ITAT Delhi on Cash Seized in Search: How Marriage Gifts, Savings and Business Cash Were Evaluated
The Delhi Bench of the Income Tax Appellate Tribunal in Anil Kumar Vs ACIT (ITAT Delhi) delivered a detailed ruling on the tax treatment of a substantial cash seizure of ₹36,50,000 during a search under Section 132 for Assessment Year 2022-23. The case offers practical guidance on how marriage gifts (Shagun), household cash, sale proceeds and company cash balances are examined during search and assessment proceedings.
The assessee, a practising Chartered Accountant, claimed that the cash represented:
- Shagun received at his daughter’s marriage
- Household cash savings held by him and his family members
- Cash received out of sale of an immovable property
- Cash belonging to a company, Mittal Homes Pvt. Ltd., in which his wife was a director
The Assessing Officer did not accept the explanations and added the entire cash of ₹36,50,000 as unexplained. The CIT(A) largely upheld this view. On further appeal, the Tribunal analysed each cash component separately, partly allowing relief and partly sustaining the additions.
Factual Background and Procedural History
Search under Section 132 and Seizure of Cash
A search action under Section 132 was conducted on 03.02.2022 at the residence of the assessee. During the operation, cash of ₹36,50,000 was found and seized. In his statement recorded under Section 132(4), the assessee stated that the seized cash comprised:
- Shagun / cash gifts received on the occasion of his daughter’s marriage
- Personal savings and household cash of himself, his wife and his second daughter
- Cash received on sale of a plot of land
- Cash belonging to companies managed by him, notably Mittal Homes Pvt. Ltd.
The assessee reiterated this explanation during the assessment under Section 143(3).
Role of the Assessee and Background Events
The assessee was a qualified Chartered Accountant in private practice and had been auditor to Amrapali Group, a well-known real estate group. The group’s failure to deliver flats led to proceedings before the Hon’ble Supreme Court, which, inter alia, directed investigation into the role of its auditors and CFO. In that backdrop, the assessee came under investigation by law enforcement agencies and had also sought medical bail. Subsequently, the income-tax search was conducted, during which the impugned cash was found.
Assessment and First Appeal
The Assessing Officer rejected the assessee’s explanation in full and treated the entire cash of ₹36,50,000 as unexplained. The addition was made as part of the regular assessment.
On appeal, the assessee furnished detailed submissions before the CIT(A) explaining the composition and sources of the cash, including:
- A list of persons who allegedly gave Shagun at the daughter’s marriage
- Details of the immovable property transaction from which ₹2,00,000 was claimed to be received in cash
- Books of account of Mittal Homes Pvt. Ltd., showing cash in hand
- Explanation of personal and household cash balances of family members
The CIT(A) was not convinced and sustained the entire addition of ₹36,50,000, finding the explanations unsubstantiated or lacking proper linkage to the seized cash.
Aggrieved, the assessee appealed before the ITAT, Delhi.
Grounds Raised Before the Tribunal
The assessee raised multiple grounds before the Tribunal, including:
- General challenges to the
CIT(A)order on facts and law - Alleged violation of principles of natural justice and non-consideration of binding precedents
- A specific ground against the addition of ₹36,50,000 as unexplained cash
- A ground relating to levy of interest under
Sections 234A, 234B and 234C
The Tribunal treated the general grounds as infructuous and focused mainly on the addition on account of cash seized and the related explanations furnished by the assessee.
Assessee’s Submissions Before ITAT
Claim of Shagun / Stri Dhan for Daughter’s Marriage
The assessee contended that a major portion of the cash, ₹24,31,500, represented Shagun money received at the time of his daughter’s marriage. The daughter’s marriage was solemnized on 17.07.2021. It was argued that: