Tax raid finds Rs 4.34 lakh forex; man wins ITAT case with sister-in-law’s help

In a tax raid conducted in Delhi, authorities discovered Rs 1.12 crore in Indian currency and Rs 4.34 lakh worth of foreign currency belonging to a man. The individual explained that the company he worked for had withdrawn the cash from 11 bank accounts due to fears of further action following demonetisation. His sister-in-law, who worked as an airline employee and lived with him, also provided a written statement supporting the man's explanation.

She confirmed that she frequently traveled for work and carried substantial amounts of foreign currency, which she entrusted to her brother-in-law for safekeeping. Initially, the Income Tax investigation team accepted the sister-in-law's explanation and decided not to seize the foreign currency. However, the Assessing Officer at Jhandewalan Central Circle treated both the cash and foreign currency as unexplained money and subjected them to tax under Section 115BBE.

The man successfully appealed the decision to the Income Tax Appellate Tribunal (ITAT) in Delhi. The tribunal found that the man had provided evidence in the form of his company's books of accounts, which recorded the exact amount of cash found during the search. The ITAT also dismissed the Assessing Officer's objections regarding the sister-in-law's foreign currency, stating that the man had not furnished sufficient evidence to support that claim. Ultimately, the man won the case, with the ITAT granting relief in both matters in 2023 and 2026.