Madras High Court
Shri Gautham Chand Jain vs Assistant Commissioner Of Income Tax on 4 March, 2025
Author: S.S.Sundar
Bench: S.S.Sundar
T.C.A. Nos.42 & 43 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 04.03.2025
CORAM
THE HONOURABLE MR.JUSTICE S.S.SUNDAR
and
THE NONOURABLE MR.JUSTICE C.SARAVANAN
T.C.A. Nos.42 & 43 of 2025
Shri Gautham Chand Jain .. Appellant in T.C.A. No.42 of 2025
Shri Sumermal Kantilal Jain .. Appellant in T.C.A. No.43 of 2025
Vs.
Assistant Commissioner of Income Tax
Central Circle 1(1)
Chennai - 600 034 .. Respondent in both appeals
***
Prayer in T.C.A. Nos.42 and 43 of 2025 : Tax Case Appeals filed under
Section 260A of the Income Tax Act, 1961, against the order of the Income
Tax Appellate Tribunal, Chennai Bench 'C', in I.T.A. No.1011/Chny/2022 &
I.T.A. No.1012/Chny/2022 dated 19.04.2023 for the Assessment Period 2021-
2022.
***
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Page 1/11
T.C.A. Nos.42 & 43 of 2025
For Appellant in : Mr.Ashok Pathy
both appeals for M/s.PASS Associates
For Respondent : Mr.Karthik Ranganathan
in both appeals Sr. Standing Counsel
COMMON JUDGMENT
(delivered by S.S.SUNDAR, J.)
These two tax case appeals arise out of the order of the Income Tax
Appellate Tribunal, 'C' Bench, Chennai dated 19.04.2023 made in I.T.A.
No.1011/Chny/2022 & I.T.A. No.1012/Chny/2022 for the Assessment Period
2021-2022 in the case of one Gautham Chand Jain and Sumermal Kantilal
Jain, the appellants herein.
2. It is admitted that there was a search conducted in the residence and
office premises of the appellants on 31.03.2021 and a sum of Rs.85,00,000/-
in cash was seized from the residential and business premises of the
appellants. The assessees gave sworn statements under Section 131(4) of the
Income Tax Act, 1961. While, Mr.Sumermal Kantilal Jain has declared a sum
of Rs.50,00,000/- as his commission income, Mr.Gautham Chand Jain, has
declared Rs.35,00,000/- as his commission income. They also agreed to pay
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T.C.A. Nos.42 & 43 of 2025
tax on the excess cash which were not accounted in the books of accounts.
Thereafter, the appellants filed their return of income, after issuance of notice
under Section 142(1) of the Income Tax Act, declaring the excess amount
seized during search proceedings under the head income from "other source".
Thereafter notice under Section 143(2) of Income Tax Act, 1961 and a show
cause notice dated 23.02.2022 was issued to the appellants. In the notice, the
appellants were requested to explain why the excess money shall not be
considered as unexplained money under Section 69A of the Act. However, the
assessees did not even respond to the show cause notice. Thereafter,
assessment orders were passed against the appellants on 02.03.2022 and
01.03.2022 respectively making the appellants liable to pay 60% of the
undisclosed income as tax under Section 115BBE r/w Section 69A of the
Income Tax Act. Appeals preferred by the appellants before the appellate
authority were also dismissed. Aggrieved by the same, the appellants have
preferred appeals before the Income Tax Appellate Tribunal 'C' Bench,
Chennai in I.T.A. No.1011/Chny/2022 & I.T.A. No.1012/Chny/2022. The
appellate Tribunal also confirmed the order of the appellate authority as well
as the Assessing Officer. Aggrieved by the same, the above tax case appeals
are preferred by the appellants.
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T.C.A. Nos.42 & 43 of 2025
3. The appellants have raised the following questions of law as the
substantial questions of law for consideration in these appeals:
"a) Whether the Income Tax Appellate Tribunal is
right in law in assessing the seized cash as unaccounted
cash under Section 69A of the Income Tax Act even though
the appellant stated under oath that it had earned
commission income and duly complied with it and offered it
as income from other sources.
b) Whether the Income Tax Appellate Tribunal is
right in law in assessing the seized cash as unaccounted
cash under Section 69A of the Income Tax Act even though
the appellant stated under oath that the said income is
commission income which could be either assessed as
income from other sources or business income.
c) Whether the Income Tax Appellate Tribunal is
right in law in levying tax on hypothetical income which
has neither accrued/arisen nor received by the appellant as
against real income by merely placing reliance on the
statement of the appellant.
d) Whether the Income Tax Appellate Tribunal is
right in law in assessing the entire cash seized from the
premises of the appellant under the head unaccounted cash
under Section 69A even though the seized cash is
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T.C.A. Nos.42 & 43 of 2025
explainable with the cash in hand of the other assessees
residing in the searched premises."
