TaxTMI 
TaxTMI 
2008 (3) TMI 395
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....ce has been brought on record linking items or amount of these papers with the appellant. The addition is made on presumptions and surmises. 4. (a) Because, the authorities below have fallen in error of fact and in law in making and sustaining addition of Rs. 12,59,450 as 'undisclosed income'. Its source was fully proved by cogent evidence on records. Nothing was undisclosed income. The addition is liable to be deleted. (b) Because, the authorities below erred on facts and in law in adding explained cash of Rs. 12,59,450 which was verifiable with reference to material on records. Even otherwise, addition is not justified in assessee's hand. (c) Because, every reasoning and findings of the authorities below are baseless/frivolous and against the facts of the case. (d) Because, the learned CIT(A) erred in deciding the issue ex parte, the opportunity allowed was a mere formality looking to the facts of the case. The appellant craves your Honour's leave to add, amend, alter, and amplify either any or all the grounds of appeal either before or at the time of hearing with the kind permission of the Hon'ble Bench." 3. It was also submitted on behalf of the assessee that ....
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....nbsp; undisclosed income income 1990-91 Rs. 21,610 Rs. 21,610 1991-92 Rs. 39,020 Rs. 39,020 1992-93 Rs. 41,470 Rs. 41,470 1993-94 Rs. 71,5,00 Rs. 71,500 1994-95 Rs. 90,930 Rs. 90,930 1995-96 Rs. 97,628 Rs. 97,628 1996-97 Rs. 80,032....
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....spect of Kara and Kundals weighing 29.700 gms. purchased @ Rs. 4,550 per 10 gms. amounting to Rs. 13,513. The second entry is in respect of purchase of some other ornaments weighing 16.930 gms. amounting to Rs. 79,531 (Rs. 7,953) thus total Rs. 21,466 for such purchases was found unaccounted for. In reply to show-cause notice the assessee simply reiterated the same facts that the paper does not relate to him. Since incriminating document found and seized from his residence it was his duty to tell the contents and to whom it relates which onus has not been discharged. Therefore, an amount of Rs. 21,466 will also be added to the undisclosed income to the block period for the relevant asst. yr. 2000-01. (Addition Rs. 21,466 in asst. yr. 2000-01)." 11. Addition of Rs. 51,328 based on Annex. A-43 pp. 4 and 5 was made in the following terms : "4.3 Annexure A-43 pp. 4 and 5 also contains details of purchase of jewellery worth Rs. 43,753 and Rs. 7,575 respectively. The same also stands unaccounted for and in the reply to show-cause notice dt. 14th March, 2002 the assessee reiterated the same facts that it does not belong to him. Since the onus to prove has not been discharged by the ....
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....elf shows that payment of Rs. 9,303 had not been made. Without prejudice to the above, it is submitted that addition of Rs. 15,000 only can be made. It is reiterated that these papers do not relate to the assessee and, therefore, the addition is not justified." 15. Not convinced with the arguments the CIT(A) proceeded to confirm the additions made in the assessment order observing that the documents were found in the search conducted upon the assessee's premises, as such, the general explanation offered namely that these documents did not belong to the assessee since the premises were occupied by him along with his wife and two married sons with their spouses and children. Similarly, the fact that these loose documents did not show the nature of the transaction, if any, and appeared to be mere estimates could not be linked with the assessee was also not accepted. The argument that these loose sheets made a reference to certain jewellery items used by ladies as such not relatable to the assessee was also rejected. Aggrieved by this the assessee is in appeal before the Tribunal. 16. The learned Authorised Representative reiterated the submission at length mainly that Shri K.P. ....
