R.JAYAKUMAR,CHENNAI vs. ACIT, TRICHY

आदेश / O R D E R

PER INTURI RAMA RAO, ACCOUNTANT MEMBER

1. This is an appeal filed by the Assessee directed against the order of the Commissioner of Income Tax (Appeals), Tiruchirapalli, (‘CIT(A)’ for short) dated 26.02.2013 for the Assessment Year (AY) 2010-2011. The Assessee raised the following grounds of appeal: 2.

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3. The CIT (Appeals) failed to appreciate that the explanation for the source of the cash found would fortify the plea for deletion of such sum in the computation of taxable total income and ought to have appreciated that having scrutinized the material evidence in fortifying such explanation, the sustenance of the said addition was wrong, incorrect, unjustified, erroneous and not sustainable both on facts and in law.

6. The CIT (Appeals) failed to appreciate that the enhancement of the said addition without qiving a notice of enhancement i view of the statutory mandate in relation thereto would vitiate his action in this regard.

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8. The CIT (Appeals) went wrong in recording the findings in this regard in paras 8 & 9 of the impugned order without assigning proper reasons and justification.

9. The CIT (Appeals) failed to appreciate that the order of assessment was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law.

The appellant is an individual and search proceedings u/s.132 of the Income Tax Act, 1961 (in short ‘’the Act’’) was conducted in the case of the assessee on 26.08.2009. Based on the incriminating material found, notice u/s.153A of the Act was issued to the assessee calling upon the assessee to file return of income for the assessment year 2010-2011. In response to the same, the assessee filed return of income on 20.10.2011 declaring total income of �14,12,990/-.

Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Central Circle-II, Tiruchirappalli vide order dated 30.12.2011 passed u/s. 143(3) of the Act, at total income of Rs. 1,01,69,875/-. While doing so, the Assessing Officer made addition on account of cash found during the ITA No.1131 /2013 :- 4 -: course of search and seizure operations treating it as unexplained income of �78,29,530/-, out of which a sum of �45,00,000/- admitted as undisclosed income in the statement recorded on 26.08.2009 u/s.132 (4) of the Act. As regards to the balance money, the explanation given by the assessee was that sum of �20,00,000/- was received from his father over a period of last ten years and another sum of �5,00,000/- is belonging to his wife were rejected by the Assessing Officer by holding that the assessee had failed to substantiate the same and no books of accounts were maintained by the assessee. Thus, the Assessing Officer brought the entire cash found during the course of search and seizure operations of �78,29,530/- to tax as unexplained. The Assessing Officer also made an addition on account of unexplained jewellery of �9,27,355/- during the course of search and seizure operations, gold jewellery of 2114.46 grams were found. The assessee had explained that the said jewellery was acquired by way of gifts on the occasion of marriage given to his wife by his father-in-law weighing 125 sovereigns (1000 grams) gold jewellery, about 600 grams of gold jewellery was received as gift from his father and father-in-law after marriage on various occasions and balance 513 grams of gold jewellery received from friends and relatives on various occasions. The Assessing Officer considering the explanations of the assessee held that only 500 grams

ITA No.1131 /2013 :- 5 -: of gold in the hands of the assessee’s wife was accepted as sreedhan and 92 grams of gold jewelery received from his mother as per the will was accepted as explained and out of the balance 300 grams of gold coins was assessed in the hands of M/s. Vijaya Plywoods and the balance jewellery of 648.5 grams was treated as unexplained by estimating the value of �1,430/- per gram brought to tax sum of �9,27,355/-. Accordingly, he completed the assessment.

Being aggrieved, an appeal was preferred before the ld. 4.

CIT(A), who vide impugned order while confirming the additions made by the Assessing Officer had enhanced the addition in respect of unexplained jewellery by adopting 1522 grams as unexplained jewellery instead of 648.5 grams.

Being aggrieved by the order of the CIT(A), the appellant is 5. in appeal before us in the present appeal. Ld. Counsel for the assessee submitted that he was not pressing ground No.1, hence ground No.1 is dismissed as not pressed.

addition can also retracted, placing reliance on the judgments of Hon’ble Supreme Court in the cases of Nagubai Ammal vs. B. Shama Rao AIR, 1956 (SC) 593 and Rubber Produce Company Limited vs. State of Kerala, (1973) 91 ITR 18, ld. Authorised Representative submitted that sworn statement should be considered in its entirety.

Having accepted the sworn statement for the purpose of making addition of �45,00,000/-, he ought to have accepted the explanation given in respect of cash of �25,00,000/- also. As regards to the addition on account of unexplained jewellery, the ld. CIT(A) without giving an opportunity of being heard the assessee had enhanced the addition.

On the other hand, the ld. CIT (Departmental 7.

Representative) placed reliance on the orders of lower authorities.

The explanation offered in support of the cash found should be supported by evidence. Explanations offered by the assessee that cash of �20,00,000/- received from his father over a period of ten

ITA No.1131 /2013 :- 7 -: years and �5,00,000/- belong to his wife needs to be collaborated with evidence. Assessee had made no efforts to collaborate the same except offering an bald explanation. With regards to the addition of �45,00,000/- the argument that statement recorded u/s.132(4) of the Act has to be considered in entirety is no doubt a valid preposition but this preposition have no application to the facts of the present case as the factum seizure itself is good enough for the purpose of making addition and the fact that the assessee had himself admitted in the statement recorded u/s.132(4) of the Act, the statement does not require to be proved further by evidence as the factum of seizure of cash itself establishes that it is an undisclosed income. There is nothing on record to show that �45,00,000/- was earned by way of agricultural income over a period of several years. Similarly, this plea was not taken before the Assessing Officer but only before the ld. CIT(A) and the ld. CIT(A) had rightly rejected the explanation by holding that agricultural income was not reflected in the returns filed by the assessee or his family members and it is only after thought.

Reliance placed by the assessee on the decision of Hon'ble Supreme Court in the case of Nagubai Ammal (supra) and Rubber Produce Company Limited (supra) are misplaced. As the ratio of the said cases would come to the rescue to the assessee only in the case assessee could prove with evidence the statement made u/s.132(4) of the Act

ITA No.1131 /2013 :- 8 -: is contradictory to the facts on records. Thus, we do not find any merits in the contention raised challenging the addition on account of unexplained cash. As regards to the addition on account of unexplained jewellery, no doubt enhancement was made by the ld. CIT(A) without giving an opportunity of hearing to the assessee.

Hence, we remand this issue back to the file of the ld. CIT(A) to give proper opportunity of hearing to the assessee. Thus, this ground of appeal filed by the assessee is partly allowed for statistical purpose.

Order pronounced on 20th day of August, 2019, at Chennai.