ORDER
Persiddhartha Nautiyal, Judicial Member.-This appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals) -48, Mumbai vide DIN: ITBA/APL/S/250/2025-26/1085189328(1) dated 27-Jan-2026 for the Assessment Year 2022-23.
2. The Assessee has raised the following grounds of appeal:
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On the facts and in the circumstances of the case and in law, and without prejudice to other grounds, the Ld. NFAC/CIT(A) has erred in upholding the assessment order passed u/s 143(3) of the Act without appreciating the facts and submissions made by the Appellant and therefore the same is liable to be quashed. |
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DUE TO LIMITATION OF FILEDS TO ENTER THE GROUNDS OF APPEAL RAISED WHICH IS 10 , YOUR HONOR IS KINDLY REQUESTED TO REFER THE SEPERATE SHEET OF GROUNDS OF APPPEAL RAISED FOR REST (2 to 10) AND ALL 10 GROUNDS OF THE APPEAL RAISED BY THE APPELLANT |
2.1 The brief facts of the case are that a search and seizure under section 132 of the Income-tax Act, 1961 (“the Act”) was conducted in the case of M/s Metropolis Healthcare Ltd. and other associated entities on 16.11.2022. The residential premises of the assessee were also covered in the course of the search. During the search proceedings, a locker held jointly by the assessee and his wife in Vishwas Sahakari Bank, Nashik, was opened and the Department found cash of Rs.7,00,000/- therein. In the statement recorded on oath, the assessee admitted that the cash belonged to him and his family but stated that documentary evidence in support of the source was not readily available. During the assessment proceedings, the assessee explained that out of the total cash, a sum of Rs.1,50,000/- belonged to his father-in-law and had been kept for medical emergencies relating to his mother-in-law, Rs.1,50,000/- were cash gifts received by his grandson during his thread ceremony, and the balance Rs.4,00,000/- were accumulated savings and cash withdrawn from bank accounts and keptfor emergencies. The Assessing Officer did not accept the submissions on the ground that the assessee did not file any supporting evidence and thus held that the source of the cash remained unexplained. Accordingly, the Assessing Officer added the amount of Rs.7,00,000/- as income of the assessee by treating the same as unexplained money under section 69A of the Act and assessing total income at Rs.1,32,02,640/-.
3. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(Appeals). Before the CIT(Appeals), the assessee reiterated that Rs.1,50,000/- had been received from his father-in-law, Shri Shantaram Jagannath Naravane, for medical treatment of the assessee’s mother-in-law and filed a confirmation and copy of the bank statement showing withdrawals. The assessee further submitted that Rs.1,50,000/- were the gifts received by the grandson on the occasion of his thread ceremony held on 30.10.2022 and the assessee placed reliance on photographs of the ceremony, confirmation from the daughter and her bank statement showing payments for the hall and caterer. With respect to the balance cash of Rs.4,00,000/-, the assessee submitted that the assessee had been declaring substantial income and had regularly withdrawn cash from bank accounts and retained cash for emergencies. The assessee also contended that the assessee was filing return under section 44ADA of the Act (running a pathological laboratory) and was not required to maintain books of account. The assessee submitted that all his income had already been offered to tax and, therefore, there was no reason to keep unaccounted cash in the locker.
4. The CIT(Appeals), however, dismissed the appeal and upheld the addition made by the Assessing Officer.
5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.
6. We have heard the rival contentions and perused the material on record. The short controversy involved in the present appeal is whether the cash amounting to Rs.7,00,000/- found in the bank locker maintained jointly by the assessee and his wife could be treated as unexplained money under section 69A of the Act and subjected to tax under section 115BBE of the Act.
7. It is an undisputed fact that during the course of search proceedings conducted under section 132, cash of Rs.7,00,000/- was found in locker No.215 kept with Vishwas Sahakari Bank, Nashik. It is also not in dispute that right from the stage of recording of statement under section 132(4) of the Act till the assessment proceedings and appellate proceedings, the assessee has consistently taken a stand that the cash belonged to him and his family and had explained the source thereof. Out of the total cash, Rs.1,50,000/- was received from the fatherin-law of the assessee for meeting medical emergencies of the assessee’s motherin-law, Rs.1,50,000/- were the cash gifts received by the assessee on the occasion of thread ceremony of the grandson and the balance sum of Rs.4,00,000/- were cash withdrawals and savings accumulated by the assessee and his wife over a period of time. In support of the aforesaid, the assessee furnished confirmation of the father-in-law, copy of his bank statement, photographs relating to the thread ceremony, confirmation from his daughter and copy of her bank statement as well as his own bank statements showing regular cash withdrawals.
8. The addition has been sustained by the Tax authorities below primarily on the ground that the explanations do not satisfy the test of human probabilities and the documentary evidence produced is not adequate. However, in our considered opinion, the approach adopted by the Tax authorities is not in consonance with the settled legal position.
9. Section 69A of the Act empowers the Assessing Officer to treat money found in possession of the assessee as unexplained only where the assessee either offers no explanation regarding the nature and source thereof or where the explanation offered is not satisfactory. Thus, the section does not contemplate proof to a mathematical certainty and once the assessee furnishes a plausible explanation supported by surrounding circumstances and supporting material, the burden shifts upon the Revenue to establish that the explanation is false or inherently improbable.
10. In the present case, no material whatsoever has been brought on record by the Revenue to demonstrate that the confirmations furnished by the father-in-law and daughter are false or fabricated. Further, the existence of the thread ceremony itself stands corroborated by photographs and expenditure incurred through banking channels to organize the same. The Tax authorities have merely doubted the explanation on the basis of conjectures and assumptions. In our considered opinion, suspicion, however strong, cannot take the place of evidence.
11. We further find merit in the contention of the learned counsel that the assessee has been regularly filing returns of income and for the year under consideration itself has disclosed total income of Rs.1,25,02,640/-. The bank statements placed on record show regular withdrawals of cash. Therefore, the explanation regarding availability of cash savings to the extent of Rs.4,00,000/-cannot be brushed aside merely because the same was found in a locker.
12. The Hon’ble Supreme Court in the case of
CIT v.
Daulat Ram Rawatmull [1973] 87 ITR 349 (SC) held that the apparent state of affairs must be presumed to be real unless proved otherwise and the burden of proving otherwise lies upon the person who alleges it. The Hon’ble Supreme Court made the following observations:
The onus to prove that the apparent is not the real is on the party who claims it to be so. As it was the Department which claimed that the amount of fixed deposit receipt belonged to the respondent firm even though the receipt had been issued in the name of B, the burden laid on the deportment to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of B.
13. In
Umacharan Shaw & Bros. v.
CIT [1959] 37 ITR 271 (SC), Hon’ble Supreme Court held that suspicion, however grave, cannot substitute legal proof. In
Omar Salay Mohamed Sait v.
CIT [1959] 37 ITR 151 (SC), the Hon’ble Supreme Court observed that conclusions reached by the Revenue authorities should be based on evidence and not on suspicion and surmises. Further, in
CIT v. P.K. Noorjahan 237 ITR 570 (SC), the Hon’ble Supreme Court held that even where the conditions of section 69 of the Act are satisfied, the deeming provision is discretionary and must be applied judiciously having regard to the facts and circumstances of the case.
14. Considering the entirety of facts and circumstances and having regard to the material brought on record, we are of the considered view that the assessee has satisfactorily explained the source of the cash found in the locker and the Revenue has failed to bring any cogent material to rebut the explanation furnished by the assessee. Accordingly, the addition of Rs.7,00,000/- made under section 69A of the Act is directed to be deleted.
15. In the result, the appeal of the assessee is allowed.