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....hem at different stages; the fact that no date or year has been found mentioned, name of the parties or for that matter the nature of the transaction, if any, is also not evidenced from these. Reliance was placed upon the order in the case of D.A. Patel v. Dy. CIT [2001] 70 TTJ (Mumbai) 969, copy of which is filed at pp. 54 -71 of the paper book for the contention that there is no evidence connecting the assessee to the seized paper and simply sheets of papers were found during the search. In these circumstances, it was argued the assessee cannot be saddled with the tax liability by the Department unless an effort is made to relate the documents to the assessee in some reasoned manner. The presumption it is an admitted fact is a rebuttable presumption and it cannot be raised to the height of conclusive proof since this would upset the settled principles of law that the assessment cannot be made on assumptions and presumptions. As such, effort by the Department to saddle the assessee with tax liability without going through the process of relating the evidence to the addition was challenged. Reliance was also placed upon the order in the case of Satnam Singh Chhabra v. Dy. CIT [2002....
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....f the Tribunal and judgment relied upon by the assessee in its favour. On a careful perusal of the same, we are of the view that in the facts as they stand no addition on the basis of these documents can be made. Ground No. 3 of the assessee as such is allowed. 19. The facts pertaining to ground No. 4 wherein an addition of Rs. 12,59,450, are found discussed at para 4.5 of the assessment order which read as under : "4.5 During the search cash amounting to Rs. 12,79,620 was found at assessee's residence D-15, Kamla Nagar, Agra. In the preliminary statement, it was stated that an amount of Rs. 2 lakhs may be available at the time of search. In the final statement the assessee was asked to show cause why excess amount of cash found may not be considered as undisclosed income. In his reply to question No. 1, the assessee has stated that as regards Rs. 2 lakhs it has already been stated in the preliminary statement. As regards Rs. 3 lakhs which has been found from his and wife's room relates to cash balance of M/s Agarwal Iron Industries. Rs. 2,64,000 relates to purchase of wood for M/s Das Cold Storage (P) Ltd. In question No. 2 to the statement the assessee was further required ....
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.... 1 that Rs. 3 lakhs which was found from his room is related to the cash of Agarwal Iron Industries of which he is a proprietor as Karta of M/s Om Prakash Kanti Prasad, HUF, is also not matching with the opening balance of Agarwal Iron Industries which shows opening balance as on 17th Feb., 2000 Rs. 2,90,505. As regards Rs. 2,64,000 stated to be cash belonging to M/s Das Cold Storage for purchase of wood also not matching with the preliminary statement given and the final statement of the assessee. In reply to questionnaire he has not been able to correlate the facts as per question No. 9 and the statement given at preliminary stage because there is variation that the three slips were written by his wife Smt. Sheela Devi and the amounts given were received from Shri Banwari Vakil and Shri Ram Avtar. More so opening balance of cash of M/s Agarwal Iron Industries and Singhal Castings Co. is not sufficient to meet the contention of the assessee. Even otherwise during the course of block assessment, it has been found that the books of accounts are not reliable and considerable, activities are carried outside the books, therefore balance shown as per the books also cannot be considered ....
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....ing the fourth bag, she stated that it had Rs. 50,000 which belong partly to her sister and partly to her and her children (Q. No. 3 paper book pp. 11 and 12) Smt. Amita Agarwal, w/o Mukesh Agarwal stated that Rs. 3,87,450 found in her almirah belonged to her and her husband and about source she will tell later on (Q. No. 9 paper book p. 16). Shri Kanti Prasad Agarwal, the assessee stated that Rs. 3,00,000 is Roker of Agarwal Iron Industries, Rs. 2,64,000 were for payment of wood of Das Cold Storage, Rs. 3,87,450 and Rs. 1,08,000 were found in the room of Smt. Amita and Mukesh about which Mukesh will be able to explain (paper book pp. 18 and 19). The cash of Rs. 12,79,620 found in search (seized Rs. 12 lakhs) is thus, explained as under : -------------------------------------------------------------- Rs. 3,00,000 Cash balance of M/s Agarwal Industries of which HUF is proprietor. The assessee is the Karta. The cash balance as on 15.02.2000 was &nbs....
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....0-01. -------------------------------------------------------------- Rs. 20,170 This was recovered from the room of Sanjay and Namita. This represents gifts received on festive occasion. -------------------------------------------------------------- Rs. 12,79,620 -------------------------------------------------------------- Except for certain alleged discrepancies in the preliminary statement and subsequent statements, the AO has not expressed any opinion as to why the cash found cannot be accepted as explained with reference to the cash balances in the regular books of account. The only observation in this connection is on p. 6 of the assessment order. Even otherwise during the course of block assessment, it has been found that the books of account are not reliable and considerable, activities are carried out outside the books, therefore, balance shown as per books also cannot be considered as very reliable. The appeals of block assessment of firm/HUF/company are also be....
