NARENDRA RAMSWARUP SHAKADWIPI,,NASHIK vs. ASSISTANT COMMISSIONER OF INCOME-TAX,,

आदेश / ORDER

PER ANIL CHATURVEDI, AM

2 ITA No.879/PUN/2015 A.Y. 2010-11

Assessee is an individual having income from business and other

sources. A search and seizure action under section 132 of the Income Tax Act,

1961 (hereinafter referred to as ‘the Act’) was conducted in Ashoka Group of cases

on 20.04.2010. Assessing Officer noted that Assessee did not file original return of

income u/s.139 of the Act for A.Y 2010-11 & the last date for filing belated return

of income was 31.03.2011. The notice u/s. 153A of the Act was issued on

25.02.2011 and served on the assessee on 07.03.2011. In pursuance to the said

notice, assessee filed return of income for A.Y 2010-11 on 17.10.2011 declaring

total income of Rs.6,86,520/-. The case of Assessee was selected for scrutiny and

thereafter, assessment was framed u/s. 143(3) r.w.s. 153A vide order dated

22.03.2013 and total income was determined at Rs.36,52,528/-. Aggrieved by the

order of Assessing Officer, Assessee carried the matter before CIT(A) who vide order

dated 29.04.2015 (in appeal No.PN/CIT(A)-12/NSK CIT(A)-I/281/2013-14) granted

partial relief to the assessee. Aggrieved by the order of CIT(A), Assessee is in appeal

before us raising following grounds:

“In view of the facts of the case, provisions of law, evidence on record and the submissions made- 1. The learned CIT(A) erred in retaining the addition made on the ground of unexplained investment in property, u/s 69, at Rs.1,36,657/-, without properly appreciating the facts of the case. Therefore, it is prayed to cancel the addition retained at Rs.1,36,657/-. 2. The learned C!T(A) erred in retaining the addition made for possession of silver articles, weighing 10.595 kgs, valued at Rs.2,57,460/-, u/s. 69A, without properly appreciating the explanation offered for possession of such silver items and in any case without properly appreciating the submission regarding the fact that, no addition u/s.69A was possible in the A.Y.2010-11, as the date of search was 20.04.2010. Therefore, it is prayed to delete the addition retained at Rs.2,57,460/-. 3. a. The learned CIT(A) erred in retaining the addition made u/s. 69 of Rs.1,70,000/- on the ground of unexplained investment in KVPs, without properly appreciating the facts and the submissions made before him.

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b. In any case, there was no reason for the learned C!T(A) to ignore the explanation offered & the evidence furnished as to the source for investment in KVPs to the extent of Rs.90,000/-. Therefore, it is prayed to cancel the addition retained at Rs.1,70,000/-. Alternatively and without prejudice to earlier prayer, it is prayed to retain the addition only to the extent of Rs.80,000/-, i.e. the investment made over and above the withdrawals from P.O.S.B. Account of Rs.90,000/-. 4. Appellant craves leave to add/amend/delete any ground of appeal before the time of hearing.”

unexplained investment in property u/s. 69 of the Act at Rs.1,36,657/-.

which, Assessee had purchased a property from Mr. Jairam Keshav Bhalerao at

Gat No.210/1/4 for Rs.4,00,500/- and the purchase deed was executed on

07.11.2009. On perusal of the purchase deed and the other documents, it was

noted by Assessing Officer that there was evidence for payment of only

Rs.2,00,000/- and there was no evidence for the payment of balance amount of

Rs.2,00,500/-. The Assessing Officer noted that Assessee did not explain the

payment of Rs.2,00,500/-. He, thereafter, considered the payment of Rs.2,00,500/-

as being made from undisclosed source and treated it as unexplained investment

in property u/s. 69 of the Act. Aggrieved by the order of Assessing Officer, Assessee

carried the matter before CIT(A) who granted partial relief to the Assessee by

observing as under:

