TaxTMI 
TaxTMI 
2025 (2) TMI 1416
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....d. The assessee filed his return of income for the impugned assessment year on 31.12.2021 declaring total income of Rs. 7,99,860/- which was revised on 25.02.2022 declaring total income at Rs. 29,79,410/-. The Assessing Officer issued statutory notices u/s 143(2) and 142(1) of the Act which were duly served on the assessee. The assessee in response to the said notices, filed the requisite details from time to time as called for by the Assessing Officer. 3. During the course of assessment proceedings the Assessing Officer asked the assessee to furnish the source of cash of Rs. 62,20,000/- and gold bars weighing 7 kg valued at Rs. 3,72,40,000/-. He also asked the assessee to furnish Cash Book and purchase bills of gold to substantiate the same. The assessee in response to the same submitted that he does not maintain any Cash Book and does not have purchase bills of the gold. Since during the course of search proceedings the assessee had not furnished the required details and also income was not offered for taxation in any previous year, the Assessing Officer asked the assessee to explain as to why the unaccounted cash of Rs. 62,20,000/- and unaccounted investment in gold of Rs. 3,....
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....ct for the impugned assessment year by recording as under: "Further, during the course of assessment proceedings, the assessee was given sufficient opportunities to produce the bills for the purchase of gold and source of cash. However, the assessee failed to produce the bills for the purchase of gold and explanation of sources of cash. In view of the above, there is no doubt that the cash and gold found in possession of Shri Pankaj Magdiya is earned out of the unaccounted Income which he himself has accepted in his statements recorded on oath from time to time. Therefore, the cash found at Rs. 62.20 lakh and the gold weighing 7000 gms valued at Rs. 3,72,40,000/- is treated as unaccounted income of Shri Pankaj Mugadiya for current financial year i.e. A.Y.2020-21 relevant to A.Y.2021-22. Further, it is pertinent to mention here that the excess income declared by the assesses in response to the notice issued u/s 153A of the I.T. Act, 1961 from A.Y 2015-16 to A.Y 2020-21 is also rejected. Accordingly, the additional income offered for taxation of Rs. 21,79,550/- in the A.Y 2021-22 is hereby also rejected as the assessee has treated the undisclosed income as business income an....
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....n of imposing nationwide lockdown for a period of two weeks from 04.05.2020 which was again extended for a period of two weeks w.e.f. 17.05.2020 vide order dated 01.05.2020, it was submitted that the assessee was not in a position to go anywhere to purchase the gold bars especially when all the shops and other establishments except for essential commodities were closed. He submitted that after easing of restrictions and phase-wise opening of lockdown wherein shops were allowed to operate with restriction of timing from 9.00 am to 5.00 pm, the Municipal Commissioner, Aurangabad again imposed lockdown from 10.07.2020 to 18.07.2020. Therefore, neither the entire unaccounted business income is earned in assessment year 2021-22 nor the assets found in the form of gold is purchased in assessment year 2021-22 since there was lockdown and it was not possible to make such huge purchases by earning such huge income. It was further submitted that considering the human probability as well as human psychology, once unaccounted income is earned, the same is always invested in some asset to gain appreciation rather than keeping the same idle. The assessee in the instant case has been earning the ....
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.... asset is acquired out of the unaccounted income, thereby avoiding tax on both unaccounted income and unaccounted assets found; 8. AO ought to have accepted the fact that there could not be any bill for acquiring unaccounted asset i.e. gold bar in cash, and thus, question of producing any bill for cash purchase does not arise; 9. In respect of bakery business, the same could have been verified by sending inspector to the business premises and moreover, the same bakery business was shifted in partnership firm M/s. Jain Industries and is carried out even as on date, which can be verified by the income-tax department and income thereof is offered in the return of income filed of the said partnership firm." 7. Based on the arguments advanced by the assessee, the Ld. CIT(A) deleted the addition made by the Assessing Officer by observing as under: "15. The AR also relied upon various decisions and has also filed copies of the same. The AR during the course of hearing has stressed upon the fact that the AO has not disputed anywhere in the entire assessment order, the factual contention that due to Covid-19 pandemic, it is not possible to either earn such huge....
