TaxTMI 
TaxTMI 
2018 (7) TMI 223
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.... individual, is partner of M/s Lakshit Jewellers, a partnership firm engaged in carrying on the business of manufacturing and trading of jewellery, bullion and stones. A search was conducted by the Railway Police Authorities on a car at VIP gate of Railway Station, Jammu on 05/04/2010 and a black bag was recovered from the occupant of the car, i.e., the assessee. The bag was found to contain cash worth Rs. 53,90,000/- and an undated cheque of State bank of India amounting to Rs. 2,50,000/- which was signed by Kidarnath proprietor of M/s Kristian Kanyya Jewellers, however, the name of the drawee was not mentioned on the cheque. Consequent upon the receipt of above information by the Deputy Director of Income-tax (Investigation), Jammu, a warrant under section 132A of the Income-tax Act, 1961 (in short 'the Act') was obtained on 06/04/2010 and served on the Senior Superintendent of Police, Railway Zone, Jammu and the cash and cheque were seized by way of warrant of authorization for the search. 2.1 For the year under consideration, the assessee filed return of income on 28/03/2012, declaring total income of Rs. 2,66,180/-. The case of the assessee was selected for scrutiny and not....
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.... there is an abnormal increase in turnover of the firm ( Rs. 1,58,94,498/-) in financial year 2010-11 i.e. the year in which cash was seized as compared to turnover of Rs. 60,42,599/- in financial year 2009-10 and turnover of Rs. 54,16,762/-in financial year 2008-09 . (7) that it is highly improbable that the partner of the firm would carry entire amount of cash-in-hand of the firm instead of utilizing banking channels (8) that the assessee failed to produce a copy of the statement recorded by the SSP, Jammu on 06/04/2010. 2.3 In view of the above observations, the Ld. Assessing Officer held the entire cash of Rs. 53.90 Lacs and cheque amounting to Rs. 2.5 lakhs seized from the assessee as unexplained income. 2.4 On further appeal before the Ld. CIT(A), the assessee made various submissions to substantiate availability of cash in the hands of the firm including submissions challenging the warrant authorization issued. The Ld. CIT(A) after considering the submission of the assessee, upheld the finding of the Ld. Assessing Officer observing as under: "As against the above, the contentions of the Ld.AO holding the cash of Rs. 53,90,000/- as unexplained....
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.... he wanted to purchase a property in Jammu & Kashmir which is not permissible as per the J&K Law. (ix) The motive of carrying cheque of Rs. 2.50 lacs on behalf of Kidar Nath was not satisfactorily explained by the appellant. (x) The fact that sum of Rs. 52,90,000/- was a loan taken by the appellant from its firm for its personal purposes was not mentioned at the time of the seizure proceedings, (xi) The production of the so called corroborative details pertaining to the seized cash was not instantaneous. In view of all the above facts, the Id.AO felt inclined to treat the money of Rs. 53,90,000/- as unexplained." 2.5 Aggrieved with the above finding of the Ld. CIT(A), the assessee is in appeal before the Tribunal, raising the grounds as reproduced above. 3. Before us, the Ld. counsel of the assessee produced copy of capital account of the assessee in the firm for the year under consideration and submitted that amount of the cash already stand explained in the hands of the firm by way of cash sales and same have already been assessed in the hands of the said firm, and, thus, the lower authorities are not justified in assessing the same as unexplained....
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....see to rebut this presumption, if the said cash & cheque belongs to someone else. He submitted that the assessee has miserably failed in discharging this onus, which is evident from the frequent change in explanation or stand in respect of the cash found from his possession. He submitted that in the books of accounts of the firm the cash has been shown as generated, against the normal business conduct, just only to explain the cash in the hands of the assessee. According to him, the unexpected increase of cash sales particularly in the period before the cash is found, the purchase shown in credit before the cash is found etc. are against the normal business conduct. He also submitted that the assessee was only partner of two thirds share of the profit of the firm and in normal business affairs, he cannot be allowed to take away the entire cash in hand of the firm. In view of the above, he submitted that normal human conduct as well as business conduct do not justify and explain the source of cash in the hands of the assessee and accordingly the Assessing Officer has rightly assessed the same as unexplained in the hands of the assessee. 5. We have heard the rival submissions and ....