“2.1.3 I have considered the facts and arguments of the Appellant. The Appellant has purchased the property for the total amount of Rs 4,00,500. The Appellant has stated that the amount of Rs 2,63,843 was paid by cheques, whereas two cheques amounting to Rs 16,507 were not encashed and the amount of Rs 1,20,150 was paid by cash. On the other hand, learned AO has stated that the source of income for the payments of Rs 2,00,500 has not been explained by the assessee. However, the learned AO has not given break-up of Rs. 2,00,500. 2.1.4 The perusal of the agreement shows that the Appellant has made cheque payments to the number of land owners totaling Rs 2,63,843. Source of the cash payments is stated to be out of the funds received from Shri Ashok Katariya. Thus considering the explanation and the evidence, according to me,

4 ITA No.879/PUN/2015 A.Y. 2010-11

the cheque payments are acceptable. The Appellant has stated that two cheques totaling of Rs 16,507 were not encashed. According to me, if these cheques have not been encashed for some reasons, then the Appellant would have paid the land owners cash. This is because, it is not possible that the owners were not fully paid when the land is transferred to the Appellant.

2.1.5 Further, as far as the amount of cash payment of Rs1,20,150 is concerned, the Appellant is stated to have paid this amounts on different dates according to his cash book. Source of these payments is stated to be out of the Appellant's savings. In this connection, I find that the Appellant has not filed his return of income from AY 2007-08 onwards. Yet he claims that he has regularly maintained books of accounts. According to me, the Appellant's conduct is against human probabilities and the books of accounts prepared after search have little credibility. The Appellant's cash book does not have credibility also because cash income and payments do not leave trail as cheque transactions do and therefore, it is possible for anyone after the search to pass the entries of cash income and expenditure to suit own convenience. . Therefore, in absence of any contemporaneous evidence of the cash transactions and fact that the cash book was prepared after search, I do not accept the Appellant's claim that cash payment were made out of his explained source of income.

2.1.6 In view of the above discussion, I treat the payment of Rs 2,63,843 made out of the funds made available by Shri Ashok Kataria. The balance payment of Rs 1,36,657 is considered to have been made out of the Appellant's unexplained source of income. Accordingly, I restrict the addition to Rs 1,36,657 as against the addition of Rs 2,00,500 made by the learned AO.”

Assessing Officer and CIT(A). He submitted that addition of Rs.1,36,657/- upheld

by the CIT(A) be deleted. The Ld. DR for the Revenue on the other hand supported

the findings of Assessing Officer.

The issue raised in the present ground is with respect to the addition made for

purchase of property. We find that CIT(A) while granting partial relief to the

assessee has noted that two cheques amounting to Rs.16,507/- were not encashed

and according to CIT(A) if these cheques have not been encashed for some reasons

then the assessee would have paid the land owners because it is not possible that

the owners without getting fully paid would have transferred the land to the

Assessee. With respect to cash payment of Rs. 1,20,150/-, CIT(A) has noted that

5 ITA No.879/PUN/2015 A.Y. 2010-11

Assessee had not filed his return of income from A.Y 2007-08. The Assessee has

stated to have made the cash payments on different dates & the source of which is

stated to be out of his savings as per his cash book. The CIT(A) has noted that

though Assessee has not filed return of income from A.Y 2007-08 onwards, yet his

submission of maintaining books of accounts & further the preparation of cash

book after the search has little credibility and is against human probabilities. He

has also noted that in the absence of any contemporaneous evidences of cash

payments, amount has been rightly considered to be out of his explained source of

income by the Assessing Officer. Before us, the Ld. AR has not brought any

material on record to controvert the findings of CIT(A) and therefore, we find no

reason to interfere with the order of CIT(A). Thus, ground No. 1 raised by

Assessee is dismissed.

Rs.10,33,797/- was found in the locker. At the residence of Assessee, gold

jewellery weighing 661.050gms valued at Rs.13,04,250/- and silver utensils of

10.595 kg valued at Rs.2,57,460/- was found. The Assessee was asked to explain

the source of the investments in the gold jewellery and silver utensils found in the

locker and his residence. The submission of Assessee was that part of the

jewellery belongs to his wife, daughter and son and some was inherited from his

mother and some was received as gift at the time of marriage. The Assessing Officer

noted that Assessee did not submit any evidence to show as to when and from

whom the jewellery were purchased, during search in the statement recorded,

Assessee had expressed his inability to explain the sources of investment in gold

jewellery and silver utensils with documentary evidence. The Assessing Officer also

noted that Assessee and his family members had not filed any wealth tax returns

6 ITA No.879/PUN/2015 A.Y. 2010-11

till date. The Assessing Officer concluded that Assessee had not been able to

explain the source of investment in gold jewellery and silver utensils found during

search action and he treated the amount of Rs.25,95,507/- as unexplained

investment in gold jewellery and silver utensils u/s. 69A of the Act and made its

addition.

