THE ACIT, CENTRAL CIRCLE-1(2)., AHMEDABAD vs. PAWAN SATYNARAYAN JALAN, AHMEDABAD

PER WASEEM AHMED, ACCOUNTANT MEMBER:

In this bunch of appeals two appeals are filed by the Revenue and one appeal has been filed by the assessee against the orders of Ld. Commissioner of Income- Tax (Appeals) involving respective Assessment Years.

First we take up IT(SS)A No.134/Ahd/2021 for A.Y. 2018-19 2. The Revenue has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the additions made by the AO in the order u/s 153A on legal grounds that the additions should have been made u/s 153C, without appreciating the fact that provisions of section 153C empowers the Assessing Officer to assess or re-assess the income of the person other than searched person, but the assessee being searched person was squarely covered under section 153A. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in accepting the contention of the assessee that the assessment u/s 153A is to be made solely on the incriminating material found during the search carried out in the case of the concerned assessee and has failed to appreciate that it has added words in Section 153A, which is not permissible in law. 2.1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s.132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2.2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred by not considering the decision of Hon'ble Jurisdiction High Court in its proper perspective in the case of Pr.CIT Vs. Saumya Construction P. Ltd. 387 ITR 529 (Guj), as this judgment lays the principle that assessment should be connected with something found during the search or requisition, viz. incriminating material which reveals undisclosed income. This decision nowhere states that addition u/s 153A can only be made if incriminating material is found during search from the premises of the concerned assessee. 2.3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or reassess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 3 2.4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XlV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s.132 after 31/5/2003.1st we take up the issue raised by the revenue in ground No. 5 of its appeal which is based on merit. 2.5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. Further, the AO is duty bound to assess correct income of assessee as held by the Hon'ble Apex Court in the case of Mahalaxmi Sugar Mills, 160 ITR 920(SC). 2.6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that in all the assessments framed u/s 153 A, authorization u/s 132 was issued and incriminating material was found during the course of search in the premises controlled by the searched group which directly belong to the concerned assessee. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has misinterpreted and extrapolated the judgment of Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla, 380 ITR 573 (Del) as this judgment lays the principle that an assessment has to be made under this section only on the basis of seized material and the assessment cannot be arbitrary. This decision also nowhere states that addition u/s 153A can only be made if incriminating material is found during search from the premises of the concerned assessee. 3.1. On the facts and circumstances of the case and in law, the Ld.ClT(A) has erred in not appreciating the decisions of Hon'ble Delhi High court in the case of CIT Vs Anil Kumar Bhatia [211 Taxman 453, 352 ITR (493)] & Kerala High Court in the case of E.N. Gopakumar vs. Commissioner of Income-tax (Central) [2016] 75 Taxmann.com 215 (ker.) wherein Courts held that assessments in a search case can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132. 4. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in his interpretation of Section 153A by holding that separate assessments have to be framed u/s 153A as well as 153C for the same assessee for the same assessment year who has been searched u/s 132, depending upon the number of premises where incriminating materials were found belonging to the assessee from various premises controlled by the "assessee group"? Thus, as held by the Ld CIT(A), the question is "is it permissible to have parallel assessment proceedings u/s 153A as well as 153C to be carried out in each case for each assessment year, resulting into ‘n’ number of assessment orders for each year which is totally contrary to the provisions of the Act as Section 153A clearly states that there will be one assessment order for each year in case of an assessee subjected to search u/s.132

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 4 5 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting both the addition of Rs.1,50,00,000/- as unexplained cash payment u/s. 69C of the IT Act and the addition of Rs.9,00,00,000/- being unexplained cash receipts u/s. 69A of the IT Act holding that loose papers seized are "dumb documents' which is not corroborated by any material, hence could not be relied upon, without appreciating the fact that the date and amounts of cheque transactions appeared in the seized loose papers duly corroborate with the books of accounts maintained by respective persons/entity of Sankalp Group. However, even though cheque transactions were recorded but cash transactions were not recorded, which clearly establish that the seized loose papers are not "dumb documents" and they contain a record of unaccounted cash transactions. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 7. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.

4.1 Impugned diary was containing the entries in cash for the receipt as well as for the payment allegedly in the name of the assessee. It was also admitted by Shri Jigar Mandaviya that impugned transaction is of receipt and payment of cash in the diary which are pertaining to the assessee.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 5 4.2 The AO analyzed all the transactions recorded in the diary containing the receipt as well as payment in cash which were tabulated in the excel form which is recorded on pages 13 and 14 of the assessment order. The net effect of the transaction was found that the assessee has received a sum of ₹4.32 crores in cash and simultaneously has made payment in cash for ₹9.02 crores. The AO proposed to treat both the transactions of cash receipt and cash payment as unaccounted investment which is the income of the assessee.

4.3 The assessee in response to such show cause notice submitted that i. No addition can be made based on the statement of the 3rd party without providing the opportunity of cross verification. ii. Neither the assessee nor his family members have carried out any transactions of whatsoever with the group of Shri Kailash Goenka and his associates except very few financial transactions. iii. The impugned diary was found from the premises of the 3rd party and therefore the same belongs to such party. Accordingly the same cannot be used again the assessee. iv. The name of the assessee being Pawan Jalan is not appearing anywhere in the noting and jottings of the diary. Therefore no adverse inference can be drawn against the assessee. Likewise it does not contain any date except the date which is printed on the diary based on which it cannot be drawn that the particular transaction was carried out on the date printed on such diary. v. None of the entry shown in the diary has been endorsed or signed by the assessee. Therefore, no liability can be fastened on the assessee. vi. Furthermore, the transactions recorded in the impugned diary does not represent any income, expense, asset or liability and therefore the same is in the nature of dumped document. vii. Alternatively, the benefit of telescoping should be provided

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 6 4.4 However, the AO was not satisfied with the contention of the assessee on the reasoning that there was the sworn statement of the key employee of Shri Kaliash Goenka recorded dated 1st November 2018 wherein it was clearly mentioned that all the transactions contained in the impugned diary were carried out between Shri Kailash Goenka and the assessee. The statement of the key employee itself corroborate the transactions recorded in the impugned diary. Thus the different name mention in the impugned diary such as pavan/pavan(vikas)/Pavan Jhala/Pavan Jalal/Pavanji refers to one person i.e. Shri Pawan Jalan only.

4.5 There is an expressed presumption under the provisions of section 292C of the Act which states that the document found from the premises of the search party or in the course of survey proceedings that such document belongs to such person and the contents of such documents are true and correct. Thus the documents found from the premises of the search party cannot be treated as dumbed document, particularly, in the given facts and circumstances wherein it was admitted by the employee of Shri Kailash Goenka that such transactions of receipt and payment of cash was carried out with the assessee.

4.6 The statement recorded during the search proceedings under the provisions of section 132(4) of the Act while examining the necessary documents, can be used as an evidence in the proceedings of the Income Tax Act.

4.7 The demand of the assessee for cross examination is not acceptable as such demand was made at fag end of the assessment proceeding. Furthermore, the right to cross examination of witness is not provided in statutes. The Courts have also held that right to cross examination is no absolute right. All the evidences collected during search has been provided to assessee for rebuttal but the assessee failed to explain the transaction of cash payment and cash receipt despite availing sufficient opportunity.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 7 4.8 The transactions of cash payment and cash receipt has not been recorded in books of account by the assessee which is pre-requisite for availing the benefit of telescoping. Therefore, the assessee’s plea for telescoping is also not acceptable. Furthermore, the Hon’ble Supreme court in case of Anantharam Veerasinghaniah & Co. vs. CIT reported 123 ITR 457 also denied to provide the benefit of peak credit in absence of explanation from whom cash was received and paid.

4.9 Thus the AO in view of the above made the addition of Rs. 9 crores on account receipt of cash and 1.5 crores on account of payment in cash in the year under consideration. Similarly, an amount of 2 lacs and 2.82 crores was also added on account of receipt and payment in subsequent year.

6.49 In brief, if AO intends to rely, for the purposes of making addition to the total income of the assesses, on the deposition of a witness, then he has to summon such witness, record his statement, offer that witness to the assessee for cross examination and thereafter, if AO requires then he may re-examine the witness again. Similarly, where assessee wants to rely on the deposition of a person in support of the claim made by him (by assessee) then he has to follow the same procedure, examine the witness before the AO, offer the witness to the AO for cross examination and if assessee requires, the witness may be re-examined by him. Section 139 of the Indian evidence Act provides that, if a person appears before the AO to produce a document, he does not become a witness and there is no requirement of any cross-examination. 6.50 The AO had relied upon some pages of diary / loose papers seized from premises of Shri Jigar Mandaviya and Kailash Goenks as per annexure -6 of party no, A-b and A-13 of party ho. A-2 which were reproduced in assessment order at page no. 3 to 11. On perusal of said pages it may be appreciated that said alleged entries do not contain date and year. It is only on the basis of date printed on face of dairy, AO has assumed that transactions was on that particular date which is not correct as it is not corroborated with any independent evidences. 6.51 On perusal of statement of Jigar Mandaviya reproduced on page no, 16 to 18 of assessment order following facts are observed:

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 8 On perusal page no. 5 of assessment on which page no. 12 of seized materials was reproduced which reads as "50,00, OOP/- to Pa van against entry". To explain this transaction, Mr. Jigar Mandaviya mentioned that the said entry of Rs. 50.00 Lakh was introduced in their books of accounts being their unaccounted money and said entry was cash against cheque-j—^In this regard, the appellant submitted that he does not have any financial transaction with Mr, Jigar Mandaviya, Kailash Goenka and Sankalp Group. Has mentioned by Shri Jigar Mandaviya that said entry was cash against cheque. There is no such transaction of cheque in books of accounts and hence same is not proved. On perusal page no. 5 of assessment on which page no. 22 of seized materials was reproduced which reads as "50,00,0007- to Pavan Jhala against entry". To explain this transaction, Mr. Jigar Mandaviya mentioned that the said entry of Rs. 50.00 Lakh was cash against cheque. In this regard the appellant submitted that, he does not have any financial transaction with Mr. Jigar Mandaviya, Kailash Goenka and Sankalp Group. Has mentioned by Shri Jigar Mandaviya that said entry was cash against cheque. But there is no such transaction of cheque in books of accounts and hence the transaction is not proved. On perusal page no. 6 of assessment order on which page no. 56 of seized materials was reproduced which reads as "50,00,000/- to Pavan Jhala", To explain this transaction, Mr. Jigar Mandaviya mentioned that the said entry of Rs.50.00 Lakh was cheque against cash

In this regard the appellant submitted that he does not have any financial, transaction with Mr. Jigar Mandaviya, Kaiiash Goenka and Sankaip Group. Has mentioned by Shri Jigar Mandaviya that said entry was cheque against cash. But there was no such transaction through cheque in books of accounts and hence transaction is not proved. On perusal of page no. 7 of assessment order on which page no. 116 of seized materials was reproduced which reads as "1 cr Pawan Received". To explain this transaction, Mr. Jigar Mandaviya mentioned that the said entry of Rs. 1 cr was received from Pawan Jhala. In this regard the appellant submitted that he does not have any financial transaction with Mr. Jigar Mandaviya, Kaiiash Goenka and Sankaip Group. On perusal page no. 7 of assessment order on which page no. 175 of seized materials was reproduced which reads as "32,00,OQO/- to Pavanji against entry". To explain this transaction, Mr. Jigar Mandaviya mentioned that the said entry of Rs. 32.00 Lakh was cheque against cash. In this regard the appellant submitted that he does not have any financial transaction with Mr. Jigar Mandaviya, Kaiiash Goenka and Sankaip Group. Has mentioned by Shri Jigar Mandaviya that said entry was cheque against cash. But there is no such transaction in cheque in books of accounts and hence the same is not proved. On perusal page no. 7 of assessment order on which page no. 179 of seized materials was reproduced which reads as "50,00,000/- to Pavanji against entry. To explain this transaction, Mr. Jigar Mandaviya mentioned that the said entry of Rs. 50.00 Lakh was cheque against cash.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 9 In this regard the appellant submitted that he does not have any financial transaction with Mr. Jigar Manaaviya, Kaiiash Goenka and Sankaip Group. Has mentioned by Shri Jigar Mandaviya that said entry was cheque against cash. There is no such transaction through cheque in books of accounts and hence same is not proved. On perusal page no. 8 of assessment order on which page no. 195 of seized materials was reproduced which reads as "50 L Pavanji against entry". To explain this transaction, Mr. Jigar Mandaviya mentioned that the said entry of Rs. 50.00 Lakh was cheque against cash. In this regard the appellant submitted that he does not have any financial transaction with Mr. Jigar Mandaviya, Kailash Goenka and Sankalp Group. Has mentioned by Shri Jigar Mandaviya that said entry was cheque against cash. But there is no such transaction through cheque in books of accounts and hence the same is not proved. On perusal page no. 8 of assessment on which page no. 202 of seized materials was reproduced which reads as "50,00,000/- Pavanji received against entry". To explain this transaction, Mr. Jigar Mandaviya mentioned that the said entry of Rs. 50.00 Lakh was cash against cheque. In this regard the appellant submitted that he does not have any financial transaction with Mr. Jigar Mandaviya, Kaiiash Goenka and Sankalp Group. Has mentioned by Shri Jigar Mandaviya that said entry was cheque against cash. But there is no such transaction through cheque in books of accounts and hence the same is not proved. The AO has assumed that all such transaction belongs to Pawan Satyanarayan Jalan, i.e. appellant. The AO has not brought out any materials on record that transactions explained by Jigar Mandaviya as Cash against Cheque were reflected in book of accounts of appellant in the form of cheque. Hence the authenticity of the transactions recorded in the loose papers or the version of Shri Jigar Mandaviya does not found to be proved. 6.52 The said 22 pages of seized materials the AO did not indicate any date of transaction, place of transaction, nature of transaction (factually wrong asexplained in statement of Jigar Mandaviya as cash against cheque). Hence, said documents are dumb and non-speaking documents and cannot be made as basis of addition. 6.53 The predominant judicial view is that no arbitrary addition to the income can be made by the Assessing Officer based on the dumb documents, loose papers containing scribbling, rough/vague notings in the absence of any corroborative material, evidence on record and finding that such dumb documents had materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by the appellant. 6.54 It shall not be out to place to mention that the Hon'ble Supreme Court in the case of K.P. Varghese v. ITO [19811 7 Taxman 13/131 ITR 597 held that the fictional receipt cannot be deemed to be a receipt in the absence of any cogent material to support the factum of actual receipt. 6.55 The Hon'ble High Court of Delhi in case of CIT v. O.K. Gupta [20081 174 Taxman 476 upheld the order of the tribunal wherein it was held that Ad-Hoc/Dumb Documents without any corroborative evidence/finding that the aileged documents have materialized into transactions cannot be deemed to be the income of the assessee. 6.56 On similar lines, the Hon'ble Delhi ITAT in case of Ashwini Kumar v. ITO J1991] 3jHTP483held that in the case of dumb document, revenue should collect necessary evidence to prove that the figures represent incomes earned by the assessee.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 10

