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2019 (1) TMI 553 - KERALA HIGH COURTWhether on the facts and in the circumstances of the case, the cash-in-hand as found on the last day of the accounting year as revealed from the books of account of the various assessees could be treated as an asset under section 2(ea) of the Act? Held that:- Admittedly, the cash-in-hand held by the appellants herein are with respect to business transactions, the accounts of which were regularly maintained and the income thereon proffered for assessment before the Income-tax authorities. The cash so held in their hand were also recorded in the books of account, with certain exceptions, as we see from the orders of the Assessing Officer. The exceptions are in so far as the Assessing Officer having taxed only such amounts, which were kept in hand and which were in excess of ₹ 50,000 on a reading of sub-clause (vi) of clause (ea). The levy made by the authorities of all such cash-in-hand, whether disclosed in the accounts or not was only of that in excess of ₹ 50,000 - sub-clause (vi) of section 2(ea) is in two limbs, one covering individuals and HUF's and the second "the other persons". As far as the former is concerned, only such cash-in-hand in excess of ₹ 50,000 would be brought to tax under the Act and as far as the second limb "the other persons" are concerned, any amount, even within the limit of ₹ 50,000 kept in hand and not recorded in the books of account will be brought to tax under the Act. The law, in this case the specific amendment seeking to tax the non-productive cash-in-hand as wealth, available in section 2(ea)(vi) is constitutionally valid. However, the officers have deviated from the policy and principle explicit from the enactment and hence such action taken under the Act for assessment of cash-in-hand of the assessees, disclosed in the books of account, but in excess of ₹ 50,000, has to be set aside. Petition disposed off declaring and holding that the "other persons" as coming in the second limb of section 2(ea)(vi) includes those persons who carry on a commercial activity and are statutorily required to maintain books of account under the Income-tax Act - The writ petitioner, a proprietary firm engaged in the business of jewellery, is declared to be entitled to be absolved from the liability to tax under the Wealth-tax Act, for any amounts held as cash-in-hand, recorded in the books of account. The is answered in favour of the assessees and against the Revenue.
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