SHRI OM PRAKASH KARNANI,JAIPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 1022/JP/2019 fu/kZkj.k o"kZ@Assessment Year :2017-18 cuke Shri Om Prakash Karnani ACIT, Vs. S-1, Khatipura Road, Govind Nagar Circle-04, Jhotwara, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ALMPK4407C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Ashok Kumar Gupta jktLo dh vksj ls@ Revenue by : Sh. Amrish Bedi lquokbZ dh rkjh[k@ Date of Hearing : 09/11/2020 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 28/01/2021 vkns'k@ ORDER PER: VIKRAM SINGH YADAV, A.M.

This is an appeal filed by the assessee against the order of ld. CIT(A)-4, Jaipur dated 24.06.2019 wherein the assessee has taken the following revised grounds of appeal:-

“1. The Learned CIT (A) as well as Ld. AO has grossly erred in law and facts in making the assessment under section 153A for the assessment year while for the Assessment year 2011-12, 2012-13, 2013- 14, 2014-15, 2015-16 and 2016-17 from initiation to completion of assessment proceedings have been conducted under section 153C of the Income Tax Act therefore complete assessment proceedings for the Assessment year 2017-18 is illegal and void ab initio.

2 Om Prakash Karnani, Jaipur Vs. ACIT, Jaipur 2. The Learned CIT (A) has grossly erred in law and facts in confirming the assessment order as framed by Ld. AO on behalf of erroneous findings therefore did not follow the provisions of section 34 of evidence act.

(a) As Ld. AO has rejected the books of accounts of the assessee though it was regularly kept in the course of business, or (b) Without issuing any show cause notice for rejecting the books of accounts, or (c) Without mentioning the reasons of rejection of books of account in the notices,

3. The Ld. CIT(A) has grossly erred in law and facts in confirming the assessment order as framed by Ld. AO who made huge addition without issuing show cause notice for mentioning specific defects/reasons therefore it hurts fundamental rights of the assessee of 'Opportunity of being heard'.

4. The Ld. CIT(A) has grossly erred in law and facts in confirming the assessment order as framed by Ld. AO who invoked section 68 of the act and made an addition under such section as undisclosed income while right from beginning assessee himself claiming that the Questioned Cash pertained to his Business and part of his day to day business transaction therefore nothing was undisclosed at the time of initiation of this assessment proceedings.

3 Om Prakash Karnani, Jaipur Vs. ACIT, Jaipur 6. The Ld. CIT (A) as well as Ld. AO has grossly erred in law and facts in the circumstances of the case for not appreciating the affidavit as submitted by the assessee to the investigation wing as well as before Ld. AO. Such affidavit cleared the assessee's contention about the cash seized as made by the department.

7. The Ld. CIT (A) as well as Ld. AO has grossly erred for denying the submission of the assessee that he had sufficient cash balance as on 01.04.2016 by saying that in preceding ITR there was no closing cash balance while that ITR was filed u/s 44AD vhere there is no provision to provide his personal cash balance.

8. The CIT (A) has grossly erred in confirming the action of Ld. AO for making addition for Rs. 5,34,000/- without appreciating affidavit as filed by other person in support of assessee contention.

9. The Ld. CIT (A) has grossly erred in confirming the action of Ld. AO in making the addition of Rs. 5,34,000/- without appreciating sufficient cash balance as available on said date (i.e. 21.10.2016) in support of Rs. 5,34,000/ -

10. The Ld. CIT (A) has grossly erred in confirming the addition as made by Ld. AO on the basis of findings that "there is no withdrawal entry in the cash book either on 20.10.2016 or on the day of seizure. On the day of seizure the entry in cash book shows income tax (attachment)." by ignoring the principle of accounting,