6.57 The Mumbai ITAT in case of S.P. Goya! v. Dy. CIT f2002] 82 ITD 85 (TM) held as under: "...,........ loose papers cannot be termed as books of an assessee maintained for any previous year. Loose sheet of paper torn out of a diary could not be construed as books for the purpose of section 68. Addition could no: be made simply en the basis of certain nothings on loose sheets of a diary without any corroborative evidence in the form of extra cash, jewellery or investment outside the books. The loose papers appear to be part of a 1992 diary- However, these loose papers consist of pages torn out from March, April, November and December. There is no closing balances or opening balances and there is no reconciliation of these entries. Therefore, it cannot be termed as books maintained by the assessee during the previous year. . . . The loose paper in itself has got no intrinsic value. ...When it is a mere entry on a loose sheet of paper and if the assessee claims that it was only a planning, not supported by actual cash, then there has to be circumstantial evidences to support that this entry really represent cash of Rs. 60 lakhs. There is no such evidence found by the Revenue in the form of extra cash, jewellery or investment outside the books." 6.58 The Mumbai ITAT in case of D.A. Patel v. Dy. CIT [20001 72 IIP 340 held that simply because a sheet of paper was found during the search at the premises of an assessee, he could not be saddled with a tax liability unless it could conceivably be related to the assessee in some reasonable manner. 6.59 On the similar lines, the Mumbai ITAT in case of Amarjit Singh Bakshi (HUF) v. Asstt. CIT [20031 86 ITD 13 (Delhi) (TM) held that any noting in the loose sheet is no evidence by itself. An entry in the books of account maintained in (he regular course of business is relevant for purposes of considering the nature and impact of a transaction, but nothings on slips of paper or loose sheets of paper cannot fall in this category. Nothings on loose sheets of paper are required to be supported/corroborated by other evidence which may include the statement of a person, who admittedly is a party to the nothings. It was further observed in that case that the provisions of the Indian Evidence Act are not strictly applicable to the proceedings under the IT Act, but the broad principles of law of evidence do apply to such proceedings. 6.60 The Hyderabad bench of ITAT in case of Nagarjuna Construction Co. Ltd. v. Dy. CIT [20121 23 taxmann.com 239/52 SOT 178 (URO) held as under:- ".............The basis for addition is only note book/loose slips. These note books/loose slips are unsigned documents. The Assessing Officer nas not established nexus between the note book loose slips with accrual actual/receipt of interest. The note book/loose slips seized found during the course of search is a dumb document having no evidentiary value, no addition can be made in the absence of corroborative material. If there is circumstantial evidence in the form of promissory notes, loan agreement and bank entries, the addition is to be made on that basis to the extent of material available. The assessee is not expected to explain the loose papers found as there is no evidence other than note book/loose slips regarding accrual of interest. It is held no addition can be made on the basis of dumb documents/note book/loose slips in the absence of any other material to show that the assessee has carried on money lending business. Nothing on the note book/diary/loose sheets are required to be supported/corroborated by other evidence and are also include the statement of a person who admittedly is a party to the noting and statement from all the persons whose names there on the note book/loose slips and their statements to be recorded and then such statement undoubtedly should be confronted to the assessee and he has to be allowed to cross examine the parties. In the instant case, undoubtedly no

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 11 statement from the parties whose names found in the note book/loose slips has been brought to the notice and as such entire addition in the hands of the assessee on the basis of uncorroborated writings in the loose papers found during the course of search is not possible." 6.61 The Hon'ble MP high Court in case of CtT v. C.L Khatri [2005] 147 Taxman 652 held that on the basis of loose slip not bearing any date and aiso not stating as to which period they related, no estimate of household expenses could be made for a particular year. In the absence of any other evidence, the estimate of household expenses in a particular year with reference to income of later year or future year was arbitrary and illogical. The Tribunal was held to be justified in deleting the additions. 6.62 The Calcutta Bench of ITAT in case of T.S. Venkatesan v. Asstt. CIT [20001 74 ITD 298 held that in the absence of corroborative evidence, addition of undisclosed income could not be made simply on the basis of entries on loose papers recovered from the residence of a third party and certain general statements of said party. 6.63 The Hon'ble Punjab and Haryana High Court in case of CIT v. Atam Valves (P.) Ltd. [2009] 184 Taxman 6 dismissed the revenue's appeal and held that no substantial question of law arose out of the Order of the Tribunal. In this case, a survey was conducted u/'s. 133A and certain incriminating documents were found including a 'Slip Pad' containing payment of wages to various persons. The slips were written by Manoj Jain, an employee of the assessee, who was confronted with the slips, apart from questioning of the Director. It was held by the Tribunal that even though explanation of the assessee that the loose papers did not relate to payment of wages during the year in question may not be accepted, in absence of any other material, the loose sheets by itself were not enough to make addition as per estimate of the A.O. It was observed by the Tribunal (as quoted):- "Now the question is regarding estimating the income on the basis of these loose slips. In our opinion, the Assessing Officer is not justified in estimating the sales on the basis of loose slips without substantiating that the assessee has actually made the sales to that extent of estimation made by the Assessing Officer and having no iota of evidence in the form of sale bills or bank account or movable and immovable property which represent earning of unaccounted income by the assessee. As such, the Id. CIT (A) to that extent is justified in holding that estimation of sales on the basis of loose slips represented payment of wages is not possible." 6.64 In case of Addl. ITO v. T. Mudduveerappa Sons [19931 45 JTD 12 (Bang.), the Bangalore Bench of ITAT held that in absence of any external evidence, addition cannot be resorted to only on the basis of loose papers. The department had not brought on record any evidence to prove conclusively that the seized documents contained details of secreted profits which were chargeable to tax. No doubt, the seized papers contained statement in figures of what appeared to be the financial results of certain unnamed transactions but there was nothing either in law or in logic to warrant the conclusion that the figures denoted secreted profits which were chargeable to tax. The details of distribution contained in the seized papers did not by themselves present a preponderance of probabilities so as to support department's case that what was distributed was taxable income. 6.65 In Asstt. CIT v. Karodilal Agarwal [1994] 50 TTJ (Jab.) 393 a diary seized during search contained certain jottings. The Tribunal held that the jottings in diary neither represented books of account nor any document and, therefore, presumption under section 132(4A) was not available and the addition made on the basis of the said jottings was deleted. 6.66 In the case of M.V. Mathew v. ITO [19931 46 TTJ (Coch.) 353