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....ld to be not established. As such, the books were considered to be not reliable. 23. Still aggrieved, the assessee is in appeal before the Tribunal. 24. The learned Authorised Representative contended that all along the case of the assessee has been not considered in the correct perspective. The factual position borne out from the records has been completely ignored and the facts have wrongly been appreciated by the tax authorities. It was contended that the assessee had filed the return just 9 months after the search and till this time the assessee did not have the records which would enable him to prepare the accounts and get the accounts audited; accordingly in these circumstances the return was filed in whatever shape the assessee could file. It was his contention that this position of fact has deliberately been ignored by the Department and also has not been rebutted by them. However, by the time the assessment proceedings were taken up it was submitted that the assessee on the basis of documents made available by the Department was able to prepare the books of accounts and these books were produced before the AO. The books of account have been repeatedly seen by the AO ....
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....accounts audited in the case of M/s Das Cold Storage. Thus, in these circumstances, it was submitted that the action of the Department in not accepting the bona fide explanation of the assessee in the facts of the present case is surprising since the same AO has accepted the assessee's bona fide explanation in the case of M/s Das Cold Storage. However, while verifying the books of accounts it was submitted while giving the remand report to the CIT(A) the said AO for no stated reasons has taken a 'U' turn. In these circumstances, it was canvassed that the issue of computer and the books duly updated being in the computer which was seized stands established. 27. It was further submitted that the assessee has all along been contending that its books duly updated were in the computer which was seized and if for a moment it is presumed that the books were not there in the computer then it was contended it needs to be questioned as to why would the search party find it necessary to seize the computer. It was submitted that it cannot be accepted that the search party would resort to seizure without application of mind and in fact would indiscriminately seize anything and everything. It....
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....vey under s. 133A of the business premises of the assessee was carried out. In the fact of the said case, it was submitted cash book and ledger were not available at the time of survey and subsequently produced in response to notice under s. 131. The action of the AO in rejecting the books of accounts on the ground that they were not available at the time of survey which was upheld by the CIT(A), it was submitted reversed by the Tribunal. Accordingly, in these circumstances, since the AO did not point out any defect in the books of account which were produced all along, the addition made was deleted by the Tribunal. Copy of the said order it was submitted is placed at paper book page Nos. 72 to 73. Reliance was also placed upon the judgment of the Allahabad High Court in the case of CST v. Shyam Lal & Co. [1984] 57 STC 31 (All), copy placed at pp. 74 to 78. Referring to the same, it was submitted that therein it was again held that adverse inference cannot be drawn against the assessee for not producing the books of account at the time of survey. The books of account cannot be rejected outright and the AO is required to scrutinize with care and caution the books of account when pro....
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....were directors. The amount of Rs. 2,64,000 it was reiterated had been received for payment to parties from whom wood was purchased and even after this the cash balance as on 16th Feb., 2000 was Rs. 24,87,776.71. With respect to the amount of Rs. 2 lakhs which was explained to have been belonging to Shri Mukesh Agarwal i.e. the son of the assessee, it was submitted that Shri Mukesh Agarwal had sold land for Rs. 3,80,000 on account of which sale proceeds on different dates during 1999-2000 had been received by the son of the assessee much prior to the date of search. Referring to the written submission filed before the CIT(A), it was contended that in all, there were 7 sale deeds which were produced before the CIT(A) for perusal and on account of the said sale Shri Mukesh Agarwal had shown capital gain in the return of income filed for the asst. yr. 2000-01. The balance sheet and copy of the capital account for the said year were also placed before the CIT(A) as per paper book page No. 30 which it was stated was appearing in paper book p. 38 before the Bench. Accordingly, in these circumstances, it was submitted the action of the AO and the CIT(A) was not justified by simply taking t....
