Rajesh Bhatia vs DCIT/ACIT

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 08.10.2025 arising out the assessment order 7-3-2024 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. 4,05,000/- made out of total cash of Rs. 9,46,500/- found during the course of search.

Brief facts of the case are that the assessee is an individual and a senior employee serving as Chief Financial Officer of the Uflex Group and has been a regular taxpayer for several decades. For the Assessment Year 2023-24, the assessee filed his return of income on 30.12.2023 declaring total income of Rs. 3,30,66,640/- A search and seizure operation under section 132 was conducted on 21.02.2023 in the case of Uflex-Montage Group, wherein the residential premises of the appellant were also covered. During the course of search, cash amounting to Rs. 9,46,500/- was found, out of which ₹7,00,000 was seized. The case of the assessee was thereafter selected for scrutiny and assessment was completed u/s 143(3) wherein the Assessing Officer treated the entire cash of ₹9,46,500/- as unexplained money u/s 69A r.w.s. 115BBE and added the same to the income of the assessee. Aggrieved by the said addition, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) partly allowed the appeal and accepted the assessee’s explanation to the extent of ₹5,41,500, which includes Rs. 3,00,000 disclosed as cash in the appellant's last year’s ITR, Rs. 1,41,500 disclosed as cash in the ITR of Rajesh Bhatia HUF, and from past savings. However, the CIT(A) sustained the addition of Rs. 4,05,000, which was the cash balance disclosed in the return of income of the appellant’s late wife, Smt. Ritu Bhatia, for A.Y. 2020-21. The addition was sustained on the grounds of a time gap between the cash disclosed and cash found. Against the aforesaid action of the Ld. CIT(A), assessee is in appeal before us.

We have heard both the parties and perused the relevant records. During the course of search, total cash of Rs. 9,46,500/- was found from the possession by the assessee which was explained as accumulated from day to day cash withdrawal, household and gifts received on various occasions by the assessee and his wife. However, AO has not accepted the contention of the assessee and made the addition of the same. In first appeal, Ld. CIT(A) has partly allowed the appeal of the assessee and gave the credit of cash of Rs. 5,41,000/- and balance was confirmed. With respect to the cash of Rs. 4,05,000/- confirmed by the CIT(A) which has been claimed by the assessee that this cash was related to his deceased wife Smt. Ritu Bhatia who expired on 2.9.2020 and the said cash was declared in her income tax return filed on 10.1.2021. Assessee claim was that the said cash was kept separately in the house and in the preliminary statement u/s. 132(4), it was stated by the assessee that this cash was found from the purse kept in almirah by his deceased wife which belonged to her. However, this fact was not accepted by the lower authorities while making and sustaining the addition.

We have perused the income tax return filed by Smt. Ritu Bhatia placed in Paper Book page no. 61-70 wherein, the cash of Rs. 4,05,000/- was shown as per paper book page no. 66. The assessee’s claim is that the said cash was kept separately out of sentimental value and therefore, this fact cannot be ignored, more particularly, when the said cash was found during the course of search in the purse kept in almirah belonged to assessee’s deceased wife. All these facts clearly indicate that the claim of the assesse is correct and cannot be denied without having any contrary material. Assessee in the preliminary statement recorded in the course of search u/s. 132(4) had also admitted this fact. Accordingly, the addition of Rs. 4,05,000/- sustained by the CIT(A) is hereby deleted. Since the said cash was belonged to the assessee’s deceased wife and the same has already been disclosed in the income tax return filed much prior to the search carried, thus, all the grounds of the assessee are allowed.

In the result, appeal of the assessee is allowed.