Cash Found At Home: Delhi Man Wins Tax Dispute Over Sister-In-Law’s Foreign Currency

Keeping someone else’s money at home can leave you answering questions about its ownership. For a Delhi taxpayer, foreign currency entrusted to him by his sister-in-law became a tax dispute that required a second hearing before the Income Tax Appellate Tribunal (ITAT).

During a search at his residence after demonetisation, officials found Rs 1.12 crore in Indian currency and foreign currency valued at Rs 4,34,400, according to a recent Times of India report. The taxpayer maintained that neither amount represented his unexplained personal income.

The two sums had different explanations. The Indian currency, he said, belonged to a company in which he was a director. The foreign currency belonged to his sister-in-law, who worked with an airline and had left it with him for safekeeping.

Company Records Explained The Indian Cash

The taxpayer explained that the company had withdrawn cash from 11 bank accounts amid concerns about further action following demonetisation. The money was subsequently kept at his residence.

The assessing officer nevertheless treated the Indian cash and foreign currency as unexplained money under Section 69A and applied Section 115BBE.

The company’s accounts helped resolve the larger dispute. The Commissioner of Income Tax (Appeals), or CIT(A), accepted that the cash found matched the amount recorded in its books and deleted the addition from the taxpayer’s income. The tribunal upheld that relief in 2023.

The foreign currency issue, however, remained contested.

Why The Foreign Currency Dispute Was Reheard

The taxpayer’s sister-in-law, Jeny Kemp, worked with Jet Airways. She explained that her work involved frequent overseas travel and that she had handed over unused foreign currency to him for safekeeping. Her written confirmation supported his account. The search officers did not seize the foreign currency.

The tribunal’s April 30, 2026 recall order provides an important detail about the proceedings. Its earlier decision had questioned whether there was evidence that Kemp lived at the same premises. However, she had been present during the search and had explained that the currency belonged to her.

The tribunal noted that its earlier reasoning differed from the basis adopted by the lower authorities. It considered this a mistake apparent from the record, warranting rectification under Section 254(2).

It therefore recalled its October 2023 order only on the foreign currency issue, allowing that part of the dispute to be heard again.

In the subsequent ruling pronounced on July 29, 2026, the tribunal upheld the deletion of the Rs 4,34,400 addition. It noted that the assessing officer had not countered the taxpayer’s submissions and dismissed the Revenue’s ground of appeal.

Keep Ownership And Source Records Together

For readers, the practical lesson is to document money held on another person’s behalf. A family arrangement may be understood by everyone at home, but explaining it during a tax inquiry can require records.

A written acknowledgement should identify the owner, amount, date, and reason for handing over the money. Supporting documents could include withdrawal records, foreign exchange receipts and relevant travel details.

Those documents should tell a consistent story: where the money came from, who owned it and why it was kept at that address.

The ruling turned on the explanation and evidence in this particular case. Readers should also distinguish a dispute over whose income the currency represents from the separate question of compliance with foreign exchange rules.

FAQs

1. Does money found at your home automatically become your taxable income?
Its presence alone does not settle ownership. Evidence showing who owns the money and where it came from can help contest an unexplained income addition.

2. Why did the taxpayer win relief over the foreign currency?
His sister-in-law confirmed that it belonged to her and was kept with him for safekeeping. The tribunal noted that the assessing officer had not countered his explanation.

3. What records should you keep when holding someone else’s money?
Keep a written acknowledgement identifying the owner, amount, date, and purpose, along with supporting withdrawal records, foreign exchange receipts, or travel documents.