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....ning balance of 17th Feb., 2000 is not understood since admittedly the closing balance as on 15th Feb., 2000 was Rs. 2,90,505.52 which has been noted by the AO himself though he refers it as opening balance on 16th Feb., 2000 since admittedly on 16th Feb., 2000 the same was the opening as well as the closing balance since on the said date search was conducted upon the assessee and as per submissions no transactions took place. Similarly, with respect to the availability of Rs. 1,08,000 as cash balance from M/s Singhal Casting Co. wherein Shri Mukesh Agarwal, son of the assessee is proprietor, the AO comments that on 17th Feb., 2000 Rs. 1,25,240 was the opening balance of 17th Feb., 2000. Thus, the said amount was the closing balance of 15th Feb., 2000. Accordingly, Rs. 1,08,000 was easily available at the residence of the assessee which was jointly shared by him and his sons and spouses along with their children stands fully explained. Similarly, the amount of Rs. 2,64,000 explained to be the cash belonging to M/s Das Cold Storage which too is an income-tax assessee wherein the assessee and his sons were directors, the said sum is stated to have been received for payments to the pa....
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.... the assessee cannot be saddled with the responsibility of the same. It is for the Department to ensure that once evidences in the form of computer, laptop etc. are seized then they are handled with due care and caution and necessary back up copies, printout etc. should be made available to the assessee with due promptness in the presence of computer literate people who can handle and obtain necessary information from these sensitive storage devices. After having seized the computer and retained it in its custody, the evidences relied upon by the assessee in its favour obtained from the printouts made available to the assessee in the case of M/s Das Cold Storage cannot be rejected merely on the ground that at the time of the survey these printouts were not available despite the fact that all the evidences were available to the AO and the CIT(A) and again restored to the AO for obtaining a remand report, it is seen that the assessee's case has been rejected simply for acts for which the assessee was not responsible. The fact that all the members of the assessee are subjected to tax and different concerns of the assessee are also subjected to tax and also keeping in mind the prelimin....
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....erely because they were not produced for inspection at the time of survey." 33. Reference may also be made of the following decisions, copies of which are placed at paper book pp. 49-51, 52-53 and 72-73 respectively : (1) Satnam Singh Chhabra v. Dy. CIT; (2) Jagdamba Rice Mills v. Asstt. CIT; (3) Ashok Kumar v. ITO. 34. Accordingly, ground No. 4 raised by the assessee is allowed. 35. With respect to the additional ground, the submission of the learned Authorised Representative was that the CIT(A) on facts was not justified in rejecting the ground of the assessee. Reliance was placed upon certain unpublished orders of the Agra Bench of the Tribunal and published order in the case of Om Prakash Sharma v. Dy. CIT [2004] 83 TTJ (Jp) 246 : [2004] 4 SOT 369 (Jp), copy of which is placed at paper book page Nos. 106 to 138. Relying upon the same, it was contended that proviso to s. 113 has increased the tax liability of the assessee and the same is not clarificatory in nature, as such, it cannot have a retrospective operation. Accordingly, the additional ground raised by the assessee should be allowed. 36. The learned Departmental Representative though placed reliance ....
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....the basis of these documents, the AO had made addition of Rs. 97,077 comprising of separate additions of Rs. 24,303 + Rs. 21,466 + Rs. 43,753 + Rs. 7,575. These additions were made by the AO after perusal of the documents, with the observations made in paras 4.1, 4.2 and 4.3 of his order, which are being reproduced below : "4.1 During the course of search Annex. A-11 loose sheet No. 71 was found and seized which contains the purchase of diamond jewellery, ring, top etc. worth Rs. 35,603 against which cash of Rs. 15,000 has already been shown to have been paid to the jeweller and after making some adjustment returned jewellery of Rs. 11,300, an amount of Rs. 9,305 remained still to be paid. The jewellery worth Rs. 24,303 was purchased and found unaccounted for. Vide notice dt. 14th March, 2002 the assessee was required to explain the said Annexure but he failed to explain the same. Therefore, an amount of Rs. 24,303 be added to the income of block period as undisclosed income relevant to the asst. yr. 2000-01 (Addition Rs. 24,303 in asst. yr. 2000-01). 4.2 Similarly Annex. A-41 loose sheet No. 111 dt. 6th Feb., 2000 contains the account of some gold ornaments purchased. The fi....
