No Additions Towards Unexplained Cash if It Was Out of Savings of Family Members and Gifts From Brothers | ITAT

Case Details: Avinash Singla vs. DCIT - [2025] 170 taxmann.com 710 (Chandigarh-Trib.)

Judiciary and Counsel Details

• Rajpal Yadav, Vice President & Krinwant Sahay, Accountant Member
• Rohit Kapoor & Virsain Aggarwal, Advs. for the Appellant.
• Smt. Kusum Bansal, CIT DR for the Respondent.

Facts of the Case

During the search operation, the assessee declared a sum of Rs. 10 lakhs in the company to cover up any irregularity in the explanation of any unexplained item. This amount was assessed in the hands of the company.

The assessee explained that the source of the cash was from past savings of family members and gifts received from brothers. However, the Assessing Officer (AO) added to the assessee’s income by stating that unexplained cash had been found at the residential premises.

On appeal, CIT(A) upheld the additions made by AO, and the matter reached the Chandigarh Tribunal.

ITAT Held

The Tribunal held that the assessee had declared a sum of Rs. 10 lakhs in the company during the search to cover up any irregularity in the explanation of any unexplained item. This amount was assessed in the hands of the company, which was framed under section 143(3). The assessee also referred to ITR-V and Computation of Income and these documents disclosed that the assessee had declared additional income of Rs. 10 lakhs.

Therefore, if the explanation is taken into consideration based on cumulative circumstances, namely, Rs. 10 lakhs was declared to cover up such type of issues, past savings of the family members, and gift received from the brothers, then it would be established that the source of cash was available with the assessee. It is difficult to establish cash available in the family with mathematical precision. It is to be appreciated based on the normal human behavior available in the family. If all the family members are assessable to tax, then the possibility of their savings and the availability of Rs. 10 lakhs could never be denied. Accordingly, the impugned additions made by AO were deleted.