TaxTMI 
TaxTMI 
2021 (11) TMI 762
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....arch various loose papers and documents were seized. Declaration of income under various heads was made by the partners on behalf of the assessee firm in the statement recorded u/s 132(4) placed at Pg.74-126 of PB-I. It was submitted by the partner that the cash balances are shown by pencil, however, in the computer data the exact cash balance are recorded. It was further submitted that as per the estimate the cash balance is around 42 to 45 lakhs. In the statement Shri Sanjay Jain surrendered the additional income of Rs. 1,60,00,000/- on account of loose papers in his hands and in the hands of the members of the family and the firm. It was further stated that person wise, concern wise and year wise details would be submitted subsequently. Thus, the income declared in the statement u/s 132(4) was vague and general in nature and was on a rough estimate basis. The income was subsequently quantified on the basis of seized records and the income was offered to tax in the respective hands. 3. The assessee is filing the return of income regularly. Books of account are audited u/s 44AB of the Act. Notices u/s 153A of the Act were issued for A.Y. 2012-13 to 2015-16. Instant appeal relat....
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....during the course of search but is made on the basis of declaration made u/s 132(4) by Shri Sanjay Jain. The declaration is made in reply to Question 54 of the statement recorded on 22.08.2015 in which the partner has stated (English version) that: "I have seen the various papers obtained in the search proceedings at various premises. Keeping in mind the business activities of my firm and family and the facts have discussed with them. Keeping in mind all incriminating documents and issues, I on behalf of myself, family members and the firm in addition to the amount mentioned herein above, accept Rs. 1,60,00,000/- as additional undeclared income. Year wise and concern wise bifurcation of this Rs. 1,60,00,000/- will be submitted by me to the Income Tax Department after some time" Thus the declaration is made in a consolidated manner for the entire group without mention of any assessment year or to the concern in which case it is being made. The declaration is not made specifically in the hands of the assessee firm. The Ld. A.O. has made the addition solely on the basis of the declaration made u/s 132(4). The Ld. CIT(A) has upheld the addit....
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....d that the assessee has admitted undisclosed income of Rs. 1,60,00,000/- in the statement recorded on oath u/s 132(4) of the Act and this surrender was made for various discrepancies and incriminating material found during the course of search. 8. We have heard rival contentions and perused the records placed before us and carefully gone through the decisions referred and relied by Ld. counsel for the assessee. Ld. counsel for the assessee had mainly contended that the alleged addition of Rs. 1.60 cr. is made by Ld. AO only on the basis of the statement recorded during the course of search without referring to any incriminating/seized material. Ld. counsel for the assessee also submitted that for various loose papers and incriminating material found during the course of search, assessee had already offered additional income and the Ld. AO has also made separate additions under various heads pertaining to stock, cash, pawning and moneylending business. 9. We find merit in the contention of the Ld. counsel for the assessee that Ld. AO had made various other additions based on the seized documents apart from the addition made for surrendered of Rs. 1.60 cr. made u/s 132(4) of th....
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....o.3 raised for Assessment Years 2013- 14 & 2014-15 assessee has challenged the finding of Ld. CIT(A) confirming the addition of Rs. 25,00,000/- and Rs. 3,00,00,000/- made by the Ld. AO for Assessment Years 2013-14 & 2014-15 respectively for the amount declared by the assessee u/s 132(4) of the Act contending that the same is without corroborating with any incriminating material found during the course of search. 26. We observe that the search was conducted on Signature Group including the assessee on 29.1.2014. Certain loose papers were seized.Additional income of Rs. 3,25,00,000/- (Rs. 25,00,000/- + Rs. 3,00,00,000/-) was offered for Assessment Years 2013-14 and 2014- 15 respectively. However in the return of income filed post search u/s 153A of the Act such additional income of Rs. 25,00,000/- and Rs. 3,00,00,000/- was not offered in the return of income. During the assessment proceedings it was submitted that various loose papers and documents narrated by the Ld. A.O found during the course of search does not pertain to the assessee. Since there was no such incriminating material relating to the assessee found during the course of search relating to the addition in ques....