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....5 : AIR 1974 SC 859. In this case, the Hon'ble Supreme Court holds that in terms of s. 106 of the Evidence Act, the Department is deemed to have discharged its burden if it adduces only so much evidence, circumstantial and direct as is sufficient to raise a presumption in its favour with regard to the existence of the facts sought to be proved. By making a reference of ss. 106 and 110 of the Evidence Act, it can be presumed that the appellant is the owner of these three documents. Reliance can also be placed on the decision of Chuharmal v. CIT [1988] 70 CTR (SC) 88 : [1988] 172 ITR 250 (SC), wherein it was held as under: "(i) That what was meant by saying that the Evidence Act did not apply to proceedings under the IT Act, 1961, was that the rigour of the rules of evidence contained in the Evidence Act was not applicable; but that did not mean that when the taxing authorities were desirous of invoking the principles of the Evidence Act in proceedings before them, they were prevented from doing so. (ii) That all that s. 110 of the Evidence Act, 1872, did was to embody a salutary principle of common law jurisprudence, viz., where a person was found in possession of anything, th....
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....shall deal with the addition of Rs. 12,59,450, sustained by the learned CIT(A) for unexplained cash found, and deleted by the learned JM. 10. During the course of search, cash of Rs. 12,79,620 was found. Annexure C to Panchnama will show that the cash was found in five bags from the residence of the appellant, the details of which are as under : Bag No. 1 - 3,00,000 Bag No. 2 - 2,64,000 Bag No. 3 - 2,00,000 Bag No. 4 - 1,08,000 Bag No. 6 - 20,170 --------- 12,79,620 --------- 11. The facts pertaining to ground No. 4 regarding addition of Rs. 12,59,450 have been discussed by the AO in para 4.5 of his order, which reads as under : ....
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....ld Storage dt. 16th Feb., 2000 to 17th Feb., 2000 showing on 16th Feb., 2000 cash opening balance Rs. 31,44,336, photocopies of cash book of M/s Singhal Casting Co. proprietor Shri Mukesh Kumar showing cash balance as on 17th Feb., 2000 Rs. 1,25,240. As regards Rs. 3,87,450 found from the room of Shri Mukesh Kumar and Smt. Amita Gupta in her statement to question No. 9, it has been stated that this amount relates to her and her husband Shri Mukesh Kumar and the source of availability of the cash will be explained later on. If it is presumed that it relates to the business of Shri Mukesh Kumar of which he is proprietor i.e. M/s Singhal Casting Co. there is only opening balance of Rs. 1,25,240 on 17th Feb., 2000. Similarly Shri K.P. Agarwal's reply to question No. 1 that Rs. 3 lakhs which was found from his room is related to the cash of Agarwal Iron Industries of which he is a proprietor as Karta of M/s Om Prakash Kanti Prasad, HUF, is also not matching with the opening balance of Agarwal Iron Industries which shows opening balance as on 17th Feb., 2000 Rs. 2,90,505. As regards Rs. 2,64,000 stated to be cash belonging to M/s Das Cold Storage for purchase of wood also not matching wi....
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....d her children (Q. No. 3 paper book pp. 11 and 12) Smt. Amita Agarwal, w/o Mukesh Agarwal stated that Rs. 3,87,450 found in her almirah belonged to her and her husband and about source she will tell later on (Q. No. 9 paper book p. 16). Shri Kanti Prasad Agarwal, the assessee stated that Rs. 3,00,000 is Roker of Agarwal Iron Industries, Rs. 2,64,000 were for payment of wood of Das Cold Storage, Rs. 3,87,450 and Rs. 1,08,000 were found in the room of Smt. Amita and Mukesh about which Mukesh will be able to explain. The cash of Rs. 12,79,620 found in search (seized Rs. 12 lakhs) is thus, explained as under : -------------------------------------------------------------- Rs. 3,00,000 Cash balance of M/s Agarwal Industries of which HUF is proprietor. The assessee is the Karta. The cash balance as on 15.02.2000 was Rs. 2,90,525 (extract enclosed) -------------------------------------------------------------....