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....rsons roaming out without any necessity and in such a situation, it is beyond human probability that any prudent person would take risk of carrying huge cash and / or assets in the form of gold. Reliance is placed on the decision of the Supreme Court in Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) wherein it is held that - "This, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human probabilities," Similarly the observation of the Supreme Court in the same decision that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available. Reliance is also placed on the decision of Supreme Court in the case of CIT v. Durga Prasad More [(1971) 82 ITR 540 (SC), to the effect that "Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities" Thus,....
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....e Appellant has not substantiated by any evidence to show business of bakery and trading in vegetables and fruits carried on by the Appellant. It is not in dispute that the Appellant has earned unaccounted income and from the sequence of events and various statements recorded of the Appellant and his brothers, the only conclusion that arrives is that the Appellant did not want to reveal his unaccounted business activity even after search by ED and inquiries by income-tax department by explaining the same to have been earned from the business carried out by his two brothers. However, when both the brothers denied of earning any unaccounted income from their business as also involvement of Appellant in the financial affairs of their business, the Appellant finally came out with truth and revealed his own unaccounted business activity carried out by him and committing to offer income therefrom in the returns of income and paying tax on the same. Considering the fact that the Appellant wanted to hide his unaccounted business activity and the entire business activity being carried out in cash, it is obvious as per human nature and psychology that he would not keep any evidence of earnin....
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....f 7 kg are held to have been earned/ purchased out of the undisclosed income from business earned in various years, thereby taxing the source of income and not application of income. The assets are held to be available / acquired in each of the year out of the unaccounted income earned in that year. It is human nature and as a prudent person to not keep the unaccounted funds idle and make investment in assets, etc. for capital appreciation. Both source of income and its application cannot be added in the hands of the same Assessee. In the case of CIT v. Jawanmal Gemaji Gandhi (1985) 151 ITR 353 (Bom), it has been held that gold acquired in latter part of the year can be assumed to have been acquired from the undisclosed income earned in that very year and this undisclosed income constituted fund from which the asset was acquired. Similarly, the Hon'ble Supreme Court in the case of CIT v. S. Nelliappan (1967) 66 ITR 722 (SC) held that even in the absence of direct evidence of any connection between the cash credit entries and the income withheld from the books of account by the assessees if the Tribunal inferred that there was a connection between the profits withheld from the b....
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....e's residential premises. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assets found at the time of ED search i.e. cash of Rs. 62,20,000/- and gold bars of 7 K.G. have been purchased from undisclosed income earned in various years and thereby taxing the source of income and not application of income. 3. Whether on the facts in the circumstances of the case and in law, the Ld. CIT(A) has erred in relying on the assessee's submission which was not supported by any supporting documentary evidences viz. bills/vouchers, etc. in support of purchase of gold bars weighing 7 K.G. and cash found of Rs. 62.20 lakh. 4. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) is justified in not appreciating the fact that the then A.O. has rightly rejected the assessee's submission which was not supported by any reasonable and satisfactory evidences and hence the order of the AO be confirmed. 5. The appellant craves leave to add, alter, modify, delete and amend any of the grounds, as per the circumstances of the case. 9. The Ld. DR strongly chall....
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....egetables, fruits and bakery products mainly bread, pav, khari etc. During the year under consideration the assessee has shown income from salaries and income from other sources." 12. He submitted that the income generated from the business activity of selling bakery items and trading of fruits and vegetables, etc. for the preceding 6-7 years was invested in purchase of gold from time to time and a part of the cash was also available from such business. However, it is an admitted fact that the assessee has not maintained any books of account nor has kept any bills or vouchers for purchase of gold bars. He submitted that the assessee during the course of assessment proceedings has categorically explained the source of acquisition of gold bars and cash which is from the business activity carried out by the assessee since past 6-7 years. 13. Referring to the provisions of section 69A of the Act, he submitted that in order to apply the said provisions, two conditions i.e. the assessee is found to be the owner of money, bullion, jewellery, etc. which is not recorded in the books of account and the assessee offers no explanation about the nature and source of acquisition of such as....
