Anant Pal Singh vs DCIT/ACIT, Central Circle-II, Noida

PER MANISH AGARWAL, AM :

This appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals-3), Noida [hereinafter referred to as “CIT(A)”] dated 25.9.2025 arising out the assessment order 18-3-2025 u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”) pertaining to A.Y. 2023-24.

All the grounds raised by the assessee are with respect to confirmation of Rs. 5,42,000/- made out of total cash of Rs. 10,42,000/- found during the course of search.

Brief facts of the case are that the assessee, aged 78 years, is a senior employee serving as President–Marketing Head of the UFLEX Group. The assessee is a widower and resides alone, and his children are well settled and earning substantial income. Being a senior executive, the assessee was provided with a motor vehicle by the organization for commuting between his residence and the company. Furthermore, on July 31, 2023, the assessee has filed his return of income for Assessment Year 2023–24, declaring a total income of ₹1,50,85,781. A search and seizure operation under section 132 of the Income-tax Act, 1961 was carried out on February 21, 2023, at the premises of the assessee in connection with the M/s Uflex-Montage Group of cases. During the search operation, cash amounting to Rs. 10,42,000/- was found and amount of Rs.9,00,000 was seized. The assessee’s case was selected for scrutiny assessment under section 143(3) of the Act for A.Y. 2023–24, and a notice u/s 143(2) was issued on June 18, 2024. In response, vide reply dated February 7, 2025, the assessee submitted that the cash represented accumulated savings, withdrawals from bank accounts, and gifts/Shagun received on various occasions. It was further explained that the assessee being an aged person who spends most of his time in office, makes systematic withdrawals to meet general household requirements and medical emergencies. The AO made an addition of Rs. 10,42,000 u/s 69A on the ground that the assessee failed to establish the source and trail of cash claimed to have been received as Shagun and gifts. The AO further observed that the cash withdrawals from the bank were made periodically in smaller amounts rather than in a lump sum and therefore presumed that the withdrawn cash might have been utilized for routine expenses before subsequent withdrawals. The AO also rejected the assessee’s contention regarding opening cash in hand of Rs. 1,20,000 in the absence of documentary evidence. Accordingly, the AO held that the availability of cash was not satisfactorily explained and treated Rs. 10,42,000 as unexplained money under Section 69A. Aggrieved by the said addition, the assessee preferred an appeal before the CIT(A) and it was explained that the amount of ₹10,42,500 was partly sourced from “Opening cash in hand of Rs. 1,20,000” and cash withdrawals from bank amounting to Rs. 7,12,500, for which copies of the relevant bank statements were duly furnished. The assessee further submitted that past savings of family members amounting to Rs. 2,10,000 (being the difference between Rs. 5,40,000 and Rs. 3,40,000) were also available, resulting in total cash availability of approximately Rs. 10,12,000, which explained the source and utilisation of the amount of Rs. 10,42,000. However, the CIT(A), vide order dated 25.09.2025, granted partial relief of Rs. 5,00,000, considering the availability of savings of the assessee and his family members as well as the cash withdrawals made by the assessee including gift amounts. Consequently, the CIT(A) sustained the addition to the extent of Rs. 5,42,000. Aggrieved by the order of the Ld. CIT(A), the assessee preferred the appeal before us.

We have heard both the parties and perused the relevant records. The total cash of Rs. 10,42,000/- was found during the course of search which was added u/s. 69A of the Act read with section 115BBE as the AO has alleged that assessee has failed to explain the source. However, it was explained by the assessee that he has made regular withdrawals from bank account and the said cash is available out of the such withdrawals. Ld. CIT(A) partly accepted the contention of the assessee and allowed the credit of Rs. 5 lacs and remaining addition of Rs. 5.42 lacs was sustained. The claim of the assessee was that the he was having opening cash balance of Rs. 1,20,000/- as withdrawals from bank amounting to Rs. 7,12,500, during the year from the bank account. Further, there were family savings and a sum of Rs. 2,10,000/- were claimed as out of the family savings. Ld. CIT(A) has given the benefit of family savings and savings of the assessee. However, the credits of the bank withdrawals have not been allowed. Copy of bank statements of the assessee were filed before us. According to which, assessee has made regular withdrawals and total sum of Rs. 7,12,000/- were withdrawn during the year. Besides, this assessee is regularly assessed to tax, since long and other family members are also having substantial income. Assessee is having salary of more than Rs. 10 lacs per month and his family members are having salary of Rs. 3 lacs per month. Looking to the entirety of the facts, the claim of the assessee having family savings of Rs. 5 lacs cannot be denied, in addition to the bank withdrawal. In view of these facts and further looking to the facts and circumstances of the case, the assessee was having substantial salary income from the last so many years and the availability of cash of Rs. 10 lacs is reasonable, keeping in view the status of the assessee. Therefore, the addition sustained by the Ld. CIT(A) amounting to Rs. 5.42 lacs is hereby deleted. Accordingly, the ground raised by the assessee is allowed.

In the result, appeal of the assessee is allowed.