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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri R.K. Panda & Shri Laliet Kumar
आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad Before Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member Assessment Year: 2014-15 Dy. C.I.T. Vs. Gokul Gems and Jewels Central Circle 1(1), Private Limited Hyderabad. Hyderabad. PAN:AADCG0272G (Appellant) (Respondent) Assessee by: Shri K.C. Devdas, CA Revenue by: Shri K. Madhusudan, DR Date of hearing: 17/10/2022 Date of pronouncement: 31/10/2022 ORDER Per Laliet Kumar, J.M This appeal filed by the Revenue is directed against the order dated 21/12/2017 of the learned CIT (A)-11, Hyderabad relating to A.Y.2014-15.
The Revenue has raised the following grounds of appeal: “1. The Learned CIT(A) erred in both facts and in Law.
2. The Learned CIT(A) ought to have appreciated the fact that during search and seizure operation conducted on 19.11.2013 physical cash of Rs. 16,57,800/- only was found in the business premises as well as the residential premises of the Directors and that the Directors and their family members did not disclose availability of the balance cash of Rs. 1,71,59, 105/- .
3. The Learned CIT(A) ought to have appreciated the fact that during search and seizure operation the assessee neither produced the books of accounts stated to have been kept with the Accountant, nor disclosed the password of the accounting package nor disclosed the factory premises where the balance cash of Rs. 1,71,59, 105/- was stated to have been kept.
4. The Learned CIT(A) erred in holding that no specific questions were put to the assessee as to cash balance vis-à-vis availability without going into facts of the case and without going into the statement of the Directors recorded u/s 132(4 wherein the question of cash balance and whereabouts of cash was rightly put before the Deponent. 5. The CIT(A) ought to have appreciated that the AO considering the surrounding circumstances and applying the test of human probabilities has rightly treated the amount of cash of Rs. 1,70,50,000/- as unexplained cash credit u/s 69A of the I.T. Act. 6. The learned CIT(A) ought to have appreciated the spirit of Apex Court judgment in the case of Sumati Dayal v. CIT 214 ITR 801 (SC) wherein it has been laid down by Court that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. 7. The Learned CIT(A) ought to have appreciated the fact that the rental agreement dated 01.04.2009 filed to prove the existence of factory premises, where cash of Rs.1,71,59,105/- was claimed to have been kept, is a forged document in as much as that the stamp paper used for the agreement was purchased by the landlord on 18.06.2009 whereas the agreement is stated to have been entered on 01.04.2009. 8. Any other ground that may be urged at the time of hearing”.
Facts of the case, in brief, are that the assessee, M/s Gokul Gems & Jewels (P) Ltd is a company engaged in the business of Manufacturing and trading of Gold Jewelry/ Ornaments. A search and seizure operation u/s 132 of Income Tax Act, 1961 was carried out in the above group of cases on 19-11-2013 and notice u/s 142(1) was issued and served upon the assessee on 03-07-2015 requiring the assessee to file the return for the A.Y.2014-15. In response, the assessee has not filed proper return, but, wrote a letter dated 09-07-2015, stating that the return already filed for the said A.Y. may be treated as its return.
A Survey operation was conducted on 19-11-2013 by ITO, Ward-2(1), Hyderabad at the business premises of M/s Gokul Gems and Jewelrs Pvt. Ltd which is a closely held company of Sri Rajender Kumar Kimtee and his family. As the main directors of the assessee company viz. Sri Anand Kumar Kimtee and Sri Vikram Kumar Kimtee had not furnished the regular books of accounts for inspection and also not replied to the questions asked by the officials during proceedings to quantify the profit margin and to compute taxable income for assessment during survey proceedings, and also basing on the information available, the DIT (Inv.), Hyderabad issued the warrant of authorization u/s 132 of the IT Act, 1961 and the operation which was initially started as survey proceedings, converted into search. The assessee had shown gross non-cooperation in divulging the information and had not at all co-operated with the Department to make enquiries/verifications. The search had been carried out and incriminating material was seized. The assessee had not furnished even the password of maintained accounting package in PACT software during the survey/search proceedings. Assessee had not replied properly to the issues about stock, cash balance, fund/receipts and the manner to which the assessee group opted to take a total evasive approach. Subsequently, efforts were taken to verify by issuing summons to the assessee; however, the assessee did not furnish proper answers and whatever answers were all evasive and not the direct answers to the questions posted. Even during the course of proceedings of the block assessment, assessee has shown the same approach, instead of Page 3 of 10 furnishing the documentary evidence required with relevant clarification, the assessee has been writing letter after letter and arguments. On all the occasions, the assessee has been giving replies like, 'notices issued are not applicable to our case' 'details already on record', ‘details asked for are not required to be filed’ etc. Moreover, despite giving several opportunities to the assessee to attend the proceedings, only on a few occasions attended and most of the time, whatever xerox copies of evasive replies wanted to file, have been filed by post only. With various excuses, the assessee was found to have been lingering the proceedings till the end.