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....tructure 50 300 350 2 Signature Builders 25 300 325 3 Signature Builders and colonisers 25 300 325 4 Signature Developers 100 100 Total 1100 5 Om builders 275 275 6 Om Construction 50 750 7 Sainath Infrastructure P. Ltd. 25 25 Total 1100 8 Ultimate Builders 225 225 9 Virasha Infrastructure 225 225 450 10 M/s Sainath Colonizers P. Ltd. 110 110 11 Shri Anil Kered Khilwani 40 40 Total 150 30. From the above we find that in the case of M/s Ultimate Builders also additional income was surrendered in the statement given u/s 132(4) of the Act for which the addition was made by the Ld. A.O without corroborating it with any incriminating material and the addition was confirmed by Ld. CIT(A). When the matter travelled before this Tribunal the addition of Rs. 2.25 crores was deleted by this Tribunal observing as follows:- "9. We have heard rival contentions and perused the r....
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....nts found during the search at Signature Group made addition for undisclosed income. When the matter came up before Ld. CIT(A) addition was confirmed. However the basis of addition was accepted to have been made only on the basis of the statement of Mr. Vipin Chouhan. No reference was made to any incriminating material having its bearing on the surrendered income. During the course of hearing before us Ld. Counsel for the assessee contended that during the course of search i.e. between 29.1.14 to 31.1.2014 no cash or unrecorded assets was found, no incriminating material was found and no income was offered to tax in the statement recorded u/s 132(4) of the Act of the person found to be in the possession and control of the books of premises. Relevant questions asked about the loose paper found were duly replied in the statement. 12. Ld. Counsel for the assessee further contended that since the search in the case of assessee was concluded on 31.1.2014 the alleged statement of the partner Mr. Vipin Chouhan taken on 02.02.2014 cannot be construed as a statement given during the course of search u/s 132(4) of the Act so far as relating to the assessee since the search in its ca....
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....icer", which means that the Officer who is authorised to conduct search on the assessee. In the instant case it is stated before us that the authorised officer of the assessee and that of the other concerns of Signature Group are different. 17. After the word the authorised officer it reads "during the course of search or seizure, examination of both the person". During the course of search is a period during which the search is initiated and concluded. In the instant case the search was initiated on 29.1.2014 and concluded on 31.1.2014 by a authorised officer for the assessee which is verifiable from the Panchanama framed by the search team. The statement of Mr. Vipin Chouhan was taken on 02.02.2014 by another authorised officer and this date is after the conclusion of the search in the case of the assessee on 30.01.2014. 18. There may have been some force in the contention of the revenue authorities if the statement u/s 132(4) of the Act was taken during the course of search at the assessee's premises or during the continuation of search, the statement may have been recorded on other places but the fact is that so far as the assessee M/s. Ultimate Builders i....
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....y on the basis of statement given during the course of search without correlating the statement with incriminating material", we have decided the issue observing as follows:- "6. It is the case of the assessee that during the course of search & seizure, no incriminating material or undisclosed income or investments were found. It is stated that the assessee was under mental pressure and tired. Therefore, to buy peace of mind, he accepted and declared Rs. 3 crores in personal name. It is also stated that the case laws as relied by the A.O. are not applicable on the facts of the present case. The assessee has relied on the decision of the Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC), wherein the Hon'ble Court has held that admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on ....
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....he course of search, the statement of Shri Sheo Kumar Kejriwal had been recorded under section 132(4) of the Income Tax Act and in the statement, he stated that he was partner in the Ganesh Trading Company, i.e. the present assessee-firm in his individual status and that he surrendered Rs. 20 lacs for the assessment year 1988-89 as income, on which tax would be paid. He further stated that other partners would agree to the same; otherwise it would be his personal liability. However, in the returns filed after search, the income of Rs. 20 lacs surrendered by Shri Sheo Kumar Kejriwal was not declared by the assessee-firm. On being asked to explain the reason for not showing the surrendered amount in the returns, it was submitted by the assessee that declaration made by the partner was misconceived and divorced from real facts. It was contended that the declaration was made after persuasion, which, according to the learned counsel for the assessee, Shri Binod Poddar, in fact, was because of coercion exerted by the search officers. In explanation, it was submitted that the firm or the individual had no undisclosed income. The assessee's said retraction was not accepted by any of th....