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 12 unaccounted sum found noted in a diary and the assessee claimed that the same represented deposits from certain parties. The parties denied having deposited the amount. The Assessing Officer treated the amount as advance made by the assessee and addition on that account was made. In the absence of clinching evidence to show that the impugned sum was advanced the amount was treated as deposited and the addition made was deleted. 6.67 In ITO v. W.D. Estate (P.) Ltd. [19931 45 1TD 473 (Bom.), the Assessing Officer made addition on the basis of a file, a table diary belonging to a disgruntled employee found during search at his premises. This showed sales and sale amounts allegedly received as "on" money by the assessee. However, there was absolutely no evidence to show that the assessee in fact received "no" money payments. The assessee contended that such additions were based on hearsay evidence. 6.68 Recently the Delhi ITAT in case of Neeraj Goe! v. ACIT [IT Appeal No. 5951 (Delhi) of 2017, dated 21-3-2018] held that addition on account of alleged interest income is not sustainable in the eyes of law, because the document does not mention the name of the assessee, does not bear the signature of the assessee, not in the handwriting of the assessee, documents has imply jottings of certain figures and does not indicate whether it is an investment or deposit or loan, hence, the said seized document is dumb/bald and even otherwise, the same was never found either in the possession or control of the assessee. Therefore, on this basis, I delete the addition in dispute and accordingly reverse the orders of the authorities below. 6.69 The Mumbai ITAT in case of ITO v. Kranti Impex (P.). Ltd. [IT Appeal No. 1229 (Mum.) of 2013, dated 28-2-2018 ] held that since the impugned seized papers are undated,.have no acceptable narration and do not bear the signature of the assesses or any other party, they are in the nature of dumb documents having no evidentiary value and cannot be taken as a sole basis for determination of undisclosed income of the assessee. When dumb documents like the present loose sheets of papers are recovered and the Revenue wants to make use of it, the onus rests on the Revenue to collect cogent evidence to corroborate the noting therein. The Revenue has failed to corroborate the noting by bringing some cogent material on record to prove conclusively that the noting in the seized papers reveal the unaccounted on-money receipts of the assessee. Further, no circumstantial evidence in the form of any unaccounted cash, jeweliery or investments outside the books of account was found in course of search in the case of assessee. Thus, the impugned addition was made by the AO on grossly inadequate material or rather no material at all and as such, deserves to be deleted. Hence, we are of the view that an assessment carried out in pursuance of search, no addition can be made simply on the basis of uncorroborated noting in loose papers found during search because the addition on account of alleged on-money receipts made simply on the basis of uncorroborated noting and scribbling on loose sheets of papers made by some unidentified person and having no evidentiary value, is unsustainable and bad-in-law. 6.70 The Mumbai ITAT in case of Asstt. CIT v. Layer Exports (P.) Ltd. [20171 88 taxmann.com 620 held that additions are to be made on basis of tangible evidence and not solely on basis of estimations and extrapolation theory. Additions could not be sustained merely on the basis of rough notings made on a few loose sheets of papers unless the AO brought on record some independent and corroborative materials to prove irrefutably that the notings revealed either unaccounted income or unaccounted investment or unaccounted expenditure of the assessee. Additions could not be made simply on the basis of rough scribbling made by some unidentified person on a few loose sheets of paper. Since the seized papers were undated, had no acceptable narration and did not bear the signature of the assessee or any other party, they were in the nature of dumb documents having no evidentiary value and could not be taken as the sole basis for determination of undisclosed

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 13 income of the assessee, thus, no addition can be made by AO on grossly inadequate material or rather no material a? all and as such deserved to be deleted. 6.71 The Hon’ble in case of Pr. CIT v. Umesh Ishrani F20191 108 taxmann.com 437 (Borrj.) held that since the tribunal concluded that entries reflected in loose papers were not corroborated with any other evidence on record, therefore the Tribunal was justified in deleting impugned additions made by revenue. 6.72 Further reliance can also be placed on the following decisions with regard to the addition is concerned which is based on dumb documents:- - Asstt, CIT v. Dr.Kamla Prasad Singhf20101 3 ITR (TRIB.) 533 (Pat.): - Pioneer Publicity Corpn. v. Dy. CIT [20001 67 TTJ f Delhi) 471: - CIT v. Girish Chaudhary f20071 163 Taxman 608/120081 296 ITR 619 (Delhi): - Asstt. CIT v. Radheshyam Poddar [19921 41 ITD 449 fCal.): - S.K. Gupta v. Dy.CIT [1999] 63 TTJ (Delhi) 532; - Satnam Singh Chhabra v. Dy. CIT [20021 74 TTJ (Lucknow) 976: - CIT v. S.M. Aggarwal [20071162 Taxman 3/293 ITR 43 (Delhi): - Pankaj Dahyabhai Patel (Huf) v. Asstt. CIT M9991 63 TTJ 790 (Ahd.): - N.K. Malhan v. Dy. CIT [2005] 91 TTJ (Delhi) 938; - Pr. CIT v. Ajanta Footcare (India) (P.) Ltd. [20171 84 taxmann.com 109fCal.): - Dy. CIT v. C, Krishna Yadav f20111 12 taxmann.com 4/T20111 46 SOT250(Hvd.)(URO); - Harish Textile Engineers Ltd. v. Dy. CIT [20151 63 taxmanrLCom 66/379 ITR 160/r2016] 236 Taxman 420(Bom): - CIT v. Jai Pal Aggarwal [20121 28 taxmann.com 269/T20131 212 Taxman 1 (Delhi) 6.73 Therefore the well settled legal position is that a non-speaking document referred to as a "Dumb Document" without any corroborative material, evidence on record and finding that such document has materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by such assessee, has to disregarded for the purposes of assessments to be framed u/s 153A and 153C of the act. 6.74 The aforementioned legal position also gathers support from the judgment of She Hon'ble Supreme Court in case of CBI v. V.C. Shukla 1998__taxmann.com 2155 popularly known as Jain Hawala Case wherein n was held that any presumption of transaction on some vague: tenuous and dubious entries in a sheet of paper is not rational and hence legal unless there is corroboration by corresponding entry in regular accounts of both the parties to the transaction. In this case it was held that entries in Jain Notebooks held on facts admissible under section 34, but file containing loose sheets of papers are not "book" and hence entries therein not admissible under section 34. Further it was also held in this case that entries in books of account shall not alone be sufficient evidence to charge any person with liability. Entries even if relevant are only corroborative evidence. Independent evidence as to trustworthiness of those entries is necessary to fasten the liability. In view of these facts it was held by the Honorable Supreme Court that entries made in the Jain Hawala diaries are under section 34, but truthfulness thereof not proved by any independent evidence. It was also held in this case that "books" ordinarily mean a collection of sheets of paper or other material, blank, written, printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed ss "book" for they can be easily detached and replaced. The Supreme Court further went on to state that even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness fix a liability upon a person. 6.75 The above view further gathers reinforcement from the judgment of the Hon'ble Supreme Court in case of Common Cause v. Union of India [2017] 77 taxmann.com 245/245 Taxman 214/394 ITR 220 popularly known Sahara diaries and Aditya Birla diaries case. In

