INCOME TAX ACT, 1961

Section 153A Section 68

Search and seizure - Assessment under section 153A - Computation of undisclosed income - Addition under section 68 of alleged excess cash shown in balance-sheet

Assessee was subject to there was description of consolidated details of cash in hand pertaining to M/s. Kesarwani Sheetalaya, Sahson, Soroan and Bhola Sheetgrih, Sahson. On this particular loose paper, it was mentioned the total cash-in-hand of both the concerns in the financial year 2007-08 was Rs. 27,39,932-86. AO found that actual cash with the above concerns of the assessee was Rs. 27,39,932.86 whereas the assessee had shown the cash at hand at Rs. 64,70,642.65, meaning thereby the cash amounting to Rs. 37,30,709.79 was unexplained. The AO had observed that the excess cash shown in the balance sheet may either relate to bogus liability or unexplained cash from undisclosed source introduced by the partners. The AO further remarked that the assessee had not maintained regular books of account in the shape of cash book, ledger, etc. The search and seizure action did not result in recovering any books of account from the business premises of the firm or from the residential premises of the partners of the firm. The said regular books of account were not found even in the premises of S Gupta, FCA whose places were covered under section 133A. On the strength of above discussion, the AO had treated Rs. 37,30,710 as bogus liability and had made the additions under section 68. CIT(A) considering the submissions of the assessee and findings of the AO, confirmed the addition.Held: It was clear that the AO had done only artificial working of lesser cash as against higher cash shown in the books of account of the assessee. Therefore, it was neither a case of addition under section 68, nor section 69A. Tribunal , therefore, did not subscribe to the view of CIT(A) in sustaining the addition. At the most, the authorities below could have presumed that the assessee had spent the difference of amount in question somewhere as per cash in hand as per books of account and lesser cash as per seized documents, but that would also not suffice to make addition under any of the above provisions because every person is at liberty to spend their own amount anywhere as per his choice because the assessee had not claimed any deduction in this case. Examining the case of the assessee from every possible angle, the addition of Rs. 37,30,710 wholly unjustified. Accordingly, the orders of the authorities below were set aside and the addition of Rs. 37,30,710 was, therefore, deleted.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09

INCOME TAX ACT, 1961

Section 153A Section 69

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