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....e authorities below in holding that there was undisclosed income to the tune of Rs. 20 lacs. 7. In view of the above reasons, without answering the question about retrospective operation of the proviso to section 134(4), we are holding that the authorities below have committed error of law in drawing inference from the materials placed on record, i.e. admission of the assessee coupled with its retraction by the assessee. The Revenue may now proceed accordingly". 25. In the light of ratio laid down in various judgments referred above including one in the case of ACIT(1) Vs. Sudeep Maheshwari (supra) decided by us wherein also we, after referred various judgments of Hon'ble High Courts have held that additions cannot be sustained merely on the basis of statement given during the course of search without correlating the addition with the incriminating seized material. Therefore the decision relied by Ld. Departmental Representative laying down the ratio that addition can be made even on the basis of statement given during the course of search u/s 132(4) of the Act irrespective of the fact whether any incriminating material is found or not, will not support Revenu....
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.... accordingly allow Ground No.3 raised in assessee's appeal for Assessment Years 2013-14 and 2014-15 raised in ITA No.185-186/Ind/2018 12. We, therefore, under the given facts and circumstances of the case and respectfully following the judicial pronouncements referred hereinabove squarely applicable on the issue raised by assessee in instant appeal and also in absence of any binding precedents in favour of revenue referred before us by Ld. DR, are of the considered view that the impugned addition of Rs. 1,60,00,000/- deserves to be deleted, as it is based only on the statement recorded u/s 132(4) having no nexus whatsoever with any incriminating/seized material found during the course of search carried out u/s 132 of the Act at the premises of the assessee. Accordingly sole ground raised by the assessee is allowed. 13. Now we take up Revenue's appeal in IT(SS)ANo.205/Ind/2019 the revenue has raised following grounds of appeal: "1.On facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 18,84,500/- made by assessing officer u/s 69 of the Income Tax Act 1961 on account of undisclosed investment in loans in pawning business....
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....ilver 132-141 7. Copy of submissions before the Ld. A.O. in respect of surrender of amount U/S 132(4) 142-147 8. Details of purchase of jewellery before search but entered in books after the search with the bills and copy of confirmation from the ledger account of parties 148-171 . INDEX-II Ground-l, 2, 4 & 5 S.NO. PARTICULARS PAGE NOS. 1. Details of interest income and investment in money lending business 172-190 2. Copy ITR, Computation of income, Balance Sheet, P&L Nc of Shri Sanjay Jain, Shri Rajeev Jain, Smt. Bhawna Jain, Smt. Monica Jain for A Y. 2010-11 to 2016-17 191-300 3. Copy ITR and Computation of income of Shri Alok Jain for A Y. 2012-13 to 2016-17 and Balance Sheet, P&L Alc for AY. 2010-11 to 2016-17 301-321 4. Copy of assessment order of Shri Sanjay Jain 322-344 5. Copy of assessment order of Shri Rajeev Jain 345-365 6. Copy of BS-44 Pg.ll 366-367 7. Copy ofLPS -1 Page 2, 3, 19,21,50,62,63 & 64 368-375 8. Details of Donations given to Pandit Todarmal Smarak Trust 376-381 INDEX-III S.NO. PARTICULARS PAGE NOS. 1. List of inventory of jewellery f....
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....f assessment proceedings it was submitted before the Ld. AO that the pawning business was carried out by the partners of the assessee and their family members. It was submitted that all such transactions were recorded in the books of accounts of the individual family members and such books of accounts were produced before the AO for his verification and copy of the same was also filed. Cash/fund flow statement and the balance sheets of the partners for various years were also furnished before the AO. Details of investment made in the pawning business and the income earned from it by various persons were submitted before the AO during the course of their respective assessments. While framing the assessment the Ld. A.O. made the addition in the hands of the firm of Rs. 18,84,500/- on the ground of undisclosed investment in the pawning business on the basis of the entries in diary in BS-4. The A.O. disregarded the submission of the assessee and the cash flows/fund flow/balance sheets/ cash book ledger/details of interest income and investment, filed and held that the activity of financing was done by the assessee firm and the transactions undertaken were all unrecorded and made additi....
