The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has granted partial relief to an assessee by reducing an addition made under Section 69A of the Income Tax Act, 1961, from ₹6 lakh to ₹3 lakh and held that socio-economic status relevant while determining unexplained cash seized during air travel.

The bench of Satbeer Singh Godara (Judicial Member) and Renu Jauhri (Accountant Member) observed that while the assessee failed to satisfactorily explain the source of the seized cash, the possibility of him legitimately possessing some cash considering his socio-economic background could not be entirely ruled out. 

The Bench clarified that the relief was granted in the peculiar facts of the case and should not be treated as a precedent. 

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The appellant/assessee has challenged the order of the Commissioner of Income Tax (Appeals), Noida, relating to the Assessment Year 2020-21. The dispute centered on an addition of ₹6 lakh made by the Assessing Officer under Section 69A as unexplained money, which had been confirmed by the first appellate authority. 

The amount represented cash seized from the assessee while he was travelling on a GoAir flight from New Delhi to Lucknow. During the assessment proceedings, the assessee initially claimed that the money belonged to a “friend’s friend.” Subsequently, he retracted this explanation and asserted that the cash belonged to him and had come from his own sources. However, both explanations were rejected by the tax authorities as lacking credibility and supporting evidence. 

Before the Tribunal, both the assessee and the Revenue reiterated their respective positions. The Tribunal observed that the assessee attempted to justify the seized cash by referring to his own cash withdrawals and expenditure pattern. However, it found that these claims were neither adequately pleaded nor substantiated with satisfactory evidence before the lower authorities. 

The Bench noted that the inconsistent explanations offered by the assessee significantly weakened his case regarding the source of the cash. Consequently, it agreed that the assessee had failed to discharge the burden of proving the entire amount. 

Despite upholding the finding that the source of the cash had not been fully explained, the Tribunal considered the surrounding circumstances. It observed that the assessee’s socio-economic status made it plausible that he could have legitimately possessed a certain amount of accumulated cash.

Taking an equitable view, the Tribunal concluded that sustaining the entire addition of ₹6 lakh would not meet the ends of justice. It therefore directed that only a lump-sum addition of ₹3 lakh should be sustained, thereby granting relief of ₹3 lakh to the assessee. At the same time, the Bench expressly cautioned that this approach was based on the peculiar facts of the case and should not be regarded as a precedent for future cases. 

The ITAT partly allowed the appeal and directed the tax authorities to recompute the income in accordance with law by restricting the addition under Section 69A to ₹3 lakh instead of ₹6 lakh. No other grounds were pressed by the assessee before the Tribunal. 

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