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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: MS. MADHUMITA ROY & SHRI B.M. BIYANI
आदेश/ O R D E R
Per B.M. BIYANI, AM:
Feeling aggrieved by appeal-order dated 18.02.2019passed by learned Commissioner of Income-Tax (Appeals)-3, Bhopal[“Ld. CIT(A)”], which in turn arises out of assessment-order dated 28.03.2016 passed by learned DCIT, Central-1, Bhopal[“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year[“AY”] 2014-15, the assessee has filed this appeal on following grounds:
“1. On the facts and circumstances of the case the ld. CIT(A) has erred in
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confirming addition of Rs.25,83,000/- on account of excess cash found during search as unexplained income is illegal, unjustified and bad in law.
On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming addition of Rs.25,83,000/- being excess cash found during search is heavily relying on statement u/s 132(4) rather than the fact that books on the date of search were incomplete is illegal, unjustified and bad in law.”
When the case was called, none appeared on behalf of assessee nor any adjournment application is filed. The appeal was filed in the year 2019 but the assessee is not taking care to pursue despite fixation of hearings on various dates. Ld. DR representing the revenue was ready to argue the case and submitted that it can be disposed of after hearing him and on the basis of material held on record. Accordingly, the hearing was proceeded.
Briefly stated the facts are such thaton 29.03.2014 / 30.03.2014, a survey u/s 133A was conducted upon the assessee which was later converted into a search u/s 132, in pursuance of which the assessment of the relevant AY 2014-15 involved in present-appeal was made u/s 143(3). While making such assessment, the Ld. AO observed that the total cash-balance found in combined premise of M/s Rachna Jewellers (a proprietary concern of assessee) and M/s Rahul Jewellers (a proprietary concern of Shri Rahul Jain, nephew of assessee who was also subjected to survey/search) was Rs. 32,83,000/- out of which Rs. 7,00,000/- belonged to Shri Rahul Jain, accordingly an addition of balance cash of Rs. 25,83,000/- was made u/s 69A in the hands of assessee. The assessee contested this addition in first-appeal before Ld. CIT(A) but could not succeed. Now, the assessee has come in appeal before us assailing the same addition.
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Coming to the assessee’s sole grievance that the Ld. CIT(A) has erred in confirming the addition of Rs. 25,83,000/-, we find that the Ld. CIT(A) has discussed this issue as under:
“8. Ground No 3 for AY 2014-15:- Through this ground of appeal, the appellant has challenged addition of Rs.25,83,000/-. During the course of Search proceeding, cash amounting to Rs. 32,83.000/- was found of the common shop of M/s Rachana jewelers(Prop Shri Vimal Chand Join) and M/s Rahul Jewellers (prop Shri Rahul Join), however cash balance in books of account was found to be Rs.2,76,416/- of M/s Rachana Jewellers and Rs. 25,3911- of M/s Rahul jewelers when asked both Shri Vimal Chand Join and Shri Rahul Join in their sworn statement stated that there was sole of Rs. 5-6 lacs in last few days and bills and voucher could not be prepared and therefore, not issued to customers also. Keeping in view the unsatisfactory reply of Shri Vimal Chand Join and Shri Rahul Join cash amounting to Rs.3O,O0,0OO/- was seized. Assessee vide notices u/s 142(1) was asked to explain the nature of possession and the source of cash of Rs. 32,83,000/- found at common shop and was also required to show cause why the cash found should not be treated as unexplained and be added to his total income. ln reply doted 05.01.2016 assessee submitted that:- “During the course of search operation of at the premises of M/s Rahul Jewelers and M/s Rachna Jewelers Physical cash of both the total cash was found Rs 3280000-/- as the books of account of both the firms was incomplete some could not be matched fromincomplete records hence of this Rs 3000000/- was seized by the department . As the books of account found during search was incomplete results drawn from suchbooks were not correct, After the search books were completed from the record and after entering the remaining transactions cash balance on the date of search is as under. In books of Rahul Jawelers Rs 893923/- as on 29.03.2014 In books of Rachna Jewelers Rs 3593332/- as on 29.03.2014 As the physical cashfound during the search is comfortably covered with in the balance as per books hence same is duly explained and no addition is called for on this account.” 8.1 The AO did not find reply of assessee convincing stating that:- i. According to the trial balance drown at the time of search, Rahul Jewellers had cashbalance of Rs. 75,391/-. The statement of Shri Vimal Chand Jain
