TaxTMI 
TaxTMI 
2017 (11) TMI 910
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....wherein the assessee has challenged two additions, viz., firstly, addition of Rs. 5,34,000/- made on account of unexplained cash found during the course of search;: and secondly, addition of Rs. 10,52,124/- made on account of alleged unexplained jewellery found during search. 2. The brief facts qua the issue involved are that a search and seizure operation u/s 132 (4) was carried out on 4.8.2011 at the business and residential premises of Nirala group which also covered the premises of assessee. During the course of search at the residential premises of Shri Rakesh Mahajan, cash amounting to Rs. 5,34,000/- was found. In his explanation, the assessee before the AO submitted that he has received sum of Rs. 5 lacs from M/s. Nirala Developers Pvt. Ltd. as imprest on 3.8.2011 and in support, the assessee submitted a copy of cash book from the period 1.8.2011 to 31.8.2011 of the said company. The Ld. AO noted that there is no entry of Rs. 5 lacs in the name of imprest account of Shri Rakesh Mahajan as on 3.8.2011 and neither there is any entry of imprest in the name of any Director in the books of M/s. Nirala Developers Pvt. Ltd. He held that, since assessee is director in various gro....
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.... 12,61,221 11.08.2011 To Bank of Baroda 02/09 Contra 65 1,00,000 12.08.2011 By SiteOff.Imprest a/c-2 Payment 652 1,00,000 Thus it was submitted that the cash found from the residence of the assessee stands fully explained out of cash-in-hand reflected in the books of the Nirala Developers Pvt. Ltd.; and are alternatively it is covered in the surrender of Rs. 1,95,47,000/- made in the case of the said company. 4. However, the Ld. CIT(A) rejected the assessee's contention on the ground that:- * Firstly, the assessee's explanation gives contradictory claim of ownership and does not lead to inference that cash found from the residence of the assessee belonging to Nirala Developers Pvt. Ltd.; * Secondly, the assessee's contention that cash of Rs. 5,34,000/- was included in the disclosure of Rs. 1,95,47,000/- made in the case of Nirala Developers Pvt. Ltd. is not correct, because there is no linkage of such claim given by the assessee; * Thirdly, the entries of the cash book of Nirala Developers Pvt. Ltd., filed before the AO gives a different narration and do not match entries appearing in the ....
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....arch and seizure the cash in hand of Rs. 53,98,000/- as reflected in the company's account was not found from the premises of the company as these cash were lying with the Director of the company. At the time of search only and also before the AO it was categorically stated and submitted that the cash found from the residence of these Directors were the cash belonging to the company and duly reflected in the cash book of the company. The observation and findings of the Ld. CIT (A) to point out that the entries do not match and there discrepancy is absolutely erroneous, because Rs. 53,98,000/- was on account of imprest account and not the advanced tax because the advanced tax on the same date was separately shown as Rs. 13,81,000/- and it was on after two days of offer of undisclosed income cash was to be deposited for advance tax. Thus, the amount of cash found duly stands duly explained from the cash-in-hand of the assessee company. 6. On the other hand Ld. CIT DR strongly relied upon the order of the Ld. CIT(A) and pointed out that the explanation given by the Ld. Counsel is again not correct, as Ld. CIT(A) has clearly brought out that the sum of Rs. 53,98,000/- is appearing o....
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....ors and the same amount has been found from the possession of the directors, then the preponderance of the probabilities lies in favour of the assessee that, it is the same cash of the company which has been found from their premises. 8. Coming to the various observations of the Ld. CIT(A) pointing out the various discrepancy in the entries in the cash book, in our humble opinion, such observations are not correct from the very face of the cash book, because he has completely missed the point a very vital fact, whether any cash in hand was available on the date of search or not. He is only going by the fact that an amount of Rs. 53,98,000/- has been shown against advance payment of tax on 6.8.2011. The payment of advance tax on 6.8.2011 is merely utilisation of cash for the payment of tax for the amount offered by the company during the course of the search. He has not rebutted that on date of search, whether this much amount of cash was available in the cash book or not; and whether at the time of search the cash recorded in the cash book was either found from the premises of the company or from somewhere else, especially when global search was carried out at various places of ....
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....ed to be unexplained and after giving benefit of other jewellery in view of the instruction No. 1916 issued by CBDT 11.05.1994. 11. Ld. CIT (A) too has confirmed the said addition and held that the shelter sought by the assessee on CBDT instruction No. 1916 dated 11.5.94, is only for the purpose of seizure of jewellery and not for explaining the source of acquisition. In support, he also relied upon the judgment of Hon'ble Madras High Court in the case of VGP Ravidas and V.G. Selvaraj vs. CIT, 2014 - TIOL-1731-HC-MAD-IT. 12. Before us, Ld. Counsel submitted that looking to the fact that total jewellery found was 1236.24 grams and assessee has family members consisting of two married women, i.e., wife and mother and one unmarried daughter and two minor children. If one goes by the circular issued by the CBDT then almost the entire jewellery stands explained. If the total jewellery of the entire family members as per the CBDT instruction is to be presumed, then it comes to 1700 grams as against this, only 1236.24 grams have been found. Thus, such a jewellery cannot be treated as unexplained. 13 On the other hand, Ld. CIT DR strongly relied upon the order of the Ld. CIT(A) an....
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....would generally be held by family members of an assessee belonging to an ordinary Hindu household. The approach adopted by the Tribunal in following the said circular and giving benefit to the assessee, even for explaining the source in respect of the jewellery being held by the family is in consonance with the general practice in Hindu families whereby jewellery is gifted by the relatives and friends at the time of social functions, viz. marriages, birthdays, marriage anniversary and other festivals. These gifts are customary and customs prevailing in a society cannot be ignored. Thus although the circular had been issued for the purpose of non-seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in Hindu society. In the circumstances, unless the Revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery stated in the circular stands explained. Thus, the approach adopted by the Tribunal in considering the extent of jewellery specified under the said circular to be a reasonable quantity, cannot be faulted with. In the circumstances, it is not possible to state that the Tribunal h....