1981 (11) TMI 79 - AT - Income Tax

Tribunal Upheld CIT Order, Dismissed Appeal on Cash & Jewellery Explained as Non-Undisclosed Income

INCOME TAX OFFICER. Versus ONKARMAL MINTRI.

The Tribunal upheld the order of the CIT (Appeals) and dismissed the appeal, concluding that the entire cash and jewellery found during the search were ... - Issues Involved:1. Deletion of addition of Rs. 1,48,974 made by the ITO under section 69A.2. Explanation of cash amounts found during the search.3. Explanation of jewellery valued at Rs. 90,160 found during the search.Issue-wise Detailed Analysis:1. Deletion of Addition of Rs. 1,48,974 Under Section 69A:The primary issue in this appeal by the Revenue is whether the CIT (Appeals) erred in law and fact by deleting the addition of Rs. 1,48,974 made by the ITO under section 69A. The ITO had added this amount as income from undisclosed sources, which the CIT (Appeals) subsequently deleted.2. Explanation of Cash Amounts Found During the Search:a. Rs. 28,000 Cash Found at the Residence:The assessee explained that the Rs. 28,000 found at his residence belonged to Mintri Transport (P) Ltd. and was brought home for security reasons. The ITO disbelieved this explanation, citing inconsistencies and improbabilities. However, the Tribunal found that the books of Mintri Transport (P) Ltd. showed a cash balance of Rs. 29,350 on 7th October 1974, which was not found in the office during the search. The Tribunal accepted the assessee's explanation that he brought the cash home, noting that the cash was distributed among three almirahs for security and that the practice of bringing cash home was established. The Tribunal concluded that the sum of Rs. 28,000 was fully explained as belonging to Mintri Transport (P) Ltd.b. Rs. 5,800 Found in Mintri Transport (P) Ltd. Office:The explanation for Rs. 5,800 found in the office was that Rs. 3,000 belonged to the assessee's two minor sons, as indicated by the names on the paper wrapping the currency notes. The Tribunal accepted this explanation. The remaining Rs. 2,800 was explained as belonging to the assessee's son, K.K. Mintri, who received Rs. 10,300 from a Sikkim debtor and kept Rs. 2,800 in the office. The Tribunal found this explanation believable and accepted it.c. Rs. 8,063 Found in the Siliguri Office:The cash balance of Rs. 2,667 was shown in the books of Mintri Transport (P) Ltd., and the remaining amount was explained as belonging to Gaya Ganga Tea Estate. The Tribunal found the explanation convincing, noting that the Tea Estate accepted the position and that the practice of keeping cash in the office was established. The Tribunal upheld the CIT (Appeals)'s acceptance of this explanation.d. Rs. 7,500 Found in the Assessee's Briefcase:The assessee explained that this amount represented gifts intended for deposit in a bank. The ITO rejected this explanation, citing low drawings and high expenditure. However, the CIT (Appeals) and the Tribunal found the explanation probable, noting that the assessee had substantial remuneration and that most expenses were met by the private limited company. The Tribunal concluded that the sum of Rs. 7,500 was explained.3. Explanation of Jewellery Valued at Rs. 90,160:The jewellery was claimed to belong to the assessee's wife, Smt. Indrawati Devi, who came from a well-to-do family and had substantial jewellery from her marriage in 1952. The ITO rejected this claim based on several reasons, including a local report stating she came from a poor family, the modern design of the jewellery, and the fact that she filed IT returns at Kanpur while residing in Kalimpong. The CIT (Appeals) did not accept these points, noting that the assessee's wife had sold jewellery worth over a lakh in 1952, indicating she possessed substantial jewellery. The Tribunal upheld the CIT (Appeals)'s finding, noting that the ITO's reasons were not convincing and that the Revenue failed to establish that the jewellery belonged to the assessee. The Tribunal emphasized that suspicion cannot substitute for proof and concluded that the jewellery belonged to Smt. Indrawati Devi.Conclusion:The Tribunal upheld the order of the CIT (Appeals) and dismissed the appeal, concluding that the entire cash and jewellery found during the search were satisfactorily explained by the assessee and did not represent income from undisclosed sources.