Cash Found During Search Needs Book Verification: ITAT Remands ₹1.25 Crore Addition

The Mumbai “A” Bench of the Income Tax Appellate Tribunal has remanded for limited verification the issue of addition of ₹1.25 crore made under Section 69A of the Income-tax Act in the case of Akshay Jayantilal Doshi, arising from a search conducted in the Bhoomi Group, while setting aside the relief granted by the Commissioner (Appeals) for statistical purposes.

Cash found in search and assessee’s explanation

During a search under Section 132 on 31 December 2021, cash of ₹1.25 crore was found at the residential premises of the assessee, a key person of the Bhoomi Group. The Assessing Officer treated the entire amount as unexplained money under Section 69A, holding that the assessee failed to substantiate his claim that the cash belonged to various group entities and family members. The addition was taxed under Section 115BBE.

In appeal, the Commissioner (Appeals) deleted the addition, noting that the aggregate cash-in-hand as per the books of the group entities exceeded the cash found during the search and observing that it is common business practice for group cash to be kept with key persons for security reasons.

Tribunal orders limited verification by Assessing Officer

The Tribunal observed that although the assessee’s explanation appeared plausible and was supported by charts showing entity-wise cash balances, neither the assessment order nor the appellate order recorded a verification of these balances with contemporaneous cash books. The Bench held that confirmation of the explanation necessarily required verification of primary records as on the date of search.

Accordingly, the matter was restored to the Assessing Officer for the limited purpose of verifying cash-in-hand as per the cash books of the relevant entities and individuals strictly as on 31 December 2021. The Tribunal directed that if the verified cash-in-hand equals or exceeds the cash found, the addition under Section 69A shall be deleted; otherwise, the addition must be restricted only to the shortfall. The scope of enquiry was expressly confined, and other legal grounds raised by the assessee were kept open.