2016 (3) TMI 329 - DELHI HIGH COURT

Cash payments made for purchase of property taxed as undisclosed income - Held that:- There was a clear admission on the part of the Assessee that the payment of ₹ 60 lacs were from the sale of undisclosed stock. The statement was reiterated again after the search on 24th February, 1999 and it is difficult to contemplate that the letter dated 5th February, 1999 and the statement recorded on 24th February, 1999, which were much after the search, were not made voluntarily and of free will. In our view, the only inescapable conclusion that can be drawn from the surrounding facts is that the Assessee would not have disclosed the cash payments admittedly made by the Assessee and such payments were his undisclosed income.

The Assessee had subsequently claimed that he had paid a sum of ₹ 12.9 lacs in cash which was withdrawn from his proprietorship concern. He further explained that a sum of ₹ 4 lacs had been withdrawn from the bank accounts on 26th November, 1998 and 7th December, 1998. The balance amount was paid out of the sales made in cash. The AO had disbelieved the aforesaid explanation as the withdrawals from the bank was much prior to the date of payment to Sh. Arvind Seth and there was no explanation for withdrawing cash in tranches and keeping the funds idle. In respect of the sales made in cash, the enquiries made by the AO revealed that cash sales of ₹ 6,16,586/- were booked in January 1999 in addition to receipts of ₹ 2,10,854/- described as 'sales realisation'. On enquiries, the AO found that the Assessee had failed to prove the said sales as there was no evidence of availability of stocks for sale and no purchases had been shown for making such sales. Further considering that the returns filed by the Assessee for the block period returned income only in the range of ₹ 18,210/- in the year 1989 to ₹ 77,440/- in the year 1999-2000, the withdrawals claimed by the Assessee were rightly disbelieved by the AO. Similarly, the claim that the Assessee's wife had contributed ₹ 10.15 lacs in cash was also not accepted as no source for such cash could be identified. The AO noted that the Assessee's wife had shown a capital of ₹ 5,57,420/-. For AY 1998-99, she had claimed to have received ₹ 60,000/- as salary and ₹ 32,550/- as petty gifts. During the AY 1999-2000, the Assessee's wife claimed to have income from other sources amounting to ₹ 9,05,000/-. The source of such income was not disclosed and it was the Assessee's case that source of such money was not required to be disclosed. In absence of any satisfactory explanation as to the source of ₹ 14 lacs which was admittedly paid by the Assessee, the same would also be liable to be taxed in his hands. - Decided against assessee