During the course of Search and Seizure operation, the assessee had not afforded the necessary facility to inspect the books of accounts or other documents maintained in electronic form in a laptop and CPU in PACT package. On the date of search, they had not provided the password and user ID for computers containing the electronic form of books of account to the Authorized Officer on the plea that the same was available with his Accountant. On the date of search, cash of Rs.13,69,000/- was found in the business premises and in the absence of any supporting books of accounts, the money available physically was treated as unexplained and seized to the extent of Rs.13,00,000/-. During the post search proceedings, the books of account in the electronic form were verified and found that entries were updated till 14-11-2013 only. As on 14- 11-2013, the cash balance was Rs.1,88,16,905/-. After considering the pending entries and reconciliation, the cash balance as on the date of search was arrived at Rs.1,88,69,150/-.
Thus, the Assessing Officer completed the assessment by making an addition of Rs.71,27,480/- to the returned income of the assessee, being the difference in cash found in the books of account and actual cash found during the search,
In appeal, the learned CIT (A) deleted the addition made by the Assessing Officer.
Aggrieved with such order of the learned CIT (A), the Revenue is in appeal before the Tribunal.
The learned DR submitted that subsequent to the search, the password and ID of the computer were provided to the department. It was noticed that the assessee had a cash balance of Rs.1,88,16,905/- in the books of account as against the actual cash balance of Rs.13.60 lakhs. In this connection, he has drawn our attention to Para 7 of the assessment order. It was submitted that after the search, the assessee deposited cash on four occasions for a total sum of Rs.1,70,50,000/- on 20-11-2013, 21- 11-2013, 22-11-2013 and on 25-11-2013.
The learned DR submitted that the learned CIT (A) deleted the addition by observing as under:
“8.1 The assessee reiterated the submissions made before the Assessing Officer and further contended that "Grounds of Appeal filed and written arguments may be considered we clarify that on date of search i.e. 19/11/2013 there was no question to me with regard to the cash available as per cash book in fact the computer CPU was opened on 09/12/2013 i.e. after date of search was the first time assessing authority question me vide his letter dated 09/12/2015 vide question no.
28. I have clarified in which I have clarified in my letter dated 18/12/2015 with regard to cash clarification. In which I have clarified there was cash was at factory (work place) at Golagally, Hyderabad. Further on 07/03/2016 I have again clarified to A.C. also. It was Page 5 of 10 submitted that there was no question put to me by DDI on date of search. Further one of the director has informed DDI that cash was deposited in bank from 20/11/2013 to 25/1 1/2013 the statement recorded by DDI may be raid with. All the directors were never question on date of search. As such the cash was available as per cash book is explained by recorded evidence." 8.2 I have considered the assessment order and submissions of the assessee. It is accepted by the Assessing Officer in the order that cash balance as on 14.11.2013 was Rs.1,88,16,905 as per the accounts maintained in electronic form which was opened under Panchanama on 09/12/2013. Thereafter, the Assessing Officer proceeded to add the cash deposits made allegedly from the above cash balance available. The contention of the assessee is that the cash was 3ACT available at factory premises which were not searched. The Assessing Officer held that the assessee did not state in any statement recorded that cash was available at other premises. The explanation was taken as afterthought. But it is seen that no specific questions were put to the assessee as to cash balance vis-a-vis availability as the computer was not opened/operated. The books of account were not verified on the day of search. The Assessing Officer having found that balance as per books was Rs.1,88,16,905/- cannot make addition, if the amounts from the cash balance available are deposited in bank accounts without bringing on record any evidence to the contrary. Mere doubting the explanation of the assessee without any evidence against it and making addition holding the explanation as afterthought cannot be sustained. In the facts and circumstances as above, it is held that the addition is not warranted and the same is deleted.”