before CIT(A) who after considering the submission of Assessee, granted partial

relief to the Assessee by observing as under:

“2.2.3 I have considered the explanation of the Appellant. I find that gold jewellery weighing 661.050 gms valued at Rs.13,04,250 was found at the Appellant’s residence. Further, gold jewellery weighing 614 gms valued at Rs 10,33,797 was found from the Appellant's locker. Thus, total gold weighing 1,275.050 gms was found with the Appellant. In addition, silver utensils weighing 10.595 Kg valued at Rs 2,57,460 was also found at the Appellant's premises.

2.2.4 The Appellant has explained that the weight of the found gold is within the limits prescribed by the CBDT's Instruction no 1916 dt 11.05.1994. Accordingly, gold found from his residence as well as from the locker stand explained between three married lady family members and two male family members. The Appellant has given the break-up of the jewellery owned by the family members as under:

Sr. Description of the Resi Net Locker Total Remark No. articles Wt. (gram) Net Wt. (Gram) Yellow & Diamond 1 Mrs. Vimal N. 260.670 189.500 450.170 gr. Within limits Shakadwipi specified 2 Mrs. Ekta 336.980 135.000 471.980 gr. in CBDT Nishant Circular Shakadwipi 3 Mr. Nishant N 63.400 -- 63.40 gr Shakadwipi 4 Mrs. Vimal R 213.500 231.50 gr Shakadwipi 5 Mr. Narendra R 76.000 76.00 gr Shakadwipi 6 White silver Utensil & Articles 10.595 kg --- 10.595 kg Mrs. Vimal Narendra Shakadwipi

7 ITA No.879/PUN/2015 A.Y. 2010-11

2.2.5. I agree with the Appellant that the total jewellery is within the permissible weight limits of the each family members according to the CBDT Instruction. I find that the ownership of jewellery found at the residence was claimed by the respective family members according to the inventory of jewellery prepared at the time of search. Therefore, I do not agree with the learned AO's view that the jewellery is unexplained because the confirmations are prepared after the search when it falls within the permissible limits according to the CBDT Instructions. I also do not accept the learned AO's objection that in absence of Wealth-tax returns, the jewellery would be treated as unexplained. This is because if the person's wealth does not exceed minimum amount chargeable to wealth tax, the person will not file his Wealth-tax return. Therefore, I do not draw any conclusion against the assessee in absence of their Wealth-tax returns. Accordingly, I treat that gold weighing 1,275.050 gms as explained. 2.2.6 With respect to silver utensils and articles weighing 10.595 kg., CBDT Instruction is not applicable on it. The Appellant also has not furnished any explanation and evidence regarding its acquisition. Further, according to the inventory list prepared at the search, utensils were found from the bedroom of the Appellant and not from the bedroom of the Appellant's mother. Therefore, I do not accept the Appellant's explanation that silver utensils belonged to his mother. Accordingly, I confirm the decision of the learned AO to add Rs 2,57,560 with respect to silver utensils. Thus, I restrict the addition to Rs.1,57,460/- as against of Rs.25,95,507.”

before Assessing Officer and CIT(A). He submitted that since the assessee has

explained the source of investment in gold jewellery and silver utensils, no addition

is called for. He further submitted that the inventory of silver was made at the time

of search, was in the name of his wife and in the assessment of his wife, no

addition was made. He, therefore, submitted that in such a situation, no addition

in the hands of Assessee is called for. The Ld. DR for the Revenue on the other

hand supported the order of Assessing Officer.

