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Facts
The assessee challenged additions made by the Assessing Officer under Section 68 and Section 69A of the Income Tax Act, which were confirmed by the CIT(A). The additions pertained to unexplained cash and unexplained investment in gold jewellery.
Held
The Tribunal held that the Assessing Officer and CIT(A) failed to properly consider the assessee's explanations and supporting documents, including cash books and jewellery-related transaction proofs. Therefore, the additions were not sustainable.
Key Issues
Whether the additions made under Section 68 for unexplained cash and Section 69A for unexplained gold jewellery were justified without proper verification of the assessee's evidence.
Sections Cited
68, 69A
AI-generated summary — verify with the full judgment below
Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha
Year: 2018-19 Mr. Tarachand Rajendra Kumar Shah, Vs. The Assistant Commissioner of No. 44, Thataamuthaippan Street, Income Tax, Sowcarpet, Chennai 600 079. Central Circle 3(3), [PAN: ANQPR1399L] Chennai. (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri D. Anand, Advocate ��थ� की ओर से/Respondent by : Shri C. Sivakumar, Addl. CIT सुनवाई की तारीख/ Date of hearing : 20.08.2025 घोषणा की तारीख /Date of Pronouncement : 07.11.2025 आदेश /O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 26.12.2023 passed by the ld. Commissioner of Income Tax (Appeals)-20, Chennai for the assessment year 2018-19.
Ground Nos. 1 & 2 raised by the assessee is general in nature and requires no adjudication.
Ground No. 3 & 4 raised by the assessee in challenging the action of the ld. CIT(A) in confirming the addition made under section 68 of the Act by the Assessing Officer.
It is noted that according to the Assessing Officer that Shri Bipin R. Shah, s/o of the assessee found in possession of cash of ₹.8,01,625/- on 09.03.2018 by Railway Police, Tirupathi station. The assessee explained about the availability of cash with the support of cash book for the period of 01.04.2011 to 31.03.2018. The Assessing Officer did not accept the same and proceeded to add the said amount under cash credit under section 68 of the Act. The ld. CIT(A) confirmed the same by recording reasons vide para 7.2.5 of the impugned order.
After hearing both the parties, it is noted that the Assessing Officer discussed the said issue vide para 6 of the assessment order. We find no discussion or verification done by the Assessing Officer with reference to explanation offered by the assessee regarding the availability of cash in his hand from 2011 to 2018. The ld. CIT(A) was of the opinion that in the absence of recording satisfaction by the Assessing Officer in the assessment order, the contentions raised by the assessee regarding the availability of cash in assessee’s hands is devoid of any merit. The ld. AR vehemently contested that the Assessing Officer and the ld. CIT(A) failed to consider the cash book during the respective proceedings and without such consideration, confirmation of addition by the ld. CIT(A) is not justified. On perusal of the assessment order, it is noted that the Assessing Officer simply proceeded to add the said amount without any reference to the explanation offered by the assessee. Admittedly, the assessee filed return of income declaring total income of ₹.5,59,230/-, which contains every detail with reference to claims of the assessee. Further, on perusal of the assessment order, except discussing the facts of the case, the Assessing Officer did not make any verification with reference to the explanation offered by the assessee, is clear from para 6(i), (ii) & (iii) of the assessment order, which is confirmed by the ld. CIT(A) vide para 7.2.3 to 7.2.5 of the impugned order. Further it is noted that the ld. CIT(A) discussed the veracity of the cash book in para 7.2.6 to 7.2.8 of the impugned order. It is noted that the assessee shown opening balance as on 01.04.2017 is ₹.9,05,488.65 and the closing balance as on 31.03.2018 is ₹.10,48,488.65. It is noted that the ld. CIT(A) was of the opinion that the assessee has not established the correctness of the opening balance shown as per cash book, but, however, it is seen the contention of the assessee that the cash balance as per cash book for the period from 01.04.2011 to 31.03.2018, but, no consideration given by the ld. CIT(A) in this regard rather giving finding of cash balance from 01.04.2017. The ld. CIT(A) should have examined the cash book with reference to the availability of cash book from 2011 onwards, but, no such verification done by the ld. CIT(A). Therefore, we find that the ld. CIT(A)
and the Assessing Officer failed to consider the explanation of the assessee with reference to availability of the cash as rightly pointed out by the ld. AR. Thus, we hold that the assessee has cash balance as on 01.04.2017 in the form of opening balance, which cannot be disputed unless evidence showing the closing balance of earlier year is doubtful. In the present case, nothing was brought on record showing the same. Therefore, taking into consideration the facts and circumstances of the case and material available on record, we are of the considered opinion that no addition is maintainable without proper verification of the explanation with documentary evidence and it is not justified. Thus, ground Nos. 3 & 4 raised by the assessee are allowed.
Ground Nos. 5 & 6 raised by the assessee in challenging the action of the ld. CIT(A) in confirming the addition made under section 69A of the Act.
