Facts of the Case

A search under Section 132 of the Income-tax Act, 1961 was conducted on 21.08.2017 in the case of the Laxmi Remote Group, including the assessee Shri Vijay Kumar Sachdeva, who was a director in M/s Laxmi Remote India Pvt. Ltd. engaged in manufacturing remote controls and set-top boxes.

During the search proceedings, the authorities found:

  • Cash: ₹61,56,000
  • Jewellery: ₹53,15,286

The Assessing Officer (AO), in the absence of satisfactory explanation regarding the source of the cash and jewellery, treated the amounts as unexplained income under Section 69A.

Meanwhile, the company and its directors had filed a settlement petition before the Interim Board for Settlement (IBS) in relation to accommodation entries and related transactions discovered during the search.

The Interim Board for Settlement, in its order dated 24.04.2023 passed u/s 245D(4), determined the total income of the group at ₹79.61 crore, which included income offered during settlement proceedings.

The assessee challenged the additions before the CIT(A), who:

  • Deleted the addition of ₹61,56,000 relating to cash
  • Restricted jewellery addition to ₹1,80,820s

Both the Revenue and the assessee filed appeals before the ITAT Delhi.

 Issues Involved


  1. Whether addition under Section 69A on account of cash found during search can be sustained when the amount is already covered in income surrendered before the Interim Board for Settlement.
  2. Whether the addition for unexplained jewellery should be sustained when the group had already offered income relating to jewellery before the Settlement Commission.
  3. Whether bogus unsecured loan of ₹3,45,00,000 and commission of ₹10,35,000 could still be added when the same amounts were considered in settlement proceedings.

 Petitioner’s Arguments (Assessee)


  • The search primarily related to accommodation entries received by the company and its directors.
  • The company filed a settlement petition before the Settlement Commission, declaring additional income covering accommodation entries and their utilization.
  • The Interim Board for Settlement determined total group income of ₹79.61 crore, covering transactions relating to both the company and its directors.
  • Cash and jewellery found during search were part of the income already offered for taxation before the Settlement Commission.
  • Taxes had already been paid on the surrendered income; therefore, separate additions would result in double taxation.

 Respondent’s Arguments (Revenue)


  • The assessee had failed to reconcile the amounts found during search with the income offered before the Settlement Commission.
  • The order of the Settlement Commission did not specifically mention certain amounts of cash and jewellery seized during search.
  • For AY 2014-15, the assessee had received bogus unsecured loans through accommodation entries, which were rightly added under Section 68, along with commission paid for such entries.

 Court Findings / ITAT Decision


  • The Settlement Board had already examined the issues arising out of the search and the income offered by the assessee group.
  • The Board determined the aggregate income of ₹79.61 crore, which covered all accommodation entries and their utilization for the relevant years.
  • The Revenue had not challenged the order of the Interim Board for Settlement.

On Jewellery Addition

The CIT(A) found:

  • Total jewellery found during search: 5624.06 grams
  • Jewellery explained: 1750 grams
  • Unexplained jewellery value: ₹1,55,62,100

Out of this amount:

  • ₹1,49,18,821 had already been offered before the Settlement Commission.

The balance unexplained amount of ₹7,23,279 was divided equally among four family members, resulting in ₹1,80,820 addition in the hands of the assessee.

The ITAT held that the assessee failed to produce evidence to rebut the findings of CIT(A). Therefore, the restricted addition was upheld.

On Cash Addition

The Tribunal observed that:

  • ₹61,56,000 cash found during search was already covered in the surrender of ₹67,00,000 before the Settlement Commission.

Accordingly, the CIT(A) was justified in deleting the addition.

On Bogus Loan Addition (AY 2014-15)

  • The Settlement Board had already examined and accepted the disclosure relating to accommodation entries and related commission.
  • Since the Revenue had not challenged the Settlement order, no separate addition was warranted.

 Court Order


  • The addition for unexplained cash was rightly deleted.
  • The addition for jewellery was correctly restricted to ₹1,80,820.
  • Additions relating to bogus unsecured loans and commission were rightly deleted.
  • Revenue’s appeals were dismissed.
  • Assessee’s appeal was also dismissed.

Important Clarification


Where income arising from cash, jewellery, or accommodation entries discovered during search has already been disclosed and accepted in settlement proceedings, the same cannot be taxed again in regular assessment, unless the Revenue successfully challenges the settlement order.

However, if any portion remains unexplained and is not covered by the settlement disclosure, such amount can still be taxed in the hands of the assessee.

Sections Involved

  • Section 69A – Unexplained money, bullion, jewellery etc.
  • Section 68 – Unexplained cash credit
  • Section 132 – Search and seizure
  • Section 153A – Assessment in case of search
  • Section 245D(4) – Order of Settlement Commission / Interim Board for Settlement

Link to download the order -  https://itat.gov.in/public/files/upload/1735715780-P2CwPW-1-TO.pdf

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