1917
- The ACIT Vs. Shri Sudesh Kumar Gupta-ITAT Jaipur [in ITA No.976/JP/2019 order dated 09.06.2020]
11. The Ld.SR-AR for Revenue, on the other hand, supporting the order of the Ld.CIT(A) submitted that, at the time of search, the assessee couldn’t explain the source for cash deposits & ’12’ gold bars and further admitted that the value of cash and gold bars, is undisclosed income of the assessee. Further, during the course of search, the assessee explained cash balance of Rs.6,73,805/- from three proprietary concerns in respect of ’12’ gold bars, no explanation has been offered. Therefore, the subsequent arguments of the assessee in light of affidavit filed by few individuals without any supporting documents can’t be accepted. The AO, after considering relevant facts has rightly made addition towards cash & 12′ gold bars. The Ld.CIT(A) after considering relevant facts has rightly sustained the additions made by the AO. Therefore, he submitted that the additions made by the AO should be upheld.
12. We have heard both the parties, perused the materials available on record and had gone through orders of the authorities below. We also carefully gone through the relevant case laws referred to by the Ld. Counsel for the assessee in support of his arguments, including the decision of the Hon’ble Supreme Court in the case of B.C. Srinivas Setty (supra). In so far as legal arguments taken by the Ld. Counsel for the assessee in light of addition of Rs.1,39,84,000/-, in our considered view, the AO has brought out clear facts and reasoning to come to a conclusion that the cash and value of ’12’ gold bars is unexplained money/bullion of the assessee and therefore, in our considered view, merely for the reason of not referring a specific section [Sec.69 to 69D] the additions made by the AO towards unexplained cash and money can’t be invalidated. Further, the case law referred to by the Ld. Counsel for the assessee including the decision of the Hon’ble Supreme Court in the case of B.C. Srinivas Setty (supra) are rendered under different sets of facts and therefore, can’t be applicable to the facts of the assessee’s case. Therefore, we reject the legal ground taken by the assessee challenging the addition.
13. Having said so, let us come back to the additions made by the AO for Rs.1,39,84,000/-. Admittedly, during the course of search by the GST authorities’ cash of Rs1 Cr. was found. Pursuant to GST search, the department has initiated proceedings u/s.132 & statement u/s.132 (4) of the Act was recorded from the assessee. The assessee failed to explain cash of Rs.1 Cr. except filing cash book extract of three proprietary concerns i.e., M/s. Ankit Industries, M/s. Ankit Marketing & M/s. Brijwasi Industries and as per the cash book extract, cash balance was available with proprietary concerns as on 04.06.2019 was Rs.6,73,805/-. At the time of assessement proceedings, the assessee come out with a new version of arguments and claimed that cash found during the course of search, was belongs to ‘9’ family members including three proprietary concerns, for which, the assessee has furnished break-up of cash available with each family members along with their affidavit and PAN and claimed that source for cash was out of cash balance available with the family members. The AO rejected explanations of the assessee on the ground that except making claim along with affidavit no further evidence has been filed to explain the cash in the hands of the individual. Even before us, the assessee makes a bold statement of cash in hand with ‘9’ family members referred in the assessment order but has not furnished any details except affidavit. In our considered view, affidavit filed by ‘9’ individuals without any supporting evidence can at best be considered as a self-serving document but not conclusive evidence of source available with the individuals to explain the cash in hand. Since the assessee has initially stated that he is unable to explain the source for cash found during the course of search, for Rs.1 Cr. except to the extent of Rs.6,73,805/- from three proprietary concerns, in our considered view, the subsequent arguments made by the assessee during the course of assessement proceedings with the help of affidavit of individuals can’t be accepted. In so far as cash balance from three proprietary concerns, right from the date of search, the assessee filed cash book extract, and as per the cash extracts, cash balance with the proprietary concern as on 04.06.2019 was at Rs.6,73,805/-. Therefore, in our considered view, the AO ought to have accepted explanation of the assessee to the extent of Rs.6,73,805/-. Thus, we direct the AO to delete addition to the extent of Rs.6,73,805/- being cash balance available with three proprietary concerns which is a source for cash found during the course of search. In respect of balance amount of Rs.93,26,195/-, the assessee couldn’t explain source with known source of income and evidences. Therefore, we upheld the addition made by the AO towards cash found to the extent of Rs.93,26,195/-.
14. Coming back to value of ’12’ gold bars found during the course of search for Rs.39,84,000/-. Once again, the assessee failed to explain the source for purchase of ’12’ gold bars found during the course of search, and also admitted that it is undisclosed income. During the course of assessement proceedings, the assessee came out with new explanation and claimed that ’12’ gold bars found during the course of search was purchased in three Financial Years and the same has been recorded in the books of accounts maintained by the assessee. However, the assessee has not furnished any bills for purchase of gold bars in three Financial Years and also failed to explain the source by filing relevant details. In absence of any explanation with regard to source of income for purchase of gold bars and also necessary evidence of bills for purchase of gold bars, in our considered view, the arguments of the assessee that ’12’ gold bars were purchased during earlier financial year can’t be accepted. The Ld.CIT(A) after considering relevant facts has rightly upheld the additions made by the AO. Thus, we are inclined to uphold the findings of the Ld.CIT(A) and sustain the addition towards value of ’12’ gold bars of Rs.39,84,000/-.
15. In the result, appeal filed by the assessee is partly allowed.
Order pronounced on the 19th day of June, 2026, in Hyderabad.
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