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....he diary and did not represent any investment. The submission of the assessee were ignored by the AO and additions were made u/s 69.The Ld. CIT(A) deleted the additions holding that the money lending business is conducted by the partners and hence the addition cannot be sustained. 22. We further observe that Ld. CIT(A) had examined the facts in detail and deleted the impugned addition observing as follows: 5.1.2 I have considered the facts of the case, evidence on record inter-alia plea raised by the appellant and findings of the AO. During the course of search diary BS-4 was found and seized which contain details of date wise loans given to various persons against pledge of gold ornaments. The Jewellery received as security against the loan amounts given were also physically found and inventoried by the search party. Details of the dates on which the loan/advance was given and other condition of the loans were found attached to the pledged jewellery items based on which the year wise amount of loans given were tabulated and mentioned at Page No. 11to 14 of the assessment order. The appellant before the AO as well as before me has submitted that the pawning business was....
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....tten by him and is related to 'Girvi'. However, another partner Shri Sanjay Jain was asked to explain the transactions mentioned in the impugned diary which are not recorded in books of accounts of the firm. In reply Shri Sanjay Jain admitted that these transactions are not recorded in books vi accounts of the appellant firm and made declaration of additional income without consulting with other partners. 5.1.4 The AO on the contrary has made a presumptive belief that the appellant firm is only involved in pawning and money lending business and stated in para that no regular income on account of interest on such lending activates have been shown by the family members in regular return of income. ,However, it is important to mention that the partners have quantified the investment in Girvi transactions and found a sum of Rs. 15,33,0001- as unexplained investment which have already been offered by respective family member while filing return of income U/S 153A of the Act. Once, the AO, has accepted unexplained income and income declared by the family members in their respective returns of income for earlier years relating to pawning and money lending business, there ....
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....ed in the paper book. Thus no addition was called for u/s 69 of the Act at Rs. 18,84,500/- and has been rightly deleted by the Ld. CIT(A). 24. Similarly, regarding the addition for money lending business we find that this was also carried out by the partners of the firm and they have already surrendered income of Rs. 15,33,000/- for the alleged money lending business in their individual hands. Since the alleged seized documents referred for making alleged addition are not connected to the assessee firm, no addition of Rs. 3,07,500/- was called for u/s 69 of the Act. We find no infirmity in the finding of Ld. CIT(A) and the same is confirmed. Accordingly ground no.1 & 2 of revenue's appeal for A.Y. 2016-17 stands dismissed. 25. Now we take up ground no.3 relating to addition of Rs. 60,00,000/- made by the Ld. AO on account of unexplained cash found during the course of search. 26. Brief facts relating to this addition as stated by ld. counsel for the assessee are that the assessee has been maintaining regular books of accounts which are duly audited and these were presented before the Ld. AO during the course of assessment proceedings. The AO had not found any deficiency in....
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....B-I) in which he has stated (pg.118) that "Computerized books are completed up till 30.06.15. Some entries pertaining to period prior to 30.06.15 are also not recorded. I am unable to produce the P&L/Balance sheet/Stock Register up to 20.08.2015 due to above reason". The Partner has also stated that (reply to Q-8) after recording of sale bills up till 20.08.15 the cash balance would work out to around 40-45 lakh. However cash physically found will be in excess of such cash by app 25-30 lakh which I am unable to explain, and hence accept the same as unexplained income of Alankar Jewelers for FY 15-16. These statements clearly indicate that the books of accounts were not completed and the partners have made a wild guess regarding the cash balance. Shri Shikhar Chand Jain in his statement stated that the cash balance of about 25-30 lakh may be unexplained. However, the other partner considering the manual cash book has surrendered an amount of Rs. 60 lakhs as undisclosed income. It was also submitted on behalf of assessee that one of the partners in his statement (Pg.119 of PB-I) has stated that the cash book has been written upto 08/08/2015, the cash balances have been noted with pen....