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 14 this case, the Hon'ble Supreme Court, following the judgment rendered in case of V.C. Shukla (supra), laid down the following principles:- i. Entries in loose papers/sheets are irrelevant and not admissible under section 34 of the Evidence Act. It is only where the entries are in the books of account regularly kept, depending on the nature of occupation, that those are admissible; ii. As to the value of entries in the books of account, such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. Even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability; iii. The meaning of account book would be spiral note book/pad but not loose sheets; iv. Entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another; v. Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is not enough merely to prove that the books have been regularly kept in the course of business and the * entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts; vi. The Court has to be on guard while ordering investigation against any important Constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence it is not admissible in evidence. 6.76 It is pertinent to mention that the aforementioned judgments of the apex court have been rendered not in direct context and interpretation of the Income-tax Act'1961 but still holds good for fastening the liability under the Income-tax Act also as far as the dumb documents are concerned. 6.77 Relying on the judgment of the apex court in case of Common Cause (supra), the Hon'ble Bencr cf ITAT. Ahmedabad in case of Nishant Construction (P.). Ltd. v. ACIT [ITA No. 1502/AHD/2015], held that in the absence of any corroborative evidence, loose sheet can at the most be termed as "dumb document" which did not contain full details about the dates, and its contents were not corroborated by any material and could not relied upon and made the basis of addition. 6.78 Reliance can be also placed on the judgment of the Panaji Bench of ITAT in case of Abhay Kumar Bharamgouda Patil v. Asstt. CIT [20181 96 taxmann.com 377 wherein the judgement of the apex court was relied upon. 6.79 In view of the above discussion, the additions made by the AO are not found sustainable legally and on factual background of the case and hence the same are deleted. Thus the grounds of appeal are allowed.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 15

9.1 From the preceding discussion, we note that the addition has been made in the hands of the assessee based on the rough diary discovered from the premises of the 3rd party. It was alleged by the AO that the name of the assessee is appearing therein. Likewise, in the statement furnished by Shri Jigar Mandaviya, it was further admitted that the transactions recorded in the rough diary were carried out with the assessee. Besides the rough diary and the statement, there was no other material discovered by the revenue to establish that the noting and jottings in the rough diary are supported by other tangible materials.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 16 9.2 The Hon’ble Supreme Court in the case of CBI v. V.C. Shukla 1998 taxmann.com 2155 (SC) has held that Loose sheets have been ruled out as of any evidentiary value. Loose sheets cannot be accounts books of a party. Even if it is taken as an informal accounting it is not the record of the assessee. Even assuming such entries as correct and authentic they cannot without independent evidence fix a liability upon a person. In that connection the court also referred to Section 9 of the Evidence Act and observed that even if such entries are admissible under the said provisions to support an inference about correctness of the entries still such entries would not suffice without supportive independent evidence. They have no probative value in the absence of some corroborative primary evidence of the reality of such transaction shown in the noting in such loose sheets of paper. Even entries in the books of account need corroboration before acting against the third party on the basis of any entry in the books of account of a person. Accordingly, we hold that there cannot be any addition in the hands of the assessee based on such rough diary.

9.3 Further the Hon'ble High Court of Delhi in case of CIT v. D.K. Gupta [2008] 174 Taxman 476 upheld the order of the tribunal wherein it was held that Ad- Hoc/Dumb Documents without any corroborative evidence/finding that the alleged documents have materialized into transactions cannot be deemed to be the income of the assessee. The relevant part of the judgment is reproduced herein under:- "The tribunal returned a finding of fact that there is no corroborative or direct evidence to presume that the notings/jottings had materialised into transactions giving rise to income not disclosed in the regular books of account. 4. Consequently, the tribunal upheld the findings of the Commissioner of Income- tax (Appeals) and agreed with the view taken by the latter that the assessee was liable to tax only on those receipts which had been proved to be income in the hands of the recipient. As a result thereof, the Tribunal found no reason to interfere with the findings recorded by the Commissioner of Income-tax (Appeals) on the ground that the same were based on valid and cogent materials placed on record and also produced before the Assessing Officer during the course of assessment proceedings. The Tribunal also noted that all the evidences, materials, explanations were furnished before the Assessing Officer and it is on the basis of such material that the Commissioner of Income-tax (Appeals) had arrived at the conclusion that no addition was warranted on the basis of the seized diaries. 5. We have examined the impugned order in detail and have also heard the counsel for the parties and we find that the issues sought to be raised before us are purely issues of fact. The Tribunal, being the final fact-finding authority, has returned a certain set of facts. We

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 17 find no perversity in such findings and, consequently, no question of law, what to speak of a substantial question of law, arises for our consideration. The appeal is dismissed."

9.4 It is also pertinent to note that CBDT in its instruction issued in vide FNO. 286/98/2013-IT(Inv.II) dated 18th December 2014 has discouraged the revenue authority to make any addition merely based on statement furnished during search. The relevant part of the instruction reads as under: Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T.Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely.

9.5 Indeed, the assessee under the principles of natural justice has a right to cross examine of the witness of the Department. The revenue has relied on the statement of Shri Jigar Mandaviya but no opportunity of cross examination was granted to the assessee which is against the principles of natural justice. The Hon’ble Supreme Court in the case of Tin Box Co. Vs. CIT reported in 249 ITR 491 where it was held as under: That the assessee could have placed evidence before the first appellate authority or before the Tribunal was really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of setting out his case. Therefore, the Tribunal was not justified in not setting aside the assessment order in spite of a finding arrived at by it that the ITO had not given a proper opportunity of hearing to the assessee.

9.6 It is also interesting to note that in the present case the documents were recovered from the 3rd party and the provisions of section 292C of the Act presumes

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 18 that such papers belongs to the search party. Such presumption cannot be used against the assessee.

9.7 In view of the above and after considering the facts in totality, we do not find any infirmity in the order of the learned CIT-A. Accordingly we decline to interfere in his order. Thus the AO is directed to delete the addition made by him. Hence the ground of appeal of the revenue is hereby dismissed.