The ld.DR submitted that the reasons given by ld.CIT(A) for deletion was incorrect as the assessee had filed only a letter on 18.12.2015 that too after a period of 2 years which is an afterthought. Further, it was submitted that the documents relied upon by the lower authorities were not adequately stamped and cannot be relied upon as the stamp paper was purchased only on 18.06.2009 whereas the lease cum license agreement was started from 1.4.2009. It was submitted that the assessee had deposited the cash in the bank after the search with a view to justify the availability of cash on books of account on four occasions as mentioned. It was submitted that the entire action on the part of the learned CIT (A) is without any merit.
It was submitted by the ld.AR for the assessee that during the course of assessment proceedings the cash was kept in safe custody at the factory outlet of the assessee. The ld.AR for the assessee submitted a copy of the lease deed of the said factory premises and also provided the details of the regular payment of rent made to the landlord, before and after the search. However, the Assessing Officer was not convinced and therefore, the additions were made in the hands of the assessee. Per contra, the learned AR of the assessee submitted that after the search, the electronic computer etc., were seized by the search team and thereafter, it was only opened on 09.12.2013. The ld.AR drew the attention of the Bench to Mahazarnama at page 2 of the Paper Book, wherein proceedings of the record which took place on 09/12/2013 were recorded, wherein it was mentioned about accessing the computer / books of accounts, including cash book was duly mentioned. The revenue had taken the printout of the cash balance / P&L A/c. It was submitted by the learned AR for the assessee that the available cash with the assessee as on 14.11.2013 was Rs.1,88,16,905/- and drew the attention of the Bench to Page 22 of the Paper Book. It was submitted that the cash was available on account of the sale took place on various dates prior to the search.
The learned AR also submitted that the assessee has provided all the details of the factory premises during assessment proceedings and even the assessee continued to be in possession of the factory premises after the initial part of the 3 years. Our attention was drawn to the statement of the rent summary placed at pages 44 to 47 of the Paper Book. It was submitted that it is obvious for the assessee not to keep the cash at the business premises, and it is always wise to keep the cash at safe premises.
We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find that initially the assessee in the instant case has not given access to the books of accounts, cash book etc., which are maintained in the computer. However, from the perusal of the record, it is clear that the said electronic computer, etc., were sealed by the Department and thereafter, it was accessed only on 09.12.2013. Revenue had failed to point out the efforts undertaken by it either to retrieve or find out user id / password of computer immediately after the search. In this age of technology, the user ID and password can always be retrieved with the help of various software and technical help. However, the Department in the present case has not resorted to taking any such help as is clearly discernible from the record of the assessee. Further, the Department has also not taken any other effort to call or summon the Accountant of the assessee with whom allegedly the user ID and password of the computer were available. The appellant / revenue is not helpless and it can use all its powers under the Act to compel / force the assessee to share the user id, and password of the computer and the revenue can use its power under the Act to take coercive measures against the assessee and also impose a penalty for non-cooperation but nothing has been done in the present case except to sit idle and wait for the assessee to provide the information to the Department. As mentioned herein above, the Department Page 8 of 10 retrieved the data on 9/12/2013 after having access to the system, the same is clear from the Mahazarnama at page 2, of the paper book.
Further, no question was asked by the search team as to whether the assessee had any other premises or factory other than the premises, which was the subject matter of the search. Incidentally, in the present case, cash was found from the business premises and residence of the assessee however, no question was asked about whether the assessee had any other factory or not. Admittedly, the assessee had the availability of cash as per books of accounts and it is not mandatory for the assessee to keep the cash only in the business premises of the assessee. Nonetheless, once the cash has been deposited, as per the cash balance available on the date of search in the books of accounts, it cannot be said that the said cash which was subsequently deposited was unexplained. In light of the above, the order of the ld.CIT(A) calls for no interference.
In the light of the above, we do not find any merit in the grounds of appeal raised by the Revenue and accordingly, the appeal filed by the revenue is dismissed.
In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the Open Court on 31st October, 2022.