Unexplained money, etc.

This article talks about unexplained money which is mentioned under section 69A of the Income Tax Act 1961.

Section 69A has been reproduced below:

“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 another valuable article, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the money and the value of the bullion, jewellery or another valuable article may be deemed to be the income of the assessee for such financial year.”

Explanations concerning case laws:

• Addition u/s 69A can only be made when the assessee is found to have money, bullion, jewellery, etc. not recorded in the books of accounts of the assessee. [DCIT Vs M/s. Karthik Construction Co. (ITAT Mumbai)]
• Additions u/s 69A are not sustainable if based on a mere loose sheet found in Third personal premises. [Riveria Properties (P) Ltd. Vs. ITO (ITAT Mumbai)]
• The assessee has failed to bring on record any evidence to establish his claims that the deposits in the Bank, saving bank account was out of receipts connected with his business transactions. Hence the said deposits have been correctly treated as unexplained money under section 69A of the Act and brought to tax into the assesses hands. [Shri Parbat M. Chamriya Vs Income Tax Officer (ITAT Mumbai)]
• For invoking provisions of section 69A assessee should be the owner of any money, bullion, jewellery or any other valuable articles. In this case of the assessee, he was not found to be the owner of any money, bullion, jewellery or any other valuable articles. In such a situation invoking provisions of section, 69A was not justified. [ ITO Vs Shri Parvez Mohammed Hussain Ghaswala (ITAT Mumbai)]
• If the Assessee merely acted as a conduit without any right in money, then no addition under section 69A of the Act could be made against the assessee. The assessee took money through a cheque from one company and transferred the whole amount to the bank account of another company, without any commission/consideration. The ITAT deleted the additions after observing that the assessee is only a conduit for the transfer of money. [M/s Bhagwati Motors Vs. ITO Chandigarh bench of ITAT].