10.1 In the result appeal of the Revenue is hereby dismissed.

Coming to ITA No. 182/Ahd/2021 an appeal by the assessee for the Assessment year 2019-20

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 19 13. During the course of search there were gold weighing 8759.7 grams found from the residential premises of assessee and bank lockers held by the assessee and his family member, out of which gold weighing 2158.16 grams was seized by the search team.

13.1 The assessee during the assessment proceeding submitted that he and his family member own gold weighing 9311.6 grams out of which he and his family member have declared gold weighing 4875.9 grams in wealth tax return filed for the assessment year 2015-16. Further gold weighing 632.2 grams was purchased by daughter in-law namely Vidhi A. Jalan in her individual capacity as on 01-12- 2015 for which he furnished copy of invoice. The Assessee also claimed that Pawan Jalan HUF also declared gold weighing 803.5 grams in wealth tax return and remaining 3000 gram of gold jewelry belongs to his parents. The assessee with respect to gold jewelry owned by the parent submitted that his parent at the time of search was at the age of 86 and having married life of 65 years and being from MADVADI cast in which it is custom that friends and relative give gift in the form of jewelry at various occasion. Therefore, the gold of 3000 grams owned by parent are very reasonable.

13.2 The assessee also submitted that as per CBDT instruction no. 1916 dated 11th may 1994 credit of gold jewelry of 100 grams per male member, 250 grams for per unmarried female member and 500 gram for per married female member in family should be granted. In this regard, the assessee submitted family details.

13.3 However the AO did not accept the explanation of the assessee with respect to the gold jewelry of 3000 grams, belonging to the parents. The AO found that the at the time of search various members of the family made claimed over the jewelry found during the course of search but the father of assessee has not made any claim and the gold of 3000 grams was claimed in the name of the mother Smt. Kanta Devi only. But the assessee failed to demonstrate the source of acquisition of

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 20 jewelry by the mother as she was not filling either income tax return or wealth tax return. The explanation that the mother is of the age of 86 and marital life of 65 years and during this period she acquired jewelry is devoid of any merit. Therefore the AO after giving credit of 500 grams of gold as per CBDT instruction treated the remaining 2500 grams of gold claimed in the name of mother as unexplained investment of the assessee. Thus the AO worked out the value of the unexplained gold at Rs. 72.5 lacs (2500 x 29000) and added the same to the total income of the assessee.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 21 claimed by the appellant that it was a large family consists of various persons and considering their social status, their income tax returns of the preceding years, receipt of jewellery on various festivals, marriage, mundan, birthday or anniversary and otner celebrations as gift cannot be denied. Therefore, the contention of the appellant in this regard Is partly correct and accepted. Taking the just and reasonable view it would be fitness on the fact that 50% of the aforesaid excess gold jewellery could be treated from the aforesaid sources such as.gifts etc. and balance 50% to be treated as sourced from undisclosed income of the appellant. In other words, the addition of the excess jewellery of 924.05 gms is confirmed which works out to Rs.26,79,745/- (@ Rs. 29000 per 10 gms as taken by the Govt. approved valuer during the course of search). Thus the undisclosed investment to the tune of Rs.26.79,745/- is confirmed and relief is granted for the balance addition. The ground of appeal is partly allowed.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 22 7. Vidhi A Jalan Daughter inlaw 500 grams 8. Anveer A Jalan Grandson 100 grams Total 2150 Grams

18.1 The learned AR in support of his contention vehemently relied on the order of Jaipur Tribunal in the case of Ram Prakash Mahawar vs. DCIT reported in 115 taxmann.com 241. The learned AR for the balance amount of 298.1 grams of gold submitted that there should not be any addition to the total income of the assessee as it belongs to the entire family who have been paying income tax on their respective hands. It was also prayed by the learned AR that the family status is also important to hold that they have received certain gifts of gold on different occasions which cannot be made subject to tax under the provisions of the income tax Act.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 23 answered by the Jaipur tribunal in the case of Ram Prakash Mahawar vs. DCIT (supra) the relevant extract of the order is reproduced as under: 2.6 We have considered the rival submissions as well as the relevant materials available on record. The first issue is regarding the addition sustained by the ld. CIT(A) to the tune of Rs. 4,57,404/- on account of unexplained gold jewellery by rejecting the claim of the assessee being acquisition of the said jewellery by way of purchases made from time to time and also recorded in the books of account of the assessee. There is no dispute regarding the fact that jewellery to the extent 343.328 gms. represents the purchases made by the assessee from time to time which is duly supported by the purchase bills found during the search and seizure action. The said quantity of jewellery is duly recorded in the balance sheet/books of account of the assessee and his family members. Once the AO has not disputed the purchases made by the assessee of the said quantity of jewellery then the same cannot be treated as unexplained jewellery of the assessee. The AO has denied the benefit of the said quantity of jewellery on the ground that since the benefit of reasonable jewellery to the extent of 850 gms. as per CBDT Instruction No. 1916 dated 11-05-1994 is already granted, therefore, to that extent, no further benefit can be granted. It is pertinent to note that CBDT Instruction No. 1916 dated 11-05-1994 has explained in case of gold jewellery found in the possession of the assessee during the course of search and seizure action and the assessee is not able to explain the same then the quantity prescribed under the said CBDT Instruction No. 1916 in respect of married female member, unmarried female member and male member of the assessee would be treated as a reasonable holding of jewellery on account of acquisition of that much jewellery on various occasions of marriages, other social & customary occasions as prevailing in the society. Therefore, a reasonable possession of the jewellery as per the customs prevailing in the society is the basis for allowing the benefit of certain quantity of jewellery explained by the CBDT Instruction No. 1916 dated 11-05- 1994 which means that the assessee need not to explain the source of jewellery found in his possession to the extent of specified quantity treated as reasonable possession by family members of the assessee. The said CBDT Instruction No. 1916 allowing the specific quantity as reasonable and need not to be explained, does not include the jewellery which is otherwise explained by proof of documents of acquisition as well as declared/recorded in the books of account of the assessee. Hence, the quantity of jewellery which is otherwise explained by the assessee by producing the purchase bills as well as recorded in the books of account of the assessee and the AO had not disputed the said explanation then the quantity which is explained otherwise by producing the purchase bills and books of account would not be treated as part of the quantity of reasonable possession as prescribed under the said CBDT Instruction No. 1916 dated 11-05-1994. Therefore, the benefit of CBDT Instruction No. 1916 dated 11-05-1994 will not take away the benefit of the explained jewellery acquired by the assessee. Accordingly, in the facts and circumstance of the case, the quantity of jewellery to the extent of 343.328 gms. has to be allowed separately as explained jewellery and no addition can be made to that extent.

