ITAT confirms Addition since there is No Direct Nexus b/w Amount Seized from Assessee and the Withdrawal from Bank Account of Assessee’s relative [Read Order]

A division bench of the ITAT, Cochin, last day upheld an income tax addition rejective a fake claim of the assessee.

In the instant case the assessee being an individual had worked as a supplier in a hotel at Mumbai. He held a huge amount without showing any source of money. Police has seized a sum of Rs.14 lakhs from the assessee and the assessee gave unsatisfactory explanation about the source of the money.

Subsequently, a close relative of the assessee, who is engaged in the business of import and export of certain accessories, has stated that the aforesaid amount was withdrawn from his NRI account for the purpose of purchase of a flat in Mumbai and it was handed over to the assessee by his father on trust.

During the assessment proceedings the Assessing Officer verified the bank account details including all the transactions made during the period and found that the amounts were drawn by unidentifiable persons. According to him on analysis of the denomination of currency notes there is no relationship with the amount seized and the amount withdrawn from the bank. As per the FIR the assessee does not mentioned the name of his close relative and about the transaction and also specified that the withdrawals were made long ago, and the assessee could have waited till the deal was finalized for drawing the money from bank and a business man like the close relative of the assessee having large business connections in Kasargod and Mumbai could have easily transferred the money through banking channels. And it is clear that this is a well-planned story created by both the assessee and his relative for tax evasion.

CIT (A) also upheld the contention of the AO and added that no prudent businessman would keep such a huge amount of cash in his custody for such a long time.

The bench comprising of Judicial Member Abraham.P.George and Accountant Member George George K observed that the assessee has failed to submit the proof of the correct source of money and the relative also create an unbelievable story. It was therefore, held that the contentions of both the AO and CIT (A) are in the right manner with relevant material facts.