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....fidence to rely upon the books of accounts of M/s Lakshit Jewellers as the assessee has attempted to explain the cash on account of sale of gold ornaments. B. Month wise sale & purchase of the assessee for A.Y. 2010-11 & 2011-12 is discussed as under:- Det ai ls of Mont hly Sale for A.Y. 2010-11 Month Delhi(A) Jammu(B) Total(A+B) Apr-09 676,410 676,410 May-09 266,978 266,978 Jun-09 38,742 38,742 Jul-09 1,543,558 1,543,558 Aug-09 211,792 211,792 Sep-09 2,680,623 2,680,623 Oct-09 712,567 401,200 1,113,767 Nov-09 746,937 746,937 Dec-09 18,867 18,867 Jan-10 1,620,837 445,117 2,065,954 Feb-10 1,627,264 414,763 2,042,027 Mar-10 4,488,842 4,488,842 14633417 1261080 15894497 Details of Monthly Purchase for for A.Y. 2010-11 Month Delhi(A) Jammu(B) Total(A+B) Apr-09 277,044 277,044 May-09 124,642 124,642 Jun-....
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....ing the months in which marriages take place whereas, in the month of March and April, by and large_.no marriages take place due to inauspicious period preceded Holi Festival a6 well as due to final exams of almost all academic sessions falling in these two months. C. During the A.Y. 2010-11 (F.Y. 2009-10), assessee has shown purchases from Shri Jain Jewellers on 17.03.2010 amounting to Rs. 16,50,000/- and on 15.03.2010 amounting to Rs. 7,20,351/- . It is worth noting that a purchase of round figure amounting to Rs. 16,50,000/- has been booked on 17.03.2010. Assessee has also booked another purchase of round figure amounting to Rs. 3,80,000/- from Royal Jewellers which is quite unusual. The sale bills for the month of March, 2010 has also been examined and the same are explained below:- Bill No. Description of Goods Weight Amount 379 dt.26.03.2010 Gold Ornaments 240.140 grms. Rs.3,68,663/- 378 dt. 20.03.2010 Silver Ornaments 18.180 kgs. Rs.2,24,014/- 377 dt. 15.063.2010 Silver Ornaments 15.240 Kgs. Rs.1,87,787/- 376 dt. 12.03.2010 Silver Ornaments 10.135 Kgs. Rs.1,25,907/- 375 dt. 10.03.2010 ....
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....5. It is also worth mentioning to note that M/s Shri Parshav Silver Ware have sold the goods to the assessee in the month of April, 2010 and has not been paid till the end of the year, i.e., a total amount of Rs. 3.30,656/- is outstanding till the end of the year. Similarly purchases have been shown from Mittal Associates amounting to Rs. 7,02,192/- and from Mittal Brothers vide bill no. 902 on 02.04.2010 amounting to Rs. 3,13,327/-, vide bill no. 904 on 07.04.2010 amounting to Rs. 2,82,917/- and vide bill no. 906 on 12.04.2010 amounting to Rs. 3,04,279/-. It is also apparent to mention here that Mittal Brothers has issued only one bill in between 02.04.2010 to 07.04.2010 and again only one bill between 07-04-010 to 12- 04-2010 i.e. within 10 complete days only two other bills have been issued apart from bills issued to the assessee. For verification, letters u/s 133(6) were issued to the above mentioned three parties and reply has been received only from Mittal Associates. M/s Shri Parshav Silver Ware and M/s Mittal Brothers have not responded to the enquiries letters u/s 133(6) issued vide letter no. 544 dt. 11.03.201 and no. 546 dt. 11.03.2014 respectively. The....
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....of ornaments, which is very unusual in the trade. On enquiry, these parties could not be traced. (v) Other discrepancies in the books of accounts of M/s Lakshit Jewellers shows that books of accounts raises concern whether the same were maintained in regular course of business. (vi) In the capital account of the assessee in the firm, produce before us capital of the assessee was shown at Rs. 8,76,671.13 as on 31/03/2011. In such circumstances, the explanation of the assessee that cash of Rs. 53,90,000/- has been taken from the firm, cannot be justified, particularly when the firm has shown net loss of Rs. 4,96,545/- in the relevant year. 5.2 In the case of CIT Vs Durga Prasad More (1971) 82 ITR 540 (SC), the Hon'ble Supreme Court held that the apparent must be considered as real until it is shown that there are reasons to believe that the apparent is not the real and the tax authorities are entitled to look at the surrounding circumstances to find out the realities and the matter as to be considered by applying the test of human probabilities. 5.3 In the case of Sumati Dayal Vs CIT (1995) 214 ITR 801 (SC), the assessee shown winning from the horse races. The....