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....mposing Nationwide Lockdown for a further period of two weeks w.e.f. 17.05.2020. Copy of record is attached herewith as Annexure-11 for your ready reference and record; (v) Order No. DMU/2020/CR.92/DisM-1 dated 31st May 2020 for Easing of Restrictions and Phase-wise opening of Lockdown (MISSION BEGIN AGAIN) wherein shops were allowed to operate with restriction of timing from 9.00 am to 5.0pm on P1-P2 basis to extend the lockdown in the entire State of Maharashtra further till midnight of 30th June 2020. Copy of order is attached herewith as Annexure-12 for your ready reference and record; (vi) Order No. 2020/256 issued by Municipal Commissioner Aurangabad for Imposing complete and strict Lockdown in Aurangabad from 10/07/2020 to 18/07/2020. Copy of order is attached herewith as Annexure-13 for your ready reference and record. 15. Referring to the statement recorded of the assessee u/s 131 of the Act on 31.07.2020, copy of which is placed at pages 234 to 238 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the reply of the assessee in response to question No.7 where he has stated that the gold bars were purchased from the u....
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....re country was passing through lockdown. He also relied on the following decisions: i) CIT vs. Jawanmal Gemaji Gandhi (1985) 151 ITR 353 (Bom) ii) CIT vs. Tyaryamal Balchand (1987) 165 ITR 453 (Raj) iii) CIT vs. Golani Brothers (2018) 300 CTR 245 (Bom) iv) CIT vs. S. Nelliappan (1967) 66 ITR 722 (SC) v) CIT vs. K.S.M. Guruswamy Nadar & Sons (1984) 149 ITR 127 (Mad) vi) PCIT vs. M/s. Tata Medical Centre Trust vide IA No.GA/1/2023, order dated 26.09.2023 vii) M/s. Overseas Leathers vs. DCIT vide ITA No.962/Chny/2022, order dt 05.04.2023 viii) Shri Bhuwan Goyal vs. DCIT vide ITA No.1385/Chd/2019, order dated 28.09.2020 ix) DCIT vs. Tapesh Tyagi vide ITA No.1344/Del/2021, order dated 27.10.2023 x) Jayashri Shrikant Deshmukh vs. ACIT vide ITA No.776/PUN/2022, order dated 17.05.2023 xi) Kantilal & Bros. vs. ACIT (1995) ITD 412 xii) DCIT vs. M/s. Madhu Developers vide ITA No.2375/Mum/2023, order dated 27.11.2024 17. He accordingly submitted that the order of the Ld. CIT(A) being in accordance with law, should be upheld and the grounds raised by the Revenue be dismissed. 18. We....
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....ge: 42 years. My residential address is Plot No.97, N-3, CIDCO, Aurnagabad My mobile No. is 9422209000. My PAN is AFUPM5496F. Q.2. Please confirm that oath has been administered upon you and you are reminded that this statement is being recorded on oath and you have been made aware of the consequences of giving false statement on oath including penalties u/s.179 of IPC, sec 180 of IPC, sec 181 of IPC, sec 275A of the Information Technology Act and Sec 277A of the Income Tax Act. Sec 179 of IPC: Refusing to answer question. Sec 180 of IPC: Refusing to sign the statement Sec 181 of IPC: False statement on oath Sec 277A of Income Tax Act, 1961: Enabling others to evade taxes. Sd/- (Sushil B. Shendge) DDIT (Inv), Unit-1, Aurangabad Sd/- (Shri. Pankaj Mugdiya) Ans. Yes, I confirm that oath has been administered upon me and the consequences of giving false statement under oath and other penal provisions as mentioned above have been explained to the Q.3 Please state whether statement can be recorded in English language or any other language. Ans. Yes, the statement can be recorded in English language....
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....ss of Sweet Shop, I used to get payments in cash as well as in cheques. I have recorded all the payments received by cheques but most of the cash receipts were not recorded. The cash of Rs. 62.20 Lakh is unaccounted cash generated from the business of M/s Namrata Caterers and M/s Namrata Sweets. Q9. Please provide the details of the parties from whom the cash payments were received. Ans. Sir, I have not maintained any records regarding the cash receipts. Since the cash is generated over a period of approximately 5 to 6 years. I do not remember any details regarding the parties from whom the cash payments were received. Sd/- (Sushil B. Shendge) DDIT (Inv), Unit-1, Aurangabad Sd/- (Shri. Pankaj Mugdiya) Q10. Please provide the details regarding the purchase of Gold bar of weighing 7000 gms. Ans. Sir, I used to purchase gold from time to time from different person (jeweller) as per the availability of unaccounted cash. Sir I do not remember the exact details of quantity, rate and amount of cash paid etc. at this moment. Sir the mode of payment for the purchase of gold bar was in cash. All the cash which was used to purchase the gol....