11. The Ld. CIT (A) as well as Ld. AO has grossly erred in charging interest under section 234A & 234B of I T Act.”

4 Om Prakash Karnani, Jaipur Vs. ACIT, Jaipur 2. Briefly stated, the facts of the case are that in this case, original return of income was filed on 26.03.2018 for the A.Y 2017-18 in the office of the ITO, Ward-1(3), Bikaner declaring total income at Rs. 1,01,600/-. Cash of Rs. 5,34,000/- was seized by the SHO Police Station, Shastri Nagar, Jaipur, from the possession of Shri Nand Lal Joshi and Shri Nand Lal Pandya on 21.10.2016, which belongs to Shri Om Prakash Karnani. Consequently, a requisition u/s 132A of the Income Tax Act, was issued by the Pr. DIT(Inv.), Jaipur on 27.10.2016 which was executed on 29.10.2016. The cash was subsequently seized on 29.10.2016. A search was conducted on 29.10.2016 in the case of Shri Nand Lal Joshi and Shri Nand Lal Pandya Group, Jaipur to which the assessee belongs. Cash of Rs. 5,34,000/- were found and seized as per annexure prepared during the course of search. Shri Om Prakash Karnani also in his statement dated 26.10.2016 recorded u/s 131 of the I.T. Act, 1961 has also admitted that the aforesaid cash belongs to him. During the assessment proceeding, a show-cause vide letter dt. 06/10/2018 was issued to the assessee to explain the source of cash seized. After considering the submission of the assessee, the Assessing Officer held as under:-

“9. The assessee is trying to justify the cash of Rs. 5,34,000/- seized by the Police Authority from his proprietorship concern M/s Vinayak Enterprises. In support of his claim he furnished copy of his bank account and cash book of M/s Vinayak Enterprises. He claimed the cash from the cash sales from M/s Vinayak Enterprises. The cash book furnished by him showing opening cash balance of Rs.5,95,790/- for which no supporting evidence has been produced. Thereafter, the cash book reflecting cash sales but the assessee failed to produced any supporting evidence such as sale bills etc to substantiate the 5 Om Prakash Karnani, Jaipur Vs. ACIT, Jaipur cash sales. Moreover, the books of the assessee is also not an audited one as he filed return u/s 44AD on the basis of presumptive income, therefore, without any supporting documents in respect of the claimed cash sales the cash books produced by the assessee cannot be relied upon.

Further, it is noted that the assessee has shown cash balance as zero in return of income filed in earlier years prior to search.

In view of the above, the explanation of the assessee have not found tenable as the assessee has failed to produce the source of the above said cash deposit. Therefore, it is held that the amount in question is the assessee's unexplained money within the meaning of section 69A of the I.T. Act, 1961. The provisions of section 115BBE are also applicable in the case of the assessee for the purpose of charging of rate of taxes as per I.T. Act, 1961 to the total income of the assessee and tax in to be charged u/s 115BBE on the amount. Accordingly penalty proceeding u/s 271AAB(1)(c) of the Income-tax Act, 1961 is also being initiated.”

“5. I have perused the written submissions submitted by the AR and the order of AO. I have also gone through various judgments cited by the Ld. A/R and those contained in the order of AO.

5.2 I am in agreement with the Ld. AO in making an addition of Rs. 5,34,000/- as the cash seized u/s 132A of the Act. Though the 6 Om Prakash Karnani, Jaipur Vs. ACIT, Jaipur Ld. A/R submitted that his cash book has sufficient cash balance (of Rs. 5,69,878/- on 20.10.2016 just a day before the date on which the cash was seized, there is no withdrawal entry in the cash book either on 20.10.2016 or on the day of seizure. On the day of seizure the entry in cash books shows income tax (attachment). On the facts and in the circumstances of the case, the addition made by the Ld. AO is confirmed.”

Against the said finding, the assessee is in appeal before us.

7 Om Prakash Karnani, Jaipur Vs. ACIT, Jaipur 5. In support of aforementioned statements as given under section 131, Nand Lal Joshi, Nand Lal Pandya, Rajendra Prasad Karnani and Om Prakash Karnani produced separate Affidavits on 02.11.2016 stating the source of such seized Cash of Rs. 5,34,000/- along with the source documents comprises Cash Book of M/s Vinayak Enterprises (Proprietorship Firm of Om Prakash Karnani) up dated up to 21.10.2016 showing Cash balance of Rs. 5,69,878/- and in support of Opening Cash Balance of Cash Book of Vinayak Enterprises as on 01.04.2016 with other supporting documents viz. Bank Book, Shop Act Registration of Vinayak Enterprises and other documents in support of cash introduced in Cash Book and submitted Copies of Income Tax Return with Computation and Balance Sheets (as available) of Om Prakash Karnani. But without considering the factual circumstances based on unchallenged manifestly evidences the Income Tax Department had finished their Search and Seizer Proceedings upon Nand Lal Joshi and Nand Lal Pandya and started assessment proceedings accordingly under Section 153A upon them and under section 153C upon Om Prakash Karnani treated as “other person”. Therefore, necessary notices were issued under section 153 of Income Tax Act on Nand Lal Joshi, Nand Lal Pandya and Om Prakash Karnani in due course and same were replied time to time by the appellant, desired information, documents and complete books of accounts were produced before investigation wing as well as the Ld. AO, case discussed and assessment made by making additions of Rs. 534000/- in the hands of Om Prakash Karnani by treated as undisclosed income u/s 68 of IT Act. Further assessment completed upon Nand Lal Joshi and Nand Lal Pandya as on returned income accepted. Being aggrieved with the order of ld. AO, assesse filed appeal before Ld. CIT(A) and the action of Ld. AO was confirmed by ld. CIT(A) and the assessee has filed present appeal before the Tribunal.