find that while dealing the issue, the CIT(A) after considering the CBDT’s

Instruction No. 1916 dated 11.05.1994 has given a finding that the total jewellery

was within the permissible weight limits of the each family members according to

8 ITA No.879/PUN/2015 A.Y. 2010-11

the CBDT Instruction and the ownership of jewellery found at the residence was

claimed by the respective family members according to the inventory of jewellery

prepared at the time of search. He, therefore, treated the gold being 1,275.050 gms

as explained. With respect to silver utensils being of 10.595 kg, he noted that

CBDT Instruction are not applicable and that the assessee has also not furnished

any explanation or evidences with regard to its acquisition. The CIT(A) also did not

accept the Assessee’s explanation that the silver utensils belongs to his mother in

view of the fact that as per inventory list prepared at the time of search, utensils

were found from the bedroom of the Assessee and not from the bedroom of the

Assessee’s mother. Before us, it is Ld.A.R.'s contention that at the time of search

the inventory of silver was made in the name of wife of Assessee, while making the

assessment in the hands of Assessee’s wife, no addition has been made. The

aforesaid contention of Ld. AR has not been controverted by Revenue. In such a

situation, we are of the view that no addition of silver of Rs. 2,57,460/- in the

hands of Assessee is called for. Thus Ground No. 2 raised by Assessee is

allowed.

unexplained investment in KVPs.

Rs.8,51,500/-were found. The assessee was asked to furnish details of the source

of investment to which Assessee inter alia submitted that investment of

Rs.1,70,000/- was made during the year out of cash in his hand. The Assessing

Officer noted that Assessee had submitted a statement of cash in hand from

1.5.2005 with the opening balance of Rs.1,20,130/-. He noted that assessee had

not submitted any documentary evidence to prove the source of the opening

balance of cash of Rs.1,20,130/-. He also noted that Assessee had shown opening

9 ITA No.879/PUN/2015 A.Y. 2010-11

cash balance of Rs. 2,75,274/- on 1.8.2009 which was also without any basis.

The Assessing Officer noted that since Assessee has not furnished return of income

from 2006-07 onwards, the claim of assessee of having cash in hand could not be

accepted. He, therefore, added the amount of Rs.1,70,000/- being the investment

made for purchase of KUP during the year as unexplained investment u/s. 69 of

the Act.

before CIT(A) who upheld the findings of Assessing Officer by observing as under:

“2.3.3 I have considered the Appellant's explanation. The Appellant has stated that it has acquired KVPs amounting to Rs 1,70,000 out of cash in hand on respective dates. I have already held that Appellant's cash book is not reliable without contemporaneous evidence of cash transactions because it was prepared after the search and because of the peculiar nature of the cash transactions. The learned AO has also stated in the assessment Order that the Appellant failed to produce the source of the opening balance of cash of Rs 1,20,130 and of Rs 2,75,274 as on 01.08.2009. In view of the lack of credibility of the Appellant's cash book, I confirm the decision of the learned AO to reject the Appellant's explanation. I confirm the addition of Rs 1,70,000 made by the learned AO as the Appellant's unexplained investment in KVPs.”

before Assessing Officer and CIT(A) and submitted that since the purchase is from

the cash in hand, the addition be deleted. He submitted that Assessee had

withdrew Rs. 90,000/- from his savings bank account maintained with Post Office

which was used for purchase of KVPs. He, therefore, submitted hat the credit for

same be granted. On the other hand, the Ld. DR supported the order of Assessing

Officer.

find that while upholding the order of Assessing Officer, CIT(A) has noted that

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assessee had failed to show the source of opening cash balance and had also not furnished any evidence of availability of cash in his hand. Before us, Ld. AR has submitted that he had withdrew Rs. 90,000/- from his savings bank account and it was used for purchase of KVPs. The aforesaid contention has not been controverted by Revenue. In such a situation, we are of view that credit to the extent of Rs.90,000/- be granted and the addition is , therefore, restricted to the balance amount of Rs.80,000/-. Before us, the Ld. AR could not controvert the findings of CIT(A). We therefore, find no reason to interfere with the order of CIT(A). Thus, ground No.3 raised by Assessee is allowed.

Order pronounced on this 09th day of April, 2018.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER

पुणे / Pune; �दनांक / Dated : 09th April, 2018 SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-12, Pune. 4. The CIT (Central), Nagpur. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.