4. For the sake of convenience and for better appreciation of facts,
Sections 69A and 115BBE of the Income Tax Act, 1961, are reproduced as
below:
Section 69A of the Act:
Where in any financial year the assessee is found to be
the owner of any money, bullion, jewellery or other valuable
article and such money, bullion, jewellery or valuable article is
not recorded in the books of account, if any, maintained by him
for any source of income, and the assessee offers no
explanation about the nature and source of acquisition of the
money, bullion, jewellery or other valuable article, or the
explanation offered by him is not, in the opinion of the
Assessing] Officer, satisfactory, the money and the value of the
bullion, jewellery or other valuable article may be deemed to
be the income of the assessee for such financial year].
Section 115BBE of the Act:
(1) Where the total income of an assessee;
(a) includes any income referred to in section 68, section
69, section 69A, section 69B, section 69C or section 69D and
reflected in the return of income furnished under Section 139;
or
(b) determined by the Assessing Officer includes any
income referred to in section 68, section 69, section 69A,
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T.C.A. Nos.42 & 43 of 2025
section 69C or section 69D, if such income is not covered
under clause (a),
the income-tax payable shall be the aggregate of -
(i) the amount of income-tax calculated on the income
referred to in clause (a) and clause (b), at the rate of sixty per
cent; and
(ii) the amount of income-tax with which the assessee
would have been chargeable had his total income been
reduced by the amount of income referred to in clause (i).
(2) Notwithstanding anything contained in this Act, no
deduction in respect of any expenditure or allowance or set off
of any loss shall be allowed to the assessee under any
provision of this Act in computing his income referred to in
clause (a) and clause (b) of sub-section (1).
5. It is admitted that the appellants have filed their returns stating that
the income of Rs.50,00,000/- and Rs.35,00,000/- are income by way of
commission. As per Section 69A of the Act, the assessee has to offer an
explanation about the nature and source of acquisition of money. In this case,
barring the statement of the appellants declaring the income by way of
commission, no other information disclosing the source of income as required
under Section 69A of the Act was given, despite the show cause notices were
issued. The very fact that the assessees did not even respond to the show cause
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T.C.A. Nos.42 & 43 of 2025
notices issued to them would show that they were indifferent to the situation.
However, the questions of law raised before this court remain as if the
assessees have disclosed their source of income and that the declaration made
during the search operation is sufficient to bring the case outside the purview
of Section 69A r/w Section 115BBE of the Act. This court is unable to
appreciate the issue as a pure question of law or arguments of the appellants.
Even if an explanation is given, such explanation has to be satisfactory in the
opinion of the Assessing Officer in terms of Section 69A of the Income Tax
Act. In this case, there is no explanation. The money seized was not disclosed
and hence it is an unexplained money. Mere declaration that it was received as
commission without an explanation about the source with supporting material
attracts Section 69A and the tax liability under Section 115BBE follows.
6. The contention of the learned counsel for the appellants that the
declaration of income furnished as an information is sufficient to satisfy the
department, cannot be countenanced. In fact, the Delhi High Court has dealt
with a similar situation in Shashi Garg v. Principal Commissioner of Income
Tax reported in [2020] 113 taxmann.com 92 (Delhi), wherein, in paragraph 9,
it has been held as follows:
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T.C.A. Nos.42 & 43 of 2025
"9. Burden to explain the source of cash deposit was
on the appellant-assessee, who as per the finding has not
been able to discharge this burden. The evidence on record is
undisputed, and the inference and factual findings recorded
we could observe are supported by cogent and weighty
reasoning. Explanation of the appellant-assessee has been
duly considered and not ignored. Implausible and lame
justification for making cash withdrawals has exposed and
dented the concocted explanation regarding source of the
cash deposit. Factual findings are based on cumulative effect
of all facts covering all essential points. We would not
interfere with factual findings unless they are irrational and
absurd, which no person acting judicially and properly
instructed in the field of law of taxation would have passed."
7. The above view of the Delhi High Court was affirmed by the Hon'ble
Supreme Court in [2020] 113 taxmann.com 93 (SC).
8. Similar view has been taken by the Hon'ble Supreme Court in Sadiq
Sheikh v. Commissioner of Income Tax, Bangalore reported in [2021] 124
taxmann.com 202 (SC) against the order passed by the Karnataka High Court.
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T.C.A. Nos.42 & 43 of 2025
9. In view of the facts on merits, we find no merit in these appeals and
the same deserve to be dismissed.
10. Accordingly, both the appeals are dismissed. All the substantial
questions of law are answered against the appellants. However, there is no
order as to costs.
[S.S.S.R., J.] [C.S.N., J.]
04.03.2025
Asr
To
The Assistant Commissioner of Income Tax
Central Circle 1(1)
Chennai - 600 034
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T.C.A. Nos.42 & 43 of 2025
S.S.SUNDAR, J.
and
C.SARAVANAN, J.
Asr
T.C.A. Nos.42 & 43 of 2025
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T.C.A. Nos.42 & 43 of 2025
Dated : 04.03.2025
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