Rajender Agarwal, New Delhi vs Department Of Income Tax

This appeal by the Revenue arises out of the order passed by the

CIT(A) on 28.2.2013 in relation to the assessment year 2009-10. ITA No.2865/Del/2013

2. The only issue raised in this appeal is against the deletion of

addition of Rs.14,00,000 made by the AO on account of unexplained

cash u/s 69A of the Income-tax Act, 1961 (hereinafter also called `the

Act').

3. Briefly stated, the facts of the case are that the assessee along with

other related persons and some of the concerns in which he is interested,

was subject to search and seizure operations. During the search

operation, cash amounting to Rs.21,41,200/- was found at the residence

of the assessee. Out of this, a sum of Rs.16 lac was seized at the time of

search. During the course of assessment proceedings, the assessee was

called upon to explain the source of cash amounting to Rs.21,41,200/-

along with the supporting documentary evidence. The assessee

submitted details of the source of cash to the extent of Rs.16 lac as

under:-

Name Amount (Rs.)

M/s Rite Pac India P. Ltd. 6,00,000/-

M/s Kiwi Food India P. Ltd. 2,00,000/- 2 ITA No.2865/Del/2013

M/s Plasto Graph India P. Ltd. 6,00,000/-

M/s Rite Pac Industries P. Ltd. 75,000/-

Sh. Rajender Aggarwal 1,25,000/-

Total 16,00,000/-

4. In the absence of any documentary evidence showing the

availability of cash with these entities, the AO refused to accept the

explanation tendered by the assessee for the reasons, inter alia, that no

documentary evidence, such as, cash book of these companies showing

the availability of cash to this extent, was filed. Considering the fact that

the assessee surrendered a sum of Rs.6,64,100/- on account of cash in

his hands, the AO made addition for the remaining amount of Rs.14 lac.

During the course of first appellate proceedings, the assessee furnished

cash books of the above companies. Noting the fact that the said

companies had cash balance more than the amount claimed by the

assessee at his residence, the ld. CIT(A) deleted the addition. The

Revenue is aggrieved against the deletion of the addition.

3 ITA No.2865/Del/2013

5. After considering the rival submissions and perusing the relevant

record, we find that the assessee contended before the AO that cash of

Rs.14.75 lac belonged to the four companies listed in the above table.

However, cash books of these companies were not produced before the

AO. It was only during the course of the first appellate proceedings, that

the assessee came out with their cash books on the basis of which the ld.

CIT(A) deleted the addition. There can be no quarrel over the

proposition that if cash in hand in the books of these companies is

proved to be more than that claimed by the assessee available in his

possession at the time of search on the relevant dates, then, there can be

no question of making any such addition. However, the fact of the

matter is that despite the repeated requests made by the AO, the assessee

failed to furnish cash books of any of these four companies to

corroborate his explanation. The ld. CIT(A) accepted the explanation

given before him for the first time despite the specific mention in the

assessment order that no such cash books were furnished during the

course of assessment proceedings notwithstanding a specific requisition.

In our considered opinion, the ends of justice would meet adequately if 4 ITA No.2865/Del/2013

the impugned order on this issue is set aside and the matter is restored to

the file of AO. We order accordingly and direct him to verify cash

books of these four companies to ascertain whether the cash to the tune

of Rs.14.75 lac as claimed, was genuinely justified. Needless to say, the

assessee will be allowed a reasonable opportunity of hearing in such

fresh proceedings.

6. The ld. AR argued that cash was found from the possession of Sh.

Sanjay Kumar Agarwal, another related person and hence the addition

ought to have been considered only in the hands of that assessee. We are

not satisfied with this argument taken up before us for the first time. It is

not disputed that Sh. Sanjay Kumar Agarwal, a close relative of the

assessee, was also simultaneously searched in a common search

operation. Both the assessee as well as Sh. Sanjay Kumar Agarwal are

interested in these four concerns. It can be seen from the assessment

order of Sh. Sanjay Kumar Agarwal that no addition on account of

unexplained cash has been considered or made in his hands. Naturally,

the addition can be made only in one hand. As the assessee made

5 ITA No.2865/Del/2013

surrender of Rs. 6,64,100 on account of unexplained cash in his hands,

which the AO has accepted and further the assessee kept on giving

explanation about the source of such cash, it is too late in the day to

come out with such an argument. This argument is repelled.

7. In the result, the appeal is partly allowed.

The order pronounced in the open court on 12.03.2015.

Sd/- Sd/-

[A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated, 12th March, 2015. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

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