It is noted that the Assessing Officer made addition on account of unexplained investment under section 69A of the Act with reference to the gold jewellery of 1926.43 grams as found in possession of assessee’s son during the course of search by the Tirupathi Railway Police. The Assessing Officer did not accept the submissions of the assessee, which are reproduced in para 6(b) (i) to (v) of the assessment order. The ld. CIT(A) was of the opinion that no explanation was given by the assessee regarding source for gold jewellery to an extent of 1689.92 grams, but, however, given benefit to an extent of 225.210 grams. The ld. AR placed on record Wealth-Tax returns, which are at page 1 to 7 of the paper book. On perusal of the same, we note that the assessee filed return of net wealth for AY 2014-15 on 25.11.2014 by declaring the aggregate value of the jewellery at ₹.22,38,714/-. We find the details of gold jewellery at gross weight of 715.380 grams valuing ₹.19,56,175/-. Further, wife of the assessee filed return of net wealth for AY 2014-15 declaring aggregate value of jewellery at ₹.26,29,603/-. We find the details of the same at page 7 of paper book and the gross weight of said gold jewellery at 875.48 grams valuing at ₹.23,43,618/-.
Further, the confirmation letter of Heera Jewelleries at page 8 of the paper book, stating that it has given gold ornaments belonging to their business weighing 118.240 grams to assessee’s son for polish and stone fitting and there is no verification done by the Assessing Officer in respect of this confirmation. Further, we find confirmation letter of Shri Sha Chunilal Rakesh Kumar from Ballari at page 9 of the paper book, confirming 16 gold rings of their business weighing 106.970 grams for polish, stone fitting and miscellaneous minor repair. Further, we find job work bills of M/s. Sasti Santra Jewel Works at pages 10 to 12 of the paper book, it is noted that they have given the gold jewellery valuing ₹.34,240/- towards making charges for gold ornaments vide invoice dated 18.06.2017, likewise, vide invoice dated 25.06.2017 & 21.07.2017, they have given gold jewellery worth ₹.23,250/- and ₹.37,700/- towards making charges for MS Pendent, tops, necklace, LD bracelet, LD ring and MS Mala respectively. Further, it is noted that Sasti Santra, deposed vide notarized affidavit that they are in the business of manufacturing of jewellery by means of job work and received old gold weighing about 1100 grams from the assessee’s son for converting them into new gold. He paid charges through banking channels on 11.10.2018. As it is evident from para 7.3.6 of the impugned order, the ld. CIT(A) observed that the assessee filed copy of job work bills with reference to the seized jewellery and the Assessing Officer valued said jewellery at ₹.47,77,407/- with reference to gross weight and net weight at 1915.130 grams and 1660.400 grams respectively by adding 5% as making charges. We find that there is no doubt that the assessee filed submissions before the Assessing Officer as well as before the ld. CIT(A), the said submissions were summarized by the ld. CIT(A) in para 7.3.7 of the impugned order. On perusal of the same, it is noted that the assessee’s son had his original gold jewellery given by the assessee and some other gold jewellery given by dealers in Ballari for repair, polishing and stone fitting job work. The Assessing Officer, after considering all the said evidences, discussed hereinabove, held that the assessee failed to prove one to one link between new jewellery seized and old reflected in Wealth-tax returns, without bringing anything contrary to the submissions of the assessee. We find force in the arguments of the ld. AR that every family member, whether male or female are entitled to have gold jewellery under the law. The ld. AR placed on record, the family tree of the assessee on record. According to him, the assessee and his three sons can have 200 grams each being male members and assessee’s wife and daughter-in-law can have 500 grams each. As is evident from the said chart, the assessee’s family is consisting of 8 members including 2 minor granddaughters, but, however, there being no holding of gold jewellery against them, we can safely hold the gold jewellery against the assessee and his family members at 1800 grams of gold. There is no doubt, raising of contention that the assessee has given his ancestorial gold weighing 1600 grams to his son, which were converted into new jewellery and the details of Goldsmiths to whom old jewellery was given for conversion are reproduced in para 7.3.5 of the impugned order.
Further, no doubt with reference to filing of confirmation letters of M/s. Heera Jewelleries, Ballari and M/s. Sha Chunilal Rakesh Kumar, Ballari, in which, they admitted that they have given 118.240 grams and 106.97 grams of gold jewellery to assessee’s son for stone fitting, polish and other minor works totalling together equivalent to seized gold jewellery from assessee’s son at Tirupathi Railway Station by the Railway Police. Having all these evidences available before both the authorities below, no consideration was given, however, held there is no one-to-one link between new jewelleries seized with reference to gold jewelleries represent in the Wealth-tax returns and job works etc., in our opinion, is not justified to hold that the assessee failed to establish one-to-one link explaining with reference to seized new gold jewellery and declared gold jewelleries and job work jewelleries. Thus, we accept the explanation offered by the assessee and therefore, the addition made by the Assessing Officer on account of gold jewellery, which was confirmed by the ld. CIT(A), is deleted. Thus, ground Nos. 5 & 6 raised by the assessee are allowed.
In the result, the appeal filed by the assessee is allowed. Order pronounced on 07th November, 2025 at Chennai.