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| The Tax Publishers2020 TaxPub(DT) 1275 (Del-Trib) INCOME TAX ACT, 1961
Section 69
Where alleged undisclosed cash was duly recorded in assessee's books of account and not even a single defect was pointed out by AO in the books, it would be said that such addition was made on the basis of suspicions and surmises and hence, the same was liable to be deleted.
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Income from undisclosed sources - Addition under section 69 - Alleged undisclosed cash - Cash being duly recorded in books of account
AO received information that two employees of assessee-company were caught by police with unexplained cash. Pursuant to that, survey operation under section 133A was carried to verify the source of such cash. One of the directors of the assessee claimed that the cash seized by the police was duly recorded in the books of account and, accordingly, the AO asked the assessee to produce the books of account. It was explained by the assessee that it was an authorised money changer and due to business requirements, it had to maintain substantial cash balance. It was further explained that the cash was withdrawn from bank 'H', but the AO observed that the cash was carrying tags of bank 'P' instead of the bank 'H'. AO further observed that cash book so produced was not made available to the survey party wherein it was explained that the books of account were lying with the CA. Accordingly, the AO made addition of the seized cash under section 69 by treating the same as undisclosed. Held: There was no dispute that assessee was an authorised money changer and such line of business required availability of cash in huge amount. The main reason for impugned addition was that the cash bundles carry the tag of bank 'P', but it could not be given weightage in as much as it was a very common practice amongst all banks to issue currency bundles as received by them. Moreover, once a bundle of currency carried tag of another bank, the issuing bank need not have to count again and again. Further, books of account lying with the CA were also verified by the AO and when during the course of assessment proceedings the books were produced, not even a single defect was pointed out by the AO in them. Therefore, it was concluded that the entire addition was made on the basis of suspicions and surmises and hence, the same was deleted.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
INCOME TAX ACT, 1961
Section 68
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