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....om of Sanjay and Namita. This represents gifts received on festive occasion. -------------------------------------------------------------- Rs. 12,79,620 -------------------------------------------------------------- Except for certain alleged discrepancies in the preliminary statement and subsequent statements, the AO has not expressed any opinion as to why the cash found cannot be accepted as explained with reference to the cash balances in the regular books of account. The only observation in this connection is on p. 6 of the assessment order. Even otherwise during the course of block assessment, it has been found that the books of account are not reliable and considerable, activities are carried out outside the books, therefore, balance shown as per books also cannot be considered as very reliable. The appeals of block assessment of firm/HUF/company are also before your Honour. In these assessments, the AO has not held that the books of account maintained are not reliable. Even now the AO has ....
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....books when produced subsequently in support of his claim by the assessee and if any error is found in them, then in that event there would be justification for holding that they were not maintained properly or that they were subsequently manipulated and got prepared after the survey was done. But the account books cannot be rejected outright merely because they were not produced for inspection at the time of survey." 15. After perusal of the record and remand report of the AO dt. 17th March, 2004 submitted to the CIT(A), it is evident that during the course of search, no books of accounts or cash books of M/s Agarwal Iron Industries, M/s Singhal Casting Co. and M/s Das Cold Storage (P) Ltd. were found and seized. Even on operation of the computer on 27th March, 2000 only general register for the period 1st April, 1999 to 15th Feb., 2000 pertaining to M/s Agarwal Iron Industries was found on printout being taken out. Except this, no information was available in the computer. Shri K.P. Agarwal is the managing director of M/s Das Cold Storage. In the return of M/s Das Cold Storage, filed for the asst. yr. 2000- 01 on 27th Nov., 2000, it was submitted by the appellant that the books....
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....idence of the appellant. No explanation has been submitted regarding the distinction of cash shown by the appellant on the basis of books, which had been subsequently written on the basis of seized documents and some other information. 18. The learned JM has relied upon the case of CST v. Shyam Lal & Co. The facts of this case are different to the extent that during the course of survey, no books of accounts had been produced and the books of accounts had been produced subsequently. In the case before us, the authenticity of the books produced subsequently, has not been proved, as these books of accounts had not been audited and these books had been written on the basis of loose papers and other information, which are not subjected to verification. The learned JM on the basis of the closing balance shown in these cash books had deleted the addition sustained by the learned CIT(A). The extract of cash book of Agarwal Iron Industries had been filed at p. 35 of paper book showing brought forward cash balance of Rs. 3,75,532-57 on 8th Feb., 2000 and the closing balance as on 15th Feb., 2000 after deduction of certain expenses incurred from 8th Feb., 2000 to 15th Feb., 2000 was shown....
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....on for unexplained investment in jewellery : (1) Whether the documents, Annexs. A-11, A-41 and A-43 contained rough estimate of jewellery ? (2) Whether these documents are dumb documents especially when there is specific mention of items of jewellery and the amounts spent ? (3) Whether the appellant can be considered the owner of these documents, which were admittedly seized from the residence of appellant D-15, Kamla Nagar, Agra ? (4) Whether the addition can be made when no date is mentioned on the documents in terms of s. 69A or s. 132(4A) of the Act? (B) Addition for unexplained cash found in search: (1) Whether the addition for unexplained cash can be deleted on the basis of the books written after the date of search on the basis of loose papers, as the original cash books and documents contained in the computer had been damaged/corrupted ? (2) Whether this point should be restored to the file of the AO for verification of the receipts of the cash from the beginning of the accounting period till the date of closing balance shown by the assessee ? (3) Whether such addition can be deleted without verification of cash built up by the assessee shown in the ....