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.... neither rejected nor any deficiency found, no addition can be made disallowing the credit in day to day balances. The surrender made by the partner on a wrong notion cannot be the ground for making any addition. In this connection, attention is drawn to the judgment of the Hon'ble Indore Tribunal in the case of Shri Sudip Maheshwari in ITA 524/IND/2013 pronounced on 13/02/2019 and in the case of M/s Ultimate Builders in ITA 134/2019 pronounces on 09/08/2019. 29. We further find that Ld. CIT(A) has deleted the addition of Rs. 60,00,000/- for the alleged unexplained cash found during the course of search observing as follows: 5.6 Ground No 6 for AY 2016-17:- Through this ground of appeal, the appellant has challenged addition of Rs. 60,00,000/- on account of unexplained cash found during the course of search. During the course of search cash amounting to Rs. 69.25 lakhs was found from show room of the assessee. Shri sanjay Jain was required to explain the source and acquisition of cash amounting to Rs. 60 lakhs; however, he failed to explain the source of cash found during the course of search and made voluntary disclosure of Rs. 60 Iakhs as additional income of the asse....
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....rding of all sales bills and after making other postings till 20.08.2015 the cash balance would work out around 40-45 lakhs and regarding physical cash found in excess to 25-30 lakhs he is unable to explain the same. During the course of search a manual cash book was found and seized according to which the cash balance of appellant as on 08.08.2015 was Rs. 10,15,919/- and opening cash balance as on 01.04.2015 was taken as Rs. 26,13,010/-. However, it is important to mention that as per audited financial statement as on 31.03.2015 the closing cash balance is of Rs. 76,16,708.71 which has been accepted by the AC. Once the audited books of accounts have been accepted by the AO the authenticity of manual cash book stand in M doubt. The appellant after. the course of search complete its books of accounts incorporating all the entries of sale and purchase. It is also important to mention that the AO has not rejected books of accounts even after noticing such huge discrepancies and has taken manual cash book to be true and correct even when the opening balance is taken as wrong. If the opening balance in manual cash book would have been taken correct as per audited balance sheet following....
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....tly no justified in presuming that the declaration made by partner on higher side is the exact amount of unexplained cash which was found during the course of search. The AO ought to have provided sufficient reasoning behind dropping the declaration made by Shri Shikhar Chand Jain of Rs. 25 -30 lakhs. Secondly, no books of accounts have been rejected by the AO. Thirdly, the opening balance as per manual cash book and audited cash book is different. My findings are considerate and based on discussion in above paras. Thus, addition made by the AO amounting to Rs. 60,00,000/- is deleted. Therefore appeal on this ground is allowed. 30. From perusal of the above finding of fact given by the Ld. CIT(A) as well as detailed submission made by the Ld. counsel for the assessee and on perusal of the records which remains uncontroverted by Ld. DR, we find that opening balance of cash in hands as on 01.04.2015 in the audited books of accounts was Rs. 76,16,708/- but in the manual cash book the balance as on 01.04.2015 was taken at Rs. 26,13,010/- which was marked in pencil. Since the audit for F.Y. 2014-15 was undergoing when the search took place on 21.08.2015, the assessee subsequently com....
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....ames appearing in the seized diary BS-44 are name of the outstanding debtors and have no relation with the alleged moneylending business. Ld. CIT(A) has rightly appreciated the facts and deleted the additions which thus no interference is called for. Ground No.4 of the revenue's appeal is stands dismissed. 34. Ground No.5 relates to addition of Rs. 5,00,000/- made u/s 69 of the Act by the Ld. AO on the basis of loose paper as per diary BS-43. 35. Brief facts relating to this issue as submitted by the Ld. counsel for the assessee are that these seized loose papers belongs to a Jain Trust and it has been confirmed by the Trust also. Since the entries on these papers do not belong to the assessee, the additions made by the Ld. A.O. are bad in law. It is further submitted that the amount under consideration is shown as payable in the seized paper. The Ld. A.O. has wrongly presumed that the amount is paid. The paper as a whole shall have to be read. No addition can be made on the basis of the presumption. The Ld. CIT(A) has correctly deleted these additions. 36. We find that Ld. CIT(A) has deleted this addition of Rs. 5,00,000/- observing as follows: 5.3.2 I have consi....
