The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has upheld an ₹80.10 lakh addition as unexplained money in a case where cash seized by Central Excise officers was subsequently requisitioned by the Income Tax Department.
The bench of Anubhav Sharma (Judicial Member) and Amitabh Shukla (Accountant Member) found that the assessee had produced no contemporaneous evidence establishing that the seized cash was generated from sales or that ₹70 lakh belonged to his brothers. It gave weight to the finding that the cash was recovered from storage under his possession.
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The appellant/assessee challenged an assessment for the assessment year 2012–13. A search conducted by the Anti Evasion Branch of the Central Excise Commissionerate on September 2, 2011, had led to the recovery of ₹80.10 lakh in cash. The income tax authorities subsequently issued a warrant of requisition under Section 132A of the Income Tax Act and initiated assessment proceedings under Section 153A.
The assessee told the Assessing Officer that ₹10.10 lakh belonged to his proprietary concern, Delhi Plastics. He claimed that the remaining ₹70 lakh was business cash belonging to his three brothers, who were also engaged in the footwear business. To support this explanation, he submitted financial statements and confirmations from his brothers.
The Assessing Officer rejected the explanation and added the entire ₹80.10 lakh as unexplained money under Section 69A. According to the assessment order, satisfactory evidence linking the cash to business sales was unavailable. The officer also relied on the circumstances in which the cash was found and Bansal’s statement before the excise authorities that tax dues could be recovered from it.
The Commissioner of Income Tax (Appeals) upheld the addition. Referring to the excise authorities’ panchnama, the appellate authority recorded that ₹50 lakh was found in an almirah and ₹30.10 lakh in drawers under Bansal’s possession. It found no contemporaneous sale bills, customer ledgers or quantitative stock reconciliation to substantiate the explanation. It also considered the brothers’ confirmations insufficient without independent supporting evidence.
The assessee argued that the cash had been disclosed in the relevant books of account and that proceedings under Sections 132A and 153A were therefore invalid. He also challenged the addition on the ground that the cash belonged partly to his brothers.
The Tribunal rejected the jurisdictional challenge. It agreed with the Commissioner (Appeals) that, in the absence of a satisfactory explanation for the source of the ₹80.10 lakh, the Assessing Officer was entitled to proceed under Sections 132A and 153A.
The Tribunal also noted Bansal’s statement permitting adjustment of tax demands against the seized cash. In its view, that statement was inconsistent with his subsequent claim that most of the money belonged to other people. The brothers’ statements, unsupported by evidence available at the time of the search, did not independently establish their ownership of the cash.
The Bench concluded that the explanation advanced for the cash was an afterthought and upheld the ₹80.10 lakh addition under Section 69A.
The assessee had also argued that the Assessing Officer made the addition without issuing a show cause notice. The Tribunal rejected this ground after noting that he had been given several opportunities before the addition was made. His grounds challenging the assessment on the basis of approval under Section 153D were withdrawn during the hearing; the Tribunal therefore did not decide that issue.
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