2002 (12) TMI 558

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....The relevant facts of the case is that a search was conducted in the office premises of the assessee-company located at Atlanta (7th floor), 205 Nariman Point, Mumbai on 17-2-1982 by the IT Department. During the course of such search cash amounting to Rs. 1,54,330 was found out of which Rs. 1,50,000 was explained as received from Calcutta office of the assessee firm at the time of the search. At the time of the search it was also stated by the assessee that the above Rs. 1,50,000 was brought from Calcutta by Shri Banwarilal Singhania, a family friend and whose office is situated at the 12th floor of the building in which the assessee's office was situated at Mumbai. During the course of proceeding under section 132(5) of the Act, the asses....

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....the denomination of cash seized was 1500 notes of Rs. 100 each. The stand of the assessee is that said Rs. 1,50,000 was handed over by Shri Mohanlal Deorah at Calcutta to Shri Banwarilal Singhania who brought the money from the flight on 15-2-1982 and handed over the same to Shri Suresh Deorah, partner of the assessee-firm in representative capacity on 16-2-1982. As the money was handed over after 5.00 p.m. and the Accountant of the assessee-firm was absent on that date and hence, on 17-2-1982 at the time of search the same was not found as entered in the books of the assessee-firm. The main arguments of the Revenue are that Shri Suresh Deorah in his deposition recorded at the time of search could not stated the exact business activity and ....

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....he money was delivered to him. At the time of giving the money to Shri Suresh Deorah, Shri Singhania simply told that "this money was given by your Calcutta Office". In such circumstances, it was not necessary for Shri Suresh Deorah to ask any further clarification from Shri Singhania as a telephone talk between Bombay and Calcutta office was expected. Further, from the fact that the money was withdrawn during November, 1979 and during November, 1981 it cannot be concluded that the currency has not come from Calcutta in February, 1992. The learned Authorised Representative of the assessee also put forward an alternative legal arguments. He, submitted that as the money was found on 17-2-1982 relevant to the financial year 1981-82, if the sam....

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....ich is placed at page No. 19 of the paper book filed by the assessee, the Assessing Officer accepted the source of Rs. 1,50,000 in the hands of said Shri Mohanlal Deorah as true and correct. It is also observed that to reject the explanation of the assessee, no cogent material could be brought on record by the Revenue after examining the said Shri Mohanlal Deorah and/or said Shri Banwarilal Singhania apart from pointing out to ascertain circumstances from which it cannot be conclusively concluded that the source of money as explained by the assessee-firm was false. It is an established position of law that an explanation prime facie reasonable cannot be rejected on capricious or arbitrary grounds R.B.N.J. Naidu v. CIT [1956] 29 ITR 194 (Nag....