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....the said Annexure but he failed to explain the same. Second addition of Rs. 21,466 again for asst. yr. 2000-01 was made because Annex. A-41 loose sheet No. 111 dt. 6th Feb., 2000 contained the account of some gold ornaments purchased, the first entry being of Kara and Kundals weighing 29.700 gms. purchased @ Rs. 4,550 per 10 gms. amounting to Rs. 13,513 and the second entry being of purchase of some other ornaments weighing 16.930 gms. amounting to Rs. 7,953 both aggregating to Rs. 21,466 for which the assessee simply stated that the paper did not relate to him. The AO observed that since incriminating documents found and seized from his residence it was his duty to explain the contents and to whom it relates, which onus has not been discharged. The third and fourth additions of Rs 51,328 were made for the reasons that Annex. A-43 pp. 4 and 5 contained details of purchase of jewellery worth Rs. 43,753 and Rs. 7,575 which also was not found accounted for and for which the assessee reiterated that it did not belong to him. 3. Aggrieved by these additions the assessee went in appeal before the CIT(A) and submitted that these premises were occupied by the assessee, his wife Smt. She....
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....held that no case was made out for addition and deleted the addition. She observed that the articles of jewellery were of usage of ladies, as such, not relatable to the assessee; that the premises searched were jointly occupied by the assessee, his wife along with the wives of his two married sons and their children and these premises were also occupied by different relatives; that no dates are found mentioned in any of the documents; that these documents appear to be only estimates; and that these are dumb documents and do not prove as to how these documents are relatable to the assessee. The learned AM on the other hand held that these documents had clear nexus with the assessee and represent actual purchase of jewellery; that the documents could not be considered as estimates; and that the Department had discharged the initial onus and it is the assessee who could not rebut the presumption raised against him. 6. The learned Authorised Representative submitted that no addition in the assessment of the assessee Shri K.P. Agarwal, could not (sic) be made with (sic) as these documents did not belong to him. These are the records of jewellery items generally used by ladies. The pr....
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....ision of Chuharmal v. CIT [1988] 70 CTR (SC) 88 : [1988] 172 ITR 250 (SC). It is further submitted that the documents are not dumb documents as there is specific mention on them for the purchases of jewellery and also payment/adjustment of Rs. 35,000, moreso in view of the fact that the assessee himself has also admitted that an addition of Rs. 15,000 can be made in his hands. Therefore, these documents represent actual purchase of jewellery and could be considered only estimates. The assessee has not rebutted the presumption raised against him under s. 69A of the IT Act, providing that the money or the value of bullion, jewellery or other valuable articles may be deemed to be the income of the assessee for the financial year in which the assessee is found to be the owner of such money, bullion or jewellery or other valuable articles. He, therefore, submitted the AO has rightly assessed the investment in jewellery as unexplained income of the assessee. 8. Parties are heard and the rival submissions considered and the material available on record perused. It is true that the assessee has repeatedly been contending that these documents pertained to articles of usage of ladies but ....
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....; and that s. 110 of the Evidence Act, 1872, embodies a salutary principle of common law jurisprudence that where a person was found in possession of anything, the onus of proving that he was not its owner was on that person and this principle could be attracted to a set of circumstances that satisfy its conditions and was applicable to taxation proceedings. The addition on account of this unexplained jewellery is accordingly upheld. 9. The second point of difference is for the addition of Rs. 12,79,620 as unexplained cash found in search in 6 bags respectively containing Rs. 3,00,000, Rs. 2,64,000, Rs. 2,00,000, Rs. 1,08,000 and Rs. 20,170. The assessee's explanation was that the cash belonged to different members of the family. The AO, however, noticed that in the preliminary statement, the assessee had accepted availability of cash of Rs. 2 lakhs only. In her statement, Smt. Sheela Devi had stated that bags were recovered from her almirah and that there were slips about Rs. 3 lakhs, Rs. 2,64,000 and Rs. 2 lakhs in each bag. Regarding the fourth bag, she stated that it had Rs. 50,000 which belong partly to her sister and partly to her and her children. Smt. Amita Agarwal, W/o ....