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.... same with the details submitted by Pandit Todarrual Smo-ak Trust, Jaipur. As per list submitted by the said trust the collection of donation from 22.07.2012 to 31.07.2014 was Rs. 7,51,000/- and amount of Rs. 2,82,500/- was received from 28.08.2014 to 09.10.2015 and a balance amount of Rs. 2,16,000/- was receivable from Vidisha Samaj totaling to Rs. 12,49,500/- which is almost equals to the amount mentioned on the impunged loose paper. This cannot be a mere coincidence that the details of receipt as mentioned on the loose paper matches exactly the same with details submitted by the trust. Also, the impunged loose paper was. found from residence of Shri Shikhar Chand Jain and not from show room of the appellant. Thus, the addition made by the AO amounting to Rs. 3,30,OOOi- in AY 2013-14, Rs. 2,20,000/- in AY 2014-15, Rs. 2,00,000/- in AY 2015- 16 and Rs, 5,00,000/- in AY 2016-17 are Deleted 37. The above finding of Ld. CIT(A) remains uncontroverted by the Ld. DR and the undisputed fact emerge that the alleged loose papers as per the diary BS43 which are the foundation for the addition of Rs. 5,00,000/- do not belongs to the assessee. It actually belongs to Jain trust namely Pandi....
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.... 10987 gms. ii. Bills accounted after the search wherein the Purchases were made before the search 5686 gms. iii. Jewellery belonging to sister and brother in law while they were visiting to Canada 779 gms. Total 16672 gms 40. It was submitted before the Ld. A.O. that the personal jewellery of 10987 gms. belonging to the partners was kept in the showroom/ residential premises is included in the stock taken by the Department. This jewellery was received by the members from the will of the mother Smt. Chamelibai. The said jewellery was declared by the members in their wealth tax returns filed for A.Y. 2011-12 much before the date of search. Regarding the bill received after the search all the details were filed before the Ld. A.O. including the copy of the bills payment proof and the copies of accounts. Regarding the jewellery belonging to the sister, the affidavit of the brother-in-law was submitted. 41. However the AO rejected the submissions/explanations of the assessee and made an addition of Rs. 4,18,16,751/- ( Rs. 7,19,27,190/-(income declared u/s 132(4) (-) Rs. 3,03,10,439/- (income offered in the ITR) It was submitted before the ld. A....
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....hree Gold) were not found in the seized hard disk data. ii. The assessee was given sufficient opportunity during the course of search to update the books of accounts up to the date of search. iii. The assessee did not make mention of any such bills during the course of search proceedings and thus the details furnished are afterthought. iv. In case of Kanak jems Mumbai it was found by the investigation department Mumbai during the course of search on that entity on 03.10.13 that it does not carry on any actual business and the business premises were found vacant. v. There were some discrepancies in the entries appearing in the seized hard disk in comparison with the details submitted on 12.12.2014. 43. As regards Jewellery belonging to sister and brother in law weighing 779.64 grams, Ld. counsel for the assessee following submission made: Mrs. Meena Jain is the sister of the partners of the assessee firm and Mr. Ashok Jain is her husband and Mrs. Meena Jain intended to go to Canada to meet her daughter and for the purpose of obtaining VISA she had required the assessee firm to give a valuation report of the jewelry owned by her family ....
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....ld' and diamond 33853.86 gms 8,10,16,1311- 2 silver 242.032 kg 61,37,135/- Total 8,71,53,266/- However, the details of stock as per books of account of the appellant are as under.- S.No Item 'Weight Current MY Purity Value at current cost 1 Gold 6105.928 gms 2740 per gms 180% 133841 2 Silver 85.27049 kg 36000 per kg 60% 13,11342 I Total 15226036 Shri Sanjay Jain was required to explain huge difference in stock, in reply he submitted that books of account are maintained till 08.0~.201j. However, the same are maintained ill tally only till 30.0G.2015 du: to ill health of accountant. Therefore, he accepted additional income of Rs. 7~19,27,190/- as undisclosed stock of the assessee firm. However, the assessee has offered income of Rs. 3,03,10,439/- while filing return of income e u/s IS31'. of the Act. Thereafter, the AO during the course of assessment proceedings required the assessee to explain the reasons for offering lower value of undisclosed income declared during the course of search. The assessee in reply submitted that out of....