8 Om Prakash Karnani, Jaipur Vs. ACIT, Jaipur 6. It was submitted that the assessment proceedings were conducted for the Assessment year from A.Y. 2011-12 to 2016-17 in pursuance to notice as issued under section153C of the Income Tax Act, 1961 while assessment proceedings for the Assessment Year 2017-18 had been conducted under section 153A (according to the Show cause notice issued on 13.11.2018) of the Income Tax Act, 1961 which should have been conducted under section 153C in consonance with the other assessment years therefore assessment proceedings for the AY 2017-18 is bad in law and liable to be null and void. In support, reliance was placed on decision of Co-ordinate Bench’s in the matter of Sh. Navrattan Kothari Vs. ACIT (425/JP/17 Dt. 31.12.2017).

9 Om Prakash Karnani, Jaipur Vs. ACIT, Jaipur 5,34,000/- into Assessee’s total income. It is also important to mention here that the authorities below did not substantiate such cash book and with having pre conceived notion just ignored such strong piece of evidence and violate the justice of administration. Reliance is placed on Jain Diary matter where the Honorable Apex Court strongly believed the authenticity of Books of Account which are kept in regular course of day to day business transaction.

11 Om Prakash Karnani, Jaipur Vs. ACIT, Jaipur Note; # Complete Financial statement have been figured out in Income Tax Return Form as submitted originally on their old dates as mentioned in table, ## As assesse filed his ITR under section 44AD hence no need to mentioned financial figures therefore same are not been provided in ITR, ### As assesse filed his ITR under section 44AD therefore only business balance have been mentioned by him in his Income Tax Return form which are part of his statement of affair as submitted before your honors, #### Though assesse filed his ITR under section 44AD but according to new instructions for filling of ITR form he had to filled relevant column of balance sheet of ITR Form, (f) Therefore with the considering all these facts and circumstances the opening balance as taken by the assesse in his Cash books for Rs. 5.95.790/- was fully proper and genuine. (g) Ld. AO alleged that Opening Cash balance as taken in Cash books is Rs. 5,95,790/- was not supported with the evidences and cash balance was Zero just at the end of year prior to search, both the allegation are based on surmises and perverse findings. (h) Here the Ld. AO made addition without any further enquiry about the documents and books of accounts submitted. Thus the Ld. AO was not justified in properly considering and appreciating explanations filed time to time and ignoring documents and books of accounts without any reasonable cause and therefore making addition is based merely on arbitrary manner. (i) At the time of investigation assessee has already accepted that the seized cash belongs to his firm M/s Vinayak Enterprises and the cash was generated from the day to day transactions of his business.

12 Om Prakash Karnani, Jaipur Vs. ACIT, Jaipur (j) It is well settled principle that the affidavit is an strong piece of evidence if it is ignored without making necessary enquiry, here in this case Investigation Wing and Ld. ACIT both did not comply necessary action for rejecting the affidavit therefore contention as contended by the assesse in the Affidavit which is on oath must have been relied by the Ld. ACIT. (k) This contention is well explained and supported in favor of assessee in a landmark judgment OF HONORABLE APEX COURT in the matter of M/s MEHTA PARIKH AND COMPANY VS. THE COMMISSIONER OF INCOME TAX 1956 AIR 556, 1956 SCR 626.”

In the result, appeal of the assessee is allowed.

Order pronounced in the open Court on 28/01/2021.