INCOME TAX ACT, 1961

Section 69C

Income from undisclosed sources - Addition under section 69C - Unexplained cash found at residence recovered by search conducted by CBI and also by IT Dept. - Assessee failed to prove source of cash

A search was conducted by CBI on 22-4-2010 on the premises of the assessee. The information was forwarded to the Income Tax Department. A search and seizure operation under section 132 was conducted by Director (Inv) at the residential and business premises of assessee on 22-4-2010. The CBI had seized Rs. 2 crores during their search action on 22-4-2010. Statement on oath was recorded by the DDlT (Inv.) wherein certain questions were asked relating to cash lying at the residential premises. During the course of assessment proceedings, the assessee filed a reply stating that Rs. 2,01,00,000 was received as advance against the property. Assessee filed reply giving the details of the cash advance received from R Ahuja along with PAN through broker Mr S Sharma. On 22-1-2013 counsel for assessee attended on behalf of R. Ahuja and filed copy of the MOU dt. 12-4-2010 entered with the assessee for purchase of agricultural land. It was also stated that R. Ahuja made payment of Rs. 2.01 crores to the assessee in cash. The same was withdrawn by him from his bank account, the copy of the same was filed. Considering the facts and discussion above, Rs. 2,00,00,000 was added by the AO in the hands of the assessee as unexplained money found in his possession. CIT(A) confirmed addition made by AO.Held: The inconsistencies in the statements of related persons had not been explained by assessee. Thus, there were serious doubts about the alleged transaction of sale of land. It is highly unbelievable that a person who was having banking facility kept substantial amount of Rs. 2 crores in cash with him for more than two months. Entire story has been cooked-up by the assessee later on and was clearly an after-thought. According to section 110 of Evidence Act when assessee was found in possession of Rs. 2 crores at the time of search by CBI and assessee denied the ownership of the same, the burden would be upon the assessee to prove as to who was the owner of the cash found from his residence and possession. However, the assessee failed to discharge onus upon him to prove as to who is the lawful owner of the cash found during the course of search. There was no reason to disbelieve the case set-up by the CBI and the IT Department against the assessee. The AO had reproduced certain material based on charge sheet filed by the CBI against the assessee and others, in which the CBI had clearly mentioned that there was a criminal conspiracy between assessee, Dr. Sukhvinder Singh and others to get a favour from Shri Ketan Desai for approval of MBBS Course. There was specific information received by CBI and conversation of all the persons have been recorded by the CBI. Considering the totality of the facts and circumstances of the case and that there was substantial gap between withdrawal of cash by R. Ahuja and alleged payment to the assessee. The MOU and receipt were sham documents and fabricated by the assessee and others later on-which fact was further strengthened by the fact that no original of MOU and receipt have been produced before the authorities below. If the human probability test was applied in this matter, it was clearly established that the assessee had failed to prove source of Rs. 2 crores found during the course of search by the CBI at his residence.

Applied:Durga Prasad More (1971) 82 ITR 540 (SC) : 1971 TaxPub(DT) 375 (SC) and Sumati Dayal (1995) 214 ITR 80 (SC) : 1995 TaxPub(DT) 1173 (SC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2011-12

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