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....ent by incorporating details of known purchase/sales and the quantity of stock was determined at 6105.928 grams and 85.27 kg of gold and silver respectively which was valued at Rs. 1,52,26,036/-. After the course of search, the appellant completed its books of accounts and reconciled the stock with available information. The difference in stock found during the course of search was ascertained at Rs. 7,19,27,190/- which was accepted to be surrendered as unrecorded investment by Shri . Sanjay Jain. However, the appellant while filing return of income uls 153A of the Act has offered sum of. Rs. 3,03,10,439/- as unexplained investment in stock. The appellant in support of its contention has explained that the reasons for variation between the difference determined during the course of search and income offered to tax was majorly on account of the following: e. Personal jewellery of partners 10937 grams f.Bills accounted after search for purchases made before search(gold) 5685.92 grams g. Jewellery belonging to sister am} brother in law 779.64 grams h. Bills accounted after search for purchases made before search( diamond) Rs. 21,94,174/- Af....
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....se of search. (iii) The assessee did not explain why the copy of will was not found during search. (iv) The assessee has converted the jewellery into stock, entry of which is not made in books. (v) The assessee could not match the list of items mentioned in the wealth Tax Return with the stock found during the course of search. (vi) The will is not registered and-various factors raise suspicion that t:1 ~ will is fabricated and after thought. Considering the various objections raised by the AO in point (i), (ii) andIiv) it is seen that the partners of the assessee firm have specifically stated in the statement that the jewellery of wife/family members of 10987 gms is included in the stock for which no accounting entry is made. The, jewellery under consideration was found at the residence and show room which was also confirmed by Mr. Shikhar Chand Jain in his statement recorded on oath on 22.08.15. Similarly, Shri Sanjay Jain in his statement recorded 011 22.08.2015, in reply to Q-53 stated that the investment in gold of the family members/concerns which was also reported in the wealth tax return have been merged in the stock in hand of the firm f....
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....ills and, invoices mace following observations: i. vi. The accounts of the suppliers (Raviraj bullion & Jewellers, Ankur Jewellers, Kanak Gems, Mansha Jewellers, Shilpi Jewellers, and Padamshree Gold) were not found in the seized hard disk data. vii. The assessee was given sufficient opportunity during the course of search to update the books of accounts up to the date of search. viii. The assessee did not make mention of any such bills during the course, of search proceedings and thus the details furnished are afterthought. ix. In case of Kanak jems Mumbai it was found by the investigation department Mumbai during the course of search' on that entity on 03.10.13 that it does not carry on any actual business and the business premises were found vacant. x. There were some discrepancies in the entries appearing in the seized hard disk in comparison with the details submitted on 12.12.2014. With regard to observations made by the AO it was observed that the appellant has been dealing with these supplier from long time and transactions with these suppliers are also reflected in regular books of accounts. The appellant h....
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....these invoices have beer. made through cheque of Rs. 3,40,0001- on 13.08.20!5 through HDFC Bank account. . The AO in para 7.17 has made in observation that the appellant has no relation what so ever with NIls Kanam Jems, Mumbai. However, the appellant during the course of appellate proceedings submitted that the appellant has purchased material -from M/s. Kanak Gems & Jewellery and traders, (address opp Shriji temple, Goyal market Lakherapura, Bhopal) and not M/s Kanam J ems, Mumbai. Thus the AO has formed a negative opinion about this transaction simply on similarity in names of the entities. * Jewellery/ornaments were also purchased from 1-1/s Kiran Dhaore, Mis Mansa Jewelers, Mis Raviraj Bullion & Jewelers, Ankur Jewelers, Kanak Gems, Jaina Jewelers & Shilpi Jewelers. The appellant has filed copy of account of these suppliers in the books of the assessee along with the confirmation of the suppliers. Further, the appellant has filed copies of affidavits obtained from Mis Kiran Dhaore, Mis Mansa Jewelers, Mis Raviraj Bullion & Jewelers, Ankur Jewelers, Kanak Gems, Jaina Jewelers & Shilpi Jewelers confirming the fact that the ornaments under consideration were supplied and....