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....e influence upon me. I have understood the contents of the above statement and I shall abide by the same. I have read over the statement and it is correctly recorded." Sd/- (Sushil B. Shendge) DDIT (Inv), Unit-1, Aurangabad Sd/- (Shri. Pankaj Mugdiya) 20. Similarly, we find the statement of the assessee was again recorded u/s 131 on 08.10.2021 wherein in reply to question No.4, he has categorically stated that he was doing the business for the last 6 to 7 years and the cash so found and the gold bars so seized were out of the income of last 6 to 7 years. The statement of the assessee so recorded reads as under: "Statement on oath of Shri. Pankaj Mugdiya, residing at Plot No.97, N-3 CIDCO, Aurangabad recorded on 08/10/2020 u/s 131 of the Income Tax Act. 1961 -------------------------------------------------------------------------------------------- OATH "I swear in the name of God that I will speak the truth, only truth and nothing but the truth. I further confirm that I have been made aware of the consequences of making a false statement under oath" Sd/- (Sushil B. Shendge) DDIT (Inv), Unit-1, Aurangabad (Shri....
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....y items like Pav, various types of Bread, Pizza base, Pani Puri, trading of vegetable and fruits. The said business is done by me for last 6 to 7 years. It is true that there is no connection of Namrata Caterer or Namrata Sweets with the cash and Gold. Still I wish to submit that the goodwill of Namrata brand has helped in my business. During the action the officers asked for all sources of my income, and I used to get the salary from Namrata Caterer, therefore I have stated the name of Namrata Caterer. Also my business of trading was totally unaccounted, therefore I have not stated this business to authorities during action. Therefore due to this fact and also due to stress of the action, I have stated the names of Namrata Caterer and Namrata Sweets in my earlier statement. Q5. In answer to above question you have stated that you are doing business of selling bakery items like Pav, Bread, Pizza base, Pani Puri, trading of vegetable and fruits. In this regard please furnish documentary evidences such as books of accounts, bills and vouchers for sale and purchase etc. Ans. Sir, initially the business was started at very low volume. The business has increase after s....
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....Shri. Pankaj Mugdiya) DECLARATION Whatever stated above by me is true and correct to the best of my knowledge and belief. The statement was recorded with sound mind and without threat, coercion or undue influence upon me. I have understood the contents of the above statement and I shall abide by the same. I have read over the statement and it is correctly recorded. Sd/- (8/10/2020) (Shri. Pankaj Mugdiya)" 21. We find on the basis of the requisition u/s 132A of the Act, the Assessing Officer issued notice u/s 153A for 6 assessment years i.e. assessment years 2015-16 to 2020-21 and the assessee in response to the same filed the return of income declaring the additional income. In our opinion, once the Assessing Officer, upon satisfaction had issued notice u/s 153A for 6 years preceding the year in which the search and seizure was conducted he is not justified in rejecting the income declared in the said returns especially when the assessee had categorically stated in his statement recorded u/s 131 of the Act by the DDIT (Inv) Unit, Aurangabad that he was earning income from sale of vegetables, fruits, bakery products etc since last 6/7 years. It....
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....y, bullion, jewellery or other valuable article not recorded in the books of account, maintained by him for any source of income. Secondly, the assessee does not offer any explanation about the nature and source of acquisition of the said money, bullion, jewellery or other valuable article, or the explanation offered by him is not satisfactory, in the opinion of the A.O. 9. In the facts of the present appeal, even assuming that the first limb of section 69A of the Act is attracted, however, it cannot be said that the assessee has not offered any explanation regarding the nature and source of the money. Not only in course of the survey action, but subsequently the assessee has clearly stated that the unaccounted money found at the time of survey was out of his business. Not only the A.O. has not contradicted the aforesaid claim of the assessee, but he has failed to identify any other source of income of the assessee, except business. Thus, when there is no contrary material brought on record to dispel assessee's claim that the unaccounted money is out of business, the provisions of section 69A of the Act would certainly not get attracted." 25. We find the Chennai Ben....