21.1 In the light of the above order of the tribunal, we hold that the assessee is entitled for the benefit of the jewelries for the other members as well who are 8 in numbers. Accordingly the assessee is entitled for the relief of 2150 grams of gold. Now the dispute remains for the balance quantity of gold i.e. 298.1 grams. In this connection we note that the entire family members of the assessee have been paying huge amount of taxes on the income disclosed by them in different

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 24 assessment years. The income disclosed by the family members of the assessee in different assessment years have been summarized in excel form by the learned AR for the assessee which is available on record. As per such sheet family members of the assessee for A.Y. 2017-18 to 2020-21 has disclosed income of Rs. 1237.12 Lacs and paid taxes of Rs. 325.36 lacs on such income. Thus considering the amount of income declared by the family members of the assessee and the family status, we are inclined to hold that there was no gold available with the assessee which can be termed as unexplained. Accordingly, in our considered view no addition is warranted in the given facts and circumstances. Hence the ground of appeal of the assessee is allowed and the ground of appeal of the revenue is hereby dismissed.

Silver Sr.No. Place Weight in Kg Value in Rs. 1. Residential 34 12,32,500/- 2. Locker No.255 31,610 11,49,024/- 3. Locker No.119 1,460 47,700/- 4. Locker No.118 7,04 2,49,800/- Total 74,110 26,79,024/-

23.1 On question by the AO with regard to source of acquisition of such Silver coins, lagdi, bar, articles and utensils etc found during the search proceeding. The assessee submitted that silver found from resident, locker number 119 and locker no. 118 weighing 34, kg, 1.46 kg and 7.04 kg having value of Rs. 12,32,500/-, Rs. 47,700/- and Rs. 249,800/- received from friends and relatives on different social

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 25 functions and birthdays or on occasion of marriage. The assessee further submitted that his family belong to MARVADI community where it is the ritual and family customs that people gift to the relative in form gold/silver or other ornaments on social functions or on birthdays and on occasion of marriage. Therefore considering the status and size of his family this amount of silver is very much reasonable.

23.2 With respect to silver bar of 31.61 kg found from bank locker number 255 the assessee submitted that same was purchased by the assessee from Ganga Jamuna Jeweleras on 17th February 2010. The assessee in support furnished copy of invoices and cheque detail through which amount was paid.

23.3 The AO disregarded the submission of the assessee with regard to silver found from residence and bank locker no. 119 and 118 118 weighing 34, kg, 1.46 kg and 7.04 kg having value of Rs. 12,32,500/-, Rs. 47,700/- and Rs. 249,800/- by holding the same as vogue and general. The AO found that the assessee has not submitted documentary evidences with regard to receipt of gift in form of silver items. The assessee has also not furnished the name of relatives and friends who have given gift of silver articles and receipt of such gift also not accounted in books of accountant. Thus the AO in absence of documentary evidences treated the silver article found from the residence and bank locker number 118 & 119 as unexplained and added the amount of Rs. 15,31,000/- to the total income of the assessee.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 26

Silver Coins, 15.500 604500 Receive on Lagdi & Bars etc. various social Silver Mix 18,500 629000 functions and Asrtfcles, birthdays by Utensils relatives and friends and on marriage functions. Total 34.00 1233500

9.1 Tne AO held that in the absence of any evidence, the explanation of the assessee on this issue lacks credibility and is therefore not tenable in law. The silver bars, lagdi and articles, weighting 34 kgs and valued at Rs. 12,33,5007-found from the residence of the assessee during the search u/s 132. remains unexplained. 9.2 Further silver articles weighing 1,460 Kg valued at Rs. 47.700/- and silver articles weighting 704 Kgs valued at Rs. 2,49,SOO/- found from Locker No. 119 and 118 respectively during the search. 9.3 The assessee has stated that these silver items were received on various social functions and birthdays. However, as per AO no evidence has been produced by the assessee in support of his claim of having received the articles as gifts. The date on which the silver articles were received is not mentioned. Name of the persons from whom such articles were received is also not mentioned. In this background and facts, the explanation offered by the assessee is held to be vague, devoid of any merits and is therefore untenable in law. Moreover, acquisition of these silver items is also not accounted for in the books 9.4 On the other side the appellant submitted that the AO had erred in law as well as on fact in making addition without appreciating facts of the case, explanation submitted during the course of assessment, the silver items/articles are often received as per Hindu customs, Social status, age, on Social Occasions in community such as birth day, marriage anniversary and other festivals and functions. 9.5 It was explained by the appellant during the course of assessment proceeding that above items were received as gift on various social occasions such as marriage, engagement, Mundan, Marriage anniversary, Birthdays and etc by family members. However, AO has not accepted the same. 9.6 The appellant submitted that silver (agdi, bars, articles, old coins, mix articles, utensils and other small items weighing 45.02 kgs was not only belonging to appellant Shri Pawan Satyanarayan Jalan but belonging to entire family as explained to AO. The family of appellant consists of following members and their holdings. Sr. Name Relation Silver Weight 2 Pawan S. Jalan Self 4.90 2 Kavita Jaian Wife 9,50 3 Ankit Salon Son 6.50

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 27 * Virfhs Pawan Jalan Daughter 3.50 5 Vidhi Ankit jalan Daughter in low 6.00 6 Aveer Ankit Jaian Grandson 0.50 7 Late Shri Satyanarayan Jaian Father 5.10 Q Smt. Kantadevi Jalan Mother 9.02 TOTAL 45.02 9.7 The appellant has submitted confirmation from each respective members claiming before AO that Silver items belongs to them. The appellant also submitted affidavits of respective person that sard silver items befongs to them. The appellant has submitted that when the independent assessee being family members claiming silver items belongs to them, the same can not be considered hands of the appellant. 9.8 The appellant’s contention is examined and the same is found partly acceptable for the reason that in the Hindu Society one cannot ruled out receipts of gifts of silver items at various occasions and celebrations. II is also the fact that the same are stored over a period of time and never disposed off by sale or otherwise. Therefore, over a period of decades these items got accumulated. The AQ's contention that the details about the gifts, name of donor, date of gift or any evidence have not been submitted is found far from the practical life and practice prevailing in the society. No one obtains any confirmation or keeps any evidences for such gifts received onvariousu occasions. Therefore, no evidences could be furnished as requisite by the AO. But at the same time the reasonableness of the claim has to be ascertained looking into the status of the family, their financial status, the size of the family and the social custom in the community. Considering all aspects, it would be fair and reasonable to consider the submission of the appellant and 50% of the silver items etc. found could be considered as per the submission of the appellant Still there remains 50% of the items for which no sources of acquisition and evidences have been submitted. Accordingly the undisclosed investment in such items amounting to Rs.7,65,500/-(50% of Rs. 1233500 + Rs.297500) is held to be confirmed. Further relief is granted to the rest of the 50% of the silver items/articles etc. Ground of appeal is partly allowed.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 28 27. The learned AR for the balance amount of 21.25 Kg of silver jewelry /bar/ utensils etc submitted that there should not be any addition to the total income of the assessee as it belongs to the entire family who have been paying income tax in their respective hands. It was also submitted by the learned AR that the family status and social custom is also important to hold that they have received certain gifts of silver on different occasions which cannot be made subject to tax under the provisions of the income tax Act.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 29

