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TMI Blog2020 (10) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... is no legality and justification for making and sustaining addition of Rs. 2,50,000 /- u/s.69 A r/ w Sec. 115 BBE for cash found from locker No.487PNB being in old currency notes as operative before demonetization, which had ZERO intrinsic value as on the date of the search. 2.1 That without prejudice, in view of the fact that the locker No.487 of PNB was lastly operated on 29.10.15 (A.Y.16-17) prior to the date of search, under no circumstance, the issue of this cash can be considered in A.Y.17-18. 2.2 That without prejudice, in view of the explanations furnished, the cash of Rs. 2,50,000/- stands explained even on merits." 3. A search and seizure operation u/s 132 of the Act was carried out on 07.04.2016 in the case of the assesse. During the search operation, cash amounting to Rs. 26,84,450 /- was found from the residential premises C-17, Nizamuddin East, New Delhi out of which cash amounting to Rs. 17, 61,950 /- belonging to the assessee was seized. During the search operation Sh. Vijay Chawla deposed in his statement recorded u/ s 131 of the Act that there is approx Rs. 17 lakhs cash belonging to him kept at his house and the same is his unaccounted income not recorded i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee was not substantiated the AO was fully justified in treating the said cash of Rs. 17,61,950 /- as unaccounted income of the assessee for AY 2017-18. It was held that since the assessee has not been able to justify earning of professional income in cash from 25 to 30 clients as admitted in course of search action, the claim of the assessee that the cash of Rs. 17,61,950 /- has been rightly dealt with in A Y 2017-18. 6. Aggrieved the assessee filed appeal before the ITAT. 7. During the hearing before us, the ld. AR argued that, 1. The search took place on 07.04.2016 wherein the cash of Rs. 17,61,950 /- has been found and by no stretch of imagination, it cannot be assumed that the assessee, a practicing advocate has earned Rs. 17.61 lacs within a period of 7 days during the year. 2. Since, the amount could not have been earned in the FY 2017-18, no addition is warranted by the AO in this year. 3. The assessee has explained before the revenue authorities on 12.04.2016 i. e. 5 days after the search that the amount belongs to FY 2015-16, hence it should have been rightly assessed in the assessment year 2016-17. 4. The assessee has filed a letter dated 23.05.2016 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the AO was right in not believing the books of accounts? 2. Whether the addition can be made solely on the basis of statement recorded on the date of search i.e. on 07.04.2016 ? 3. Whether ignoring the statement recorded on 12.04.2016 wherein the assessee explained that the amounts pertain to assessment year 2015-16 ? 4. Whether the retraction filed before the ADIT( Inv.) on 23.05.2016 can be considered valid? 12. The argument that inspite of the undisputable evidences that the amounts have been duly reflected in the books of accounts, the AO went ahead with making of the addition has been examined. 13. We have perused the documents filed by the assessee before the revenue authorities to explain the cash found at the residence. The details are as under: Vijay Chawla B/S Complete cash book Cash book B/S As on 31.03.2015 01.04.2015 to 31.03.2016 01.04.2016 to 08.04.2016 As on 31.03.2016 Shalini Chawla B/S Complete cash book Cash book B/S As on 31.03.2015 01.04.2015 to 31.03.2016 01.04.2016 to 08.04.2016 As on 31.03.2016 14. On perusal of the balance sheet of the assessee, we find that the cash in hand as at 31.03.2015 was Rs. 3,52,074 /- taking as this opening ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the books of accounts of the assessee. This cannot be a valid reason to reject his books of accounts. 17. Section 145 of the Income Tax Act 1961, lays down that income chargeable under the head " Profit and gains of business or profession" or " Income from other sources" shall, be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Subsection 3 of Section 145 lays down that where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting namely cash or mercantile systems or accounting standards as notified by the Central Government, have not been regularly followed by the assessee, the Assessing Officer may make an assessment in the manner provided in Section 144 of the Act. 18. The Section 145 as it stands now restricts the choice of system to either the cash or mercantile system and Central Government has powers to notify accounting standards to be followed by the assessee. After going through the various decisions of the Courts upholding the rejection of books of accounts or otherwise it can be said that the A. O may proceed under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,50,000 /- has found. The last date of operation of the locker was 29.10.2015 and it was operated by the revenue on 25.04.2017. There were no locker operations between 01.04.2016 to 25.04.2016. Hence, it was alternatively argued that the amount rightly belongs to assessment year 2016-17. The revenue argued that the factum that the assessee has had this " amount" at the time of operating of the locker proves unexplained source of the money liable to be taxed u/s 69A. 25. Heard the arguments of both the parties and perused the material available on record. 26. The amount has been added as unexplained money u/s 69 A for the assessment year 2017-18. Hence, it needs to be considered as to whether for the period between 01.04.2016 to 25.04.2016, possession of these notes have any intrinsic value or not. On this issue, we are guided by the judgment of Hon' ble High Court of Karnataka in the case of CIT Vs Andhra Pradesh Yarns Combines Pvt. Ltd. 200 CTR 641. The operative part of the said judgment is as under: "9. Having heard the learned counsel for the parties to the lis and after carefully considering the findings and the conclusions reached by the Tribunal, we are of view, that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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