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....se of obtaining VISA she had reqired the assessee firm to give a valuation report of the jewellery owned by her family and with this object she had brought her jewelry to the assessee firm. As she had planned to leave for Canada after obtaining the 1SA she had kept her jewellery with, her father brothers for safe keeping which was kept in the business/residential premises of the assessee. The said lady left for Canada on 29.07.2015 and returned back to India on 27.10.2015. During post search, summons were also issued by Investigation wing to the said persons who appeared and statement were recorded confirming the same fact. An affidavit was also filed in this regard before the Investigation \Ving. After considering the factual matrix of the case, and evidences on record the AO was not justified in treating jewelle~ of Smt Meena Jain and Shri Ashok Jain as undisclosed stock of appellant firm even when the valuation report of jewelley of Smt Meena Jain and Shri Ashok Jain was found during the course of search. The valuation report clearly indicates that the jewelry of779.64 gms belongs to Smt Meenajain and Shri Ashok Jain which was kept with Shri Sikhar Chand Jain (father of Smt Meen....
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....ooks of accounts were incomplete as on the date of the search and the stock was shown in the books at 6105.938 gms. The actual stock of the gold ornaments was found at 33,853 gms. Revenue has challenged the deletion of addition of Rs. 4,18,16,751/- calculated in the following manners: Stock found during the course of the search (Gold and Diamond) 33,853.86gms. Rs. 8,10,16,131/- Stock as per books of accounts as on the date of search 6,105.938 gms. Rs. 1,33,84,194/- Difference 27747.922 gms Rs. 6,76,31,937/- Difference in stock of silver 157gms Rs. 42,95,253/- Total difference in stock Rs. 7,19,27,190/ Stocks surrendered in the return (wrongly taken by A.O. at 3,01,10,439/-) 11075 gms Rs. 3,03,10,439/- Balance addition challenged 16672 gms. Rs. 4,16,16,751/ 47. Bifurcation of the alleged quantity of Gold arnaments weighing 16672 gms is as follows: It was explained before the Ld. A.O. that the stock of 16,672 gms is explained as under: i. Personal jewellery of the partners 10987 gms. ii. Bills accounted after the search wherein the Purchases were made before the search 5686 gms. iii....
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....version or remaking of jewellery, it cannot be said that jewellery to this extent was unexplained". c. Rakesh R. Purohit, 14 DTR 414 (Jaipur Bench) It has been held that jewellery disclosed by the assessee in past cannot be lost site in view of the non-availability of item-wise tally. 49. We further note that the Central Board of Direct Taxes has issued Guidelines/ Instruction No. 1916 dated 11th May, 1994. "Instances of seizure of jewellery of small quantity in the course of operation under section 132 have come to the notice of the Board. The question of a common approach to situation where search parties come across items of jewellery has been examined by the Board and following guidelines are issued for strict compliance. In the case of a wealth tax assessee, gold jewelry and ornaments found in excess of the gross weight declared in the wealth tax return only needs to be seized. Various High Courts, relying on the above referred instructions of the CBDT, has consistently held that the possession of the jewellery and ornaments to the extent of the quantities specified in the instruction is to be treated as reasonable and therefore explained and should not be....
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....47 grams) (854.200) (Pg.451 and 451A of PB) iii. Invoice of Raviraj Bullion & Jewellers dated 13.08.15 for Rs. 3,40,000/- had escaped accounting as on the date of search and was submitted during the assessment proceedings, the payment for this purchase was made by RTGS through account payee cheque dated 13.08.15 for Rs. 3,40,000/- drawn on HDFC Bank .(131 grams) (Pg.451B) iv. Kiran Dhaore 80.712 grams date of purchase 27/04/2015 payment made through banking channel. v. Ankur Jewellers Guna bill dated 14/05/2015 and 19/08/2015 payment made through baking channel Rs. 17,72,494/- (842.440 grams) (pg.454) and Rs. 39,08,632/- ( 1825.440 grams) (Pg.458) Shipli jewelers Mumbai bill dated 18/08/2015 payment made through cheque Rs. 9,15,865/- (409 grams) (Pg.457) v. Diamonds purchased from Mansha Jewelers, Alankar Jewellers and Kanak Jems were prior to the search but accounted for after the search. 53. We further find that all the above stated bills along with copy of invoices of the suppliers, details of payments made and confirmations received from suppliers were placed before the Ld. AO. who failed to find any discrepancy or inaccuracy in the above ....