TaxTMI 
TaxTMI 
2017 (7) TMI 29
X X X X Extracts X X X X
X X X X Extracts X X X X
.... finally assessed for the current year, i.e., at Rs. 34.86 lacs; the assessment having travelled to the Tribunal earlier, which (vide its order dated 05.05.2011 in ITA No.1483 & 1484/Mds/2008) set aside the same back to the assessing authority for considering the assessee's explanation for a part of the income assessed, i.e., Rs. 57.52 lacs, the balance Rs. 84.44 lacs having been found by it as explained. The ld. CIT(A), on the other hand, has allowed the assessee relief on the ground that the same does not survive the tribunal's order supra in-as-much as it has already indicated the manner in which the assessee's explanation is to be considered, i.e., by allowing it credit for the amount explained by way of sale of gold, diamond and silver in the earlier years. Not accepting the assessee's explanation as regards the opening cash balance (as per the documents seized during search) as available for investment, does not ipso facto become a ground for concealment, or furnishing inaccurate, particulars of income, liable for penalty u/s. 271(1)(c) of the Act, further relying on the decision in CIT v. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC). 3.2 The background of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce / document.' Considering the same the AO allowed further relief of Rs. 25.39 lacs, assessing the income at Rs. 34,85,857/- (vide his order dated 23.12.2011) as against the earlier assessment at Rs. 60,25,054/-. No further appeal was preferred by the assessee against this assessment, whereby the penalty proceedings were also initiated separately, and levied at 100 percent of the tax on the assessed income, i.e., Rs. 13,52,746/-. His reason for the same is the clear indictment of his case by the assessee as well as by the tribunal, relying for the purpose on the tribunal's order supra as well as the assessee's statement and the notes to the return of income for A.Y 2003-04, which we reproduce for ready reference as well as better comprehension of the Revenue's case: 'I have gone through the printouts taken from the system and examined the same .... These transactions are pertaining to my gold jewellery business and finance business which are not reflected in the regular books of accounts maintained by me.' (Extract of the assessee's statement dated 26/05/2006 on the print out taken from file of 'Dhanraj', reproduced at pg. 4 of the penalty order) 'I have ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....03-04, 2004-05 and 2005-06 of Rs. 21,39,157/- (Rs.29,589 + Rs. 7,74,568 + Rs. 13,35,000) as per the cash flow statement c. The profit offered for the assessment years 2003-04 and 2004-05 (Rs 1,50,000/- and Rs. 2,50,000/- respectively) d. The cash of Rs. 2,09,035/- available as per the cash flow statement. In my view, the cash balance of Rs. 34,17,850/- cannot be given credit because, the cash shown in 'Dhanraj' file is cash available with the assessee and whereas what was found during the course of search is a shortage of cash. Similarly, the cash of Rs. 2,09,035/- is also cash available with the assesee and by the same logic, cannot be given credit. However, credit for the income declared by the assessee (Rs.21, 39,157/-) and the profit offered for the assessment years 2003-04 and 2004-05 (Rs 1,50,000/- and Rs. 2,50,000/- respectively) can be available for investment and therefore given credit. Subject to the above, the assessment is completed as under: Total income as per order dated 23.05.2008 Rs. 60,25,054 Less: Income offered by the assessee available for investment Rs. 25,39,157 Total income Rs. 34,85,857' (*) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9 lacs, credit for which stands allowed by the AO in the second round is only interest income, so that it is clear that the sale amounts had since been realized and diverted to the lending (financing) business. This income, being an accretion to the existing stock of assets (i.e., jewellery), does not explain the deficit in the assets, viz. cash, found in search, though explains the assets in the form of amounts due from different buyers or, as the case may be, borrowers. A peak value ought to therefore have been generated on a time scale, taking into account the assets found and that admitted (recorded). Be that as it may, the assessee stands already allowed credit for the entire jewellery sold during the previous years relevant to AYs 2003-04 and 2004-05, which itself implies that no part of the sale has been realized, in which case only it would outstand, while its receipt - to whatever extent, implies it no longer outstands and is either lent or recycled, converting into sale again, swelling the sale (qua the same amount), for the entire of which (sale) credit stands allowed. And further, that the sale does not include any sale after January, 2004, as the explanation is only fo....