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....tc." 11. In view of this fact since no data was found from the computer, the claim of the assessee was rejected by the CIT(A) holding that no cash book of any of these concerns as such was found in the computer. He observed that the computer seized from the assessee was operated by the Investigation Wing on 27th March, 2000 and from this only general register from 1st April 1999 to 15th Feb., 2000 of M/s Agarwal Iron Industry was found. Thus, the authenticity of the cash book produced by the assessee was held to be not established. The CIT(A) further observed that the hard disk of the computer was found damaged, as such, the claim of the assessee was held to be not established. As such, the books were considered to be not reliable. He upheld the addition. 12. Still aggrieved, the assessee came in appeal before the Tribunal and there stuck a difference of opinion between the two Members. The learned AM held that cash is not explained and required verification but the learned JM held otherwise and opined that no case for addition has been made out. 13. The assessee contends that funds were available prior to the date of search and their sources have been explained namely ava....
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....Mukesh Agarwal, son of the assessee is proprietor. The amounts of Rs. 3,37,450 and Rs. 2,54,000, claimed to be belonging to M/s Das Cold Storage in which the assessee and his son Shri Mukesh Agarwal were directors. The amount of Rs. 2,64,000 was received for payment to parties from whom wood was purchased and even after this the cash balance as on 16th Feb., 2000 was Rs. 24,87,776. The amount of Rs. 2 lakhs belonged to Shri Mukesh Agarwal i.e., the son of the assessee, who had sold land for Rs. 3,80,000 on account of which sale proceeds on different dates during 1999-2000 had been received by the son of the assessee much prior to the date of search. 14. Learned Departmental Representative on the other hand placed reliance upon the orders of the IT authorities. He submitted that no books of account were found during the course of search and the information contained in the computer was found damaged/corrupted. The books of accounts have subsequently been prepared on the basis of certain loose papers. These books not audited and therefore, no reliance can be placed thereon. This is also, evident from the perusal of the record and remand report of the AO dt. 17th March, 2004. Even ....
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....f by the same AO who has made assessment in the case of M/s Das Cold Storage. The face that the computer which was seized by the Department for the specific reason contained relevant data cannot be ignored nor the fact that all the family members of the assessee are subjected to tax and different concerns of the assessee are also subjected to tax. The preliminary statement of Smt. Sheela Devi stating that few bags recovered from her almirah and the bags had slips mentioning about Rs. 3,00,000, Rs. 2,64,000 and Rs. 2 lakhs in each bags further supports the case of the assessee. Similarly, the statement of Smt. Amita Agarwal, wife of Shri Mukesh Agarwal affirmed that Rs. 3,87,450 belonged to her husband and she would explain the source, later corroborated by a similar statement by the assessee himself that Rokar of Rs. 3 lakhs was available from M/s Agarwal Iron Industries and Rs. 2,64,000 were for payments of wood of M/s Das Cold Storage as such. The decision of CST v. Shyam Lal & Co. [1984] 57 TTJ (All) 31 (sic), support this view when it observes : "Though an adverse inference can be drawn against the assessee on his not producing the account books for inspection at the time of....
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....he warrant of authorization dt. 1st Feb., 2000 as mentioned in Panchnama dt. 16th Feb., 2000 is bad and illegal as the authority (DI) at Kanpur issuing it had no requisite reliable material/information in his possession so as to form a reasonable belief to direct action under s. 132 against the assessee. All proceedings taken under Chapter XIV-B are bad and illegal. 2. Because, all proceedings and consequent block assessment made by Asstt. CIT, CC, Agra are without jurisdiction and void. The impugned block assessment made is liable to be annulled. 3. (a) Because, the authorities below have fallen in error of facts and in law in making and confirming additions of Rs. 97,077 for alleged purchase of jewellery in the hands of the appellant. (b) Because, no evidence has been brought on records linking items or amount of these paper with the appellant. The addition is made on presumptions and surmises. 4. (a) Because, the authorities below have fallen in error of fact and in law in making and sustaining addition of Rs. 12,59,450 as 'undisclosed income'. Its source was fully proved by cogent evidence on records. Nothing was undisclosed income. The addition is liable to be dele....