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ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, KANPUR vs SHRI BHAGWAN SINGH, MATHURA | BharatTax

ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, KANPUR vs. SHRI BHAGWAN SINGH, MATHURA

ITA 446/LKW/2023Status: DisposedITAT Lucknow30 September 2025AY 2021-22Bench: SHRI KUL BHARAT (Vice President), SHRI ANADEE NATH MISSHRA (Accountant Member)1 pages

AI SummaryDismissed

Facts

Shri Bhagwan Singh and Shri Sunil Garg, employees of M/s. Giriraj Ornaments, were intercepted with cash and jewellery. They claimed it belonged to M/s. Giriraj Ornaments, but lacked documentation. The owner, Shri Sachin Agarwal, eventually owned up and disclosed it in his return. The Assessing Officer made protective additions in the hands of Bhagwan Singh and Sunil Garg, which the CIT(A) deleted.

Held

The Tribunal held that since the substantive addition of the cash and jewellery was already considered and accepted in the hands of Shri Sachin Agarwal, whose assessment had attained finality, there was no justification for sustaining the protective additions in the hands of the respondents. Consequently, the appeals filed by the Revenue were dismissed.

Key Issues

Whether protective additions in the hands of employees are justified when the substantive addition has been accepted and finalized in the hands of the principal owner?

Sections Cited

132A, 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW

Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA

For Appellant: Shri Anurag Sinha, Advocate

(A). These appeals have been filed by the different assessees against the impugned appellate order dated 16.10.2023 of the Ld. Commissioner of Income Tax (Appeals), Kanpur - 4 [“Ld. CIT(A)”, for short] for the A.Y. 2021-22. Grounds of appeal are as under: - 1.

1.

The Ld. CIT (A)-IV, Kanpur has erred in law and on facts in deleting the additions of Rs.3,24,20,035/- on account of 1/2 of the value of seized jewellery and 5,00,000/- on account of ½ of the seized cash made by the Assessing Officer on protective basis without appreciating the facts that impugned addition was based upon cash and jewellery found and seized from the possession of the assessee by the police party at Banda and the assessee has no documents to substantiate ownership of the same.

2. The Ld. CIT (A)-IV, Kanpur has erred in law and on facts in deleting the additions of Rs.3,24,20,035/on account of 1/2 of the value of seized jewellery and 5,00,000/on account of 1/2 of the seized cash made on protective basis in the hands of the assessee by the Assessing Officer without appreciating the facts that the substantive addition of the corresponding amount made in the hands of Shri Sachin Agarwal (PAN: AKMPA3554D) is still under consideration to attain finality before the Hon'ble ITAT in appeal IT(SS)A No. 78/AGR/2023.

3.

That the above grounds are without prejudice to each other and appellant craves leave to add or amend any other more ground of appeal as stated above as and when needs for doing so may arise.”

1. The Ld. CIT (A)-IV, Kanpur has erred in law and on facts in deleting the additions of Rs.3,24,20,035/- on account of 1/2 of the value of seized jewellery and 5,00,000/- on account of 1/2 of the seized cash made by the Assessing Officer on protective basis without appreciating the facts that impugned addition was based upon cash and jewellery found and seized from the possession of the assessee by the police party at Banda and the assessee has no documents to substantiate ownership of the same.

3. That the above grounds are without prejudice to each other and appellant craves leave to add or amend any other more ground of appeal as stated above as and when needs for doing so may arise.” (A.1) At the time of hearing, Revenue was represented by Shri Punit Kumar (CIT-DR) and the assessee was represented by Shri Anurag Sinha (Advocate), who joined virtually. After hearing both sides and perusing the records, the relevant facts which are not in dispute are that police intercepted Shri Bhagwan Singh and Shri Sunil Garg (the respondents in the present two appeals before us) with cash of Rs.10,00,000/- and gold jewellery weighing 20.678 Kg (valued at Rs.6,48,40,070/-). Both of them are employees of M/s. Giriraj Ornaments (Proprietor: Mr. Sachin Agarwal); and during investigation they stated that the aforesaid Page 3 of 5 cash of Rs.10,00,000/- and jewellery valued at Rs.6,48,40,070/- belonged to M/s. Giriraj Ornaments. However, they had no documentary evidence in support of the claim that the aforesaid cash and jewelry belonged to M/s. Giriraj Ornaments. The said cash and jewellery were requisitioned under section 132A of I. T. Act. During assessment proceedings, both Shri Bhagwan Singh and Shri Sunil Garg submitted that the aforesaid cash and jewellery belonged entirely of M/s. Giriraj Ornaments, the proprietary concern of M/s. Sachin Agarwal. Eventually, Mr Sachin Agarwal owned up and disclosed the aforesaid cash and jewellery in his return of income. However, 50% of each of aforesaid cash and jewellery was added in the hands of each of aforesaid Shri Bhagwan Singh and Shri Sunil Garg; on protective basis. The cash and jewellery were equally divided between the two, resulting in protective additions of ₹5,00,000/- (cash) and Rs.3,24,20,035/- (jewellery) in the hands of each, aggregating to Rs.3,29,20,035/-. In appeal, the Ld. CIT(A) deleted the said additions after noting that the cash and jewellery had already been considered in the case of Shri Sachin Agarwal, who was the actual owner and had disclosed the same in his return of income. The present appeals have been filed by the Revenue against the aforesaid impugned appellate orders of the Ld. CIT(A). However, it is now on record that in the case of Shri Sachin Agarwal, the matter has attained finality vide order dated 28.03.2025 passed by the Agra Bench of the Income Tax Appellate Tribunal (ITAT) in for A.Y. 2021-22 in DCIT, Central Circle vs. Shri Sachin Agarwal. By the said order, the Agra Bench dismissed the Department’s appeal in view of the fact that the aforesaid cash of ₹10,00,000/- and jewellery of ₹6,48,40,070/-, (B) At the time of hearing, the Ld. Departmental Representative left the matter in dispute in the present appeals before us, to the discretion of the Bench. The Ld. Counsel for the assessees submitted that the protective additions made in the cases of Shri Bhagwan Singh and Shri Sunil Garg are liable to be deleted since the corresponding amounts already stand considered substantively in the hands of Shri Sachin Agarwal and the issue has attained finality vide the aforesaid order dated 28.03.2025 passed by the Agra Bench of ITAT. We are satisfied with the submissions made by the Ld. Counsel for the assessee. There is no dispute that Shri Sachin Agarwal has offered the aforesaid cash and jewellery to tax in his return of income and the assessment has been upheld by the Agra Bench of the Tribunal vide order dated 28.03.2025. In view of these circumstances, there is no justification for sustaining the protective additions in the hands of the respondents, namely, Shri Bhagwan Singh and Shri Sunil Garg in the present appeals. Accordingly, the impugned orders of the Ld. CIT(A) are upheld and appeals filed by the Revenue are dismissed.