Sr.No. Name Balance as on Seized by IT on 30.10.2018 30.10.2018 1 Basant Fabrics (prop. Pawan Jalan) 307392 300000 2. Kavita P. Jalan (Prop. K J Enterprise) 345923 300000 3. Ankit P. Jalan 173900 150000 4. Ankit Enterprise 361250 350000 5. Basant Cleanenviro Ltd 277203 250000 6. Vidhi Pawan Jalal 690078 200000 7. Vidhi Pawan Jalan 571157 550000 8. Vibrant Cotfab Pvt. Ltd. 2457652 240000 9 Aveer Ankit Jalan 250000 250000 10 Parents Saving 400000 400000 11. Other family members saving 350000 350000 Total 6184555 5500000 Cash found during search 5960840 Excess cash NIL

32.1 The assessee in support of its claim for cash balance of Rs. 2,77,203/- and Rs. 24,57,652/- contended that it belongs to companies namely M/s Basant Clean Enviro Ltd. and Vibrant Cotfab Pvt Ltd. in which he is director. The assessee furnished copy of cash book, board resolution for approval of keeping the cash balance at his residential premises. Likewise the assessee with respect to cash balance of Rs. 6,90,078/- and Rs. 5,71,157/- belonging to his daughter in-law and daughter namely Smt. Vidhi Ankit Jalan and Smt. Vidhi Pawan Jalan claimed that

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 30 they received cash from sale of handmade painting and furnished their cash book. The assessee with regard to cash balance of Rs. 2.5 Lacs belonging to Grandson namely Shri Aveer Ankit Jalan claimed that this amount was received as cash gift on occasion of social functions and birthdays. With respect to cash balance of Rs. 4 Lacs and 3.5 Lacs the assessee claimed that the same belongs to parents and the parents are keeping the cash balance for their mental satisfaction.

32.2 The AO did not believe the contention of the assessee. The AO observed that M/s Vibrant Cotfab Pvt. Ltd against which cash balance of Rs. 24,57,652/- claimed was having cash balance of Rs. 1,13,332/- only as on 30th September 2018 and thereafter shown cash receipt sale from different parties between 1st October to 30th October 2018 i.e. to date of search which is nothing but afterthought. Further neither of the companies has come before authorities during the course of search or after search proceeding that it belongs to them. The companies being separate legal entity required to keep its assets including cash at its business premises not at residential premises of the one of director. It is also unusual for a company to keep such huge amount of cash in hand that too at the residential premises of the director instead of depositing the same in the bank. Therefore, the assessee’s explanation for cash of M/s Basant Clean Enviro Ltd and M/s Vibrant Cot Fab Pvt. Ltd is vogue and devoid of any merit.

32.3 The cash balance of Rs. 2.5 lacs claimed as belonging to grandson Anveer Ankit Jalan is also not acceptable for the reason that he was minor at relevant time and was not having any source of income. The explanation that the cash received on birthday is gift vogue and afterthought. Similarly the explanation for cash of Rs. 7.5 Lacs claimed to be held by the parents out of their saving for mental satisfaction is not acceptable for the reason that no documentary evidence brought on record to establish that they were having cash balances. Further, the parents has not made any claim with regard to cash found at the time of search or after search proceedings conducted by the search team.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 31

32.3 Thus AO in view of the above treated cash balance of Rs. 37,34,855/- claimed in the name of M/s Basant Clean Enviro Ltd, M/s Vibrant Coat Fab Pvt Ltd, Grandson Anveer Ankit Jalan and parents as unexplained and added the same to the total income of the assessee

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 32 confirmation of the addition for Rs. 500000/- being 50% of cash claimed to belong to assessee parent and grandson whereas the revenue is in appeal against the deletion made by the ld. CIT-A for 32,34,855/-of cash found during search. The Revenue in ITA No. 204/Ahd/2021 has raised the following grounds of appeal:

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition under section 69A of Rs.32,34,855/- out of total addition of Rs.37,34,855/- on account of unaccounted cash found during the course of search at the residential premises, even though the assessee has failed to explain the source of cash seized during the course of assessment proceedings with supporting documentary evidences.

37.1 With respect to the cash of Rs. 27,34,855/- allegedly belonging to the companies, we note that the AO has not brought any iota of evidence suggesting that cash shown in the hands of the company was not admitted in the assessment proceedings of those companies. In other words, once the availability of cash in hand has been admitted in the hands of the companies, the genuineness of the same cannot be doubted in the hands of the assessee. Furthermore, the cash was generated in the hands of those companies against the sales which were subject to

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 33 GST. Accordingly, we are inclined not to interfere in the finding of the learned CIT- A with respect to such cash belonging to the companies.

37.2 With respect to the cash of ₹10 Lacs belonging to the parents and the grandson of the assessee, we note that considering the status and profile of the assessee and the income tax return filed by the entire group including companies, we are of the view that the availability of cash in the hands of the parents cannot be doubted. The parents are quite old and it is very much possible that they have accumulated so much of the fund out of their previous savings. Therefore, no addition is warranted on account of the cash belonging to the parents. However, the cash available in the name of the grandson is not believable. It is for the reason that whatever amount of cash received by the grandson on any occasion has to be substantiated based on the documentary evidence. But no such evidence has been brought on record. Accordingly, we direct the AO to treat the amount of cash available with the grandson for Rs. 2.5 lacs as income of the assessee. Hence the ground of appeal of the assessee and the revenue are partly allowed.

37.3 In the result appeal of the assessee is partly allowed.

Coming to ITA No. 204/Ahd/2021 an appeal by the Revenue for Assessment Year 2019-20

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 34 jewellery of 1848.10 gms found during the course of search even though neither the assessee disclosed the same in wealth tax return nor the source of the same is explained with documentary evidence such as gift deed etc. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting 50% of the addition made u/s 69A of the IT Act, 1961 in respect of silver items and silver bars, etc. and addition on account of silver articles found from bank locker during the course of search, without appreciating the fact that the assessee has failed to explain the source and did not enter the same in the books of accounts regarding receipt of gift. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition under section 69A of Rs.32,34,855/- out of total addition of Rs.37,34,855/- on account of unaccounted cash found during the course of search at the residential premises, even though the assessee has failed to explain the source of cash seized during the course of assessment proceedings with supporting documentary evidences. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 35 41. The next issue raised by the revenue in ground no. 2 of its appeal is that the learned CIT(A) erred in treating the 50% of excess gold i.e. 50% 1848.1 grams of gold as explained under section 69A of the Act.

IT(ss)A No.134/Ahd/2021 & ITA No. 182/Ahd/2021 & 204/Ahd/2021 A.Ys. 2018-19 & 2019-20 36 47. Other issue raised by the Revenue vide ground numbers 5 and 6 are general in nature. Hence the same is dismissed accordingly.

47.1 In the result appeal of the Revenue is partly allowed.

Order pronounced in the Court on 27/04/2022 at Ahmedabad.

Sd/- Sd/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 27/04/2022 TRUE COPY Manish