KUSH MISHRA ,KOLKATA vs. D.C.I.T.,CIRCLE-45, KOLKATA

First we shall take up the assessee’s appeal for A.Y. 1990-91 being (1) For that the orders passed by the lower authorities are arbitrary, erroneous, without proper reasons, & 843/KOL/2019 Assessment Years: 1990-1991 & 1991-1992 Kush Mishra

At the time of hearing before the Tribunal, the ld. Counsel for the assessee has not pressed Grounds No. 1 & 2 raised in the appeal of the assessee. The same are accordingly dismissed as not pressed.

Apropos the issue raised in Ground No. 3 relating to the addition of Rs.25,000/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of assessee’s estimated income from the activity of exchange of torn out and soiled Indian Currency Notes, the relevant facts are that a search was conducted by the Officers of the Directorate of Revenue Intelligence at the assessee’s office premises on 12.08.1989. During the course of the said search, cash of Rs.2,80,580/- was found and seized. The said cash was subsequently handed over to the Director of Income Tax (Investigation) in terms of warrant of Authorisation issued under section 132(A) of the Income Tax Act on 13.03.1990. While explaining the said cash, one of the sources stated by the assessee was that he was carrying on the business of exchange of torn out and soiled Indian Currency notes and for the purpose of the said business, he was always required to maintain some cash. Keeping in view this explanation offered by the assessee in the petition filed under section 132(5) of the Act, the Assessing Officer estimated the income of the assessee from the business of exchange of torn out and soiled Indian Currency at & 843/KOL/2019 Assessment Years: 1990-1991 & 1991-1992 Kush Mishra Rs.25,000/- and made addition to that extent. On appeal, the ld. CIT(Appeals) confirmed the said addition.

I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. Although the ld. Counsel for the assessee has not raised any material contention to dispute the action of the authorities below in estimating the income of the assessee from the business of exchange of torn out and soiled Indian Currency Notes, he has contended that the estimate of income so made at Rs.25,000/- is on higher side, which may be restricted to some reasonable amount. I am unable to accept this contention of the ld. Counsel for the assessee. He has not brought anything on record to show as to how the income estimated by the Assessing Officer at Rs.25,000/- is excessive or unreasonable. On the other hand, I find that such estimate made by the Assessing Officer at Rs.25,000/- in the facts and circumstances of the assessee’s case is quite fair and reasonable and there is no infirmity in the impugned order of the ld. CIT(Appeals) in confirming the same. I, therefore, find no merit in Ground No. 3 of the assessee’s appeal and dismiss the same.

As regards the issue involved in Ground No. 4, it is observed that the cash of Rs.2,80,520/- found and seized during the course of search was explained by the assessee as under:-

I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observed that even though the explanation of the assessee regarding the availability of cash with his wife and children was not supported by any reliable evidence, the fact that he carried on the business of exchange of torn out and soiled Indian Currency notes, was sufficient to show that some amount of cash was required to be maintained by the assessee for the purpose of the said business. As rightly contended by the ld. Counsel for the assessee in this regard, when the income of such business was estimated by the Assessing Officer at Rs.25,000/-, there was no justifiable reason to not consider the availability of cash, which the assessee was required to maintain for the purpose of the said business. In my opinion, the explanation of the assessee regarding the availability of such cash to the extent of Rs.1,54,000/- can reasonably be accepted keeping in view the factum of the business carried on by the assessee as well as the quantum of income estimated by the Assessing Officer. I accordingly restrict the addition of Rs.2,80,520/- made on this issue to Rs.1,26,520/- and allow partly Ground No. 4 of the assessee’s appeal.

Now I take up the assessee’s appeal for A.Y. 1991-92 being Grounds No. 1 & 2 of which, similar to Grounds No. 1 & 2 of the assessee’s appeal for A.Y. 1990-91, are not pressed by the ld. Counsel for the assessee. The same are accordingly dismissed as not pressed. & 843/KOL/2019 Assessment Years: 1990-1991 & 1991-1992 Kush Mishra

As regards Ground No. 3, it is observed that the issue involved therein relating to the addition of Rs.30,000/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of the estimated income of the assessee from the business of exchange of torn out and soiled Indian Currency notes is similar to the one involved in Ground No. 3 of the assessee’s appeal for A.Y. 1990-91, which has already been decided by me in the foregoing portion of this order. Following my conclusion drawn in A.Y. 1990-91, I confirm the addition made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on this issue. Ground No. 3 of the assessee’s appeal for A.Y. 1991-92 is accordingly dismissed.

As regards the issue involved in Ground No. 4 relating to the addition of Rs.3,24,000/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of unexplained gold bars found and seized from the possession of the assessee, it is observed that as per the information received by the Assessing Officer, nine pieces of gold bars were seized by the Customs Authority from the assessee on 08.06.1990. Since the seizure list was in the name of one Shri Krishna Dev Dubey, the assessee argued that nine pieces of gold bars were not seized from him. In his statement recorded by the DRI in the course of search, the assessee, however, had stated that he was engaged in smuggling of gold. Similar statement was also made by the assessee even before the Enforcement Directorate. Keeping in view this categorical statements made by the assessee, the stand taken by the assessee that he was not engaged in smuggling of gold and nine pieces of gold bars were not belonging to him was not accepted by the Assessing Officer. He held that Shri Krishna Dev Dubey was engaged by the assessee to smuggle gold on his behalf and considering the cost of each bar at Rs.36,000/-, addition of Rs.3,24,000/- was made by the Assessing Officer to the total income of the assessee on account of unexplained investment made in gold bars. On & 843/KOL/2019 Assessment Years: 1990-1991 & 1991-1992 Kush Mishra appeal, the ld. CIT(Appeals) confirmed the addition made by the Assessing Officer on this issue.

I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. Although the ld. Counsel for the assessee has contended that nine pieces of gold bars having been seized from Shri Krishna Dev Dubey and not from the assessee, the addition made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of unexplained investment made in the said bars is not sustainable, I am unable to accept the same. As rightly held by the Assessing Officer, the assessee was engaged in smuggling of gold as categorically admitted before the Directorate of Revenue Intelligence (DRI) as well as the Enforcement Directorate and keeping in view the same, the only conclusion which logically followed was that Shri Krishna Dev Dubey was engaged by the assessee to smuggle gold on his behalf and nine pieces of gold bars seized from Shri Krishna Dev Dubey were belonging to the assessee. I, therefore, find no infirmity in the impugned order of the ld. CIT(Appeals) confirming the addition made by the Assessing Officer on this issue and upholding the same, I dismiss Ground No. 4 of the assessee’s appeal.

In the result, the appeal of the assessee for A.Y. 1990-91 is partly allowed, while the assessee’s appeal for A.Y. 1991-92 is dismissed. Order pronounced in the open Court on November 06, 2019.