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was recorded on oath on29.03.2014 during the survey proceeding u/s 133A of the Act (which was converted intosearch on 30.03.2014). Shri Rahul Join is a nephew of Shri Vimal Chand lain and theyboth have a common shop from which their individual proprietary businesses are carriedout. ln the sworn statement recorded on 29.03.2014 Shri Vimal Chand loin, uncle of theassessee was required (vide query no. 17 of the statement dated 29.03.2014) to explainthe cash found the assessee replied that the above cash belonged to RachanaJewellers and Rahul Jewellersand that in the 2-3 days sale of 5-6 (Five-Six) lakhs has happened,bills of which were not prepared. Vide query no. 20 of the statement dated 29.03.2014, the assessee was required to produce the sole bills and the assessee replied that the billswere due for issue to the customer, when he was asked to produce the bills that weredue for issue, he stated that, the bills had not been prepared, therefore, not available atthe business premise. Vide query no. 37, the assessee was required to provide the name, addresses and mobile numbers of the customers to whom soles were mode or withwhom sales and purchases transactions were done and whose bills were alleged to bedue for issue, to which the assessee replied that, he did not remember the names of thecustomers. The assessee had not updated his books of accounts, the cash book was written only upto 23.03.2014. ln the sworn statement of Shri Rahul Join recorded u/s B2H) of the Income Tax Act, 7967 dated i0.03.2014, he was asked vide query no. 10 to produce the soles and purchase bills jewelleryand bullion of Rahul Jewellers for the period between27.03.201.4 to 29.03.2014, Shri Rahul Join stated that between 27.03.2014 and29.03.2014 sole of Rs. 2,50,000/- (approximate) had taken place and that he had noteven prepared the bills of sales, therefore, showed inability to produce the some, videquery no. 72, he was further required to explain the cash of Rs. 30,50,000/-, in reply Shri Rahul jain stated that, he was unable to explain the amount of Rs. 30,50,000/- foundfrom his residential premiseand therefore, therefore he admitted undisclosed income on account of unexplained cash of Rs. 30,50,000/-. In response to query no. 77 of thestatement Shri Rahul loin reconfirmed and deposed that the cash amount of Rs.30,50,000/- for which he could not produced any documentary evidence, and, which was unexplained cash was his undisclosed income. iii. From the above cited sworn statements, of the assessee, and his nephew Shri Rahul Jain,it is evident that the assessee has failed to explain the cash found at the time of search, and now the purported explanation of the assessee is on exercise in futility. iv. The assessee has stated that "As the books of account found during search was incomplete results drown from such books were not correct, After the search books were completed from the record and after entering the remaining transactions cash balance on the date of search is os under. The assessee's assertion that books were incomplete is correct as also found at the time of search, but, the assessee has not produced the alleged records from which the books were completed. Despite specifically being asked at the
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time of search to produce the source documents, such os, sale bills, the assessee failed completely to produce the sales bills or to name the customer or to give any account of the sales which could have any semblance of truth and satisfactory explanation. Thus, the attempted explanation is not based on facts and is merely on afterthought and post search exercise to try to explain the cash found, however, theassesseehas failed to furnish satisfactory explanation regarding the cash found.According to assessee'sown admission, the books of account were incomplete at the time of searchand it is evident from the above narrated facts of the statements that thesource documents i.e. soles invoices were not found. Therefore, the entries in the booksof accountsubsequent to the search cannot be given any credence. v. The assessee has not produced any source documents/records during the assessmentproceedings also. These post search entries in the books are without any basis andunsupported by documentary evidences, and, therefore, the entries subsequent to thesearch and seizure action cannot be given any credence. Out of the total cash found Shri Rahul Join has confirmed that Rs.7,00,000/- cash belongs to him and the balance of Rs. 25,83,000/- belongsto Shri Vimal Chand Join. 8.2 I have considered the factual matrix of the case, written submission filedby the appellant and assessment order. During the course of search cash amounting to Rs. 32,83,000/- was found in possession of the appellant. ShriRahul Join during assessment proceedings submitted that out of entirecash Rs. 7,00,000/- belongs to him and the balance cash of Rs. 25,83,000/-belongs to the appellant. Appellant during assessment proceedingssubmitted that there was sale of 5-6 lacs per dote from last 2- 3 days.The AO required the assessee to produce sales bills and vouchers which were also not furnished. The AO during assessment proceedings found that the post search entries in books are without any basis and unsupportive by documentary evidences and are afterthought. Appellant neither before the AO nor before me has filed any documentary evidence which could clearly establish that there was huge sale few days before the date of search. Since the cash was found in possession of the appellant, therefore, the onus lies on the appellant to prove its genuineness. The plea raised by the appellant is clearly an afterthought and is not supported by any documentary evidence. Thus, in view of the above discussion, I find no merit in interfering with the order of the AO and the addition made by the AO amounting to Rs.25,83,000/- is confirmed. Therefore, appeal on this ground is dismissed.” 5. Although we are not having assistance from assessee due to non- representation, we observe certain undisputed facts as follows: The search was
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conducted on 29.03.2014 and at that time the books of account were written upto 23.03.2014, thus the books of account were not updated for 5-6 days. It is also on record that the un-updated books of account of M/s Rachna Jewellers showed cash balance of Rs. 2,76,416/- and of M/s Rahul Jewellers showed cash balance of Rs. 75,391/-. It is further observed that the physical cash of Rs. 32,83,000/- was found by authorities on 29.03.2014. At this stage, we would like to mention that since the search was conducted on 29.03.2014, it was lawful and fair to allow updation of books of account upto 29.03.2014, which the assessee also did and presented updated books of account before authorities. It is also noteworthy that the lower authorities have not raised any objection against the acceptance of updated books of account, their objection is on the footing that the entries incorporated in the books were not supported by sufficient documentary-evidences. We further note that the assessee had shown following cash-balances as per updated books of account as on 29.03.2014:
Rahul Jewellers (Rahul Jain is proprietor) – Rs. 8,93,923/- Rachna Jewellers (assessee is proprietor) – Rs. 35,93,332/- This updated cash-balance was after incorporating the unaccounted sales of business during 5-6 days’ period from 23.03.2014 to 29.03.2014 but the authoritiesrejected those entries of unaccounted sales for want of sales-bills. Although we find merit in the action of lower authorities in rejecting the high cash-balance of Rs. 8,93,923/- and Rs. 35,93,332/- in absence of sufficient sales-bills, yet we observe that at the first-stage of recording the statements during the course of survey/search itself, the authorities found that the books of account were updated only upto 23.03.2014 and when questioned, the assessee and Shri Rahul Jain had given replies (which are duly narrated in the order of first-appeal re-produced above)according to which unaccounted sales of approximate Rs. 5-6 lakhs in M/s Rachna Jewellers and Rs. 2,50,000/- in M/s Rahul Jewellers was not updated in the books of account. We find that
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these statements/explanations were given by assessee and Shri Rahul Jain in the normal course during sudden survey/search conducted by the authorities and can be taken as bonafide, credible and should not be viewed as afterthought. It is also a practical fact known to everyone that the customers in jewellery-business do not want to take sales-bills. In fact, in reply to Q.No. 23 of the statements noted on Page No. 9 of the assessment-order, the assessee himself explained to the authorities that sales-bills are prepared and torn if the customers do not revert. The facts also reveal that the authorities have just counted the physical balance of Rs. 32,83,000/- and partly added (Rs. 7,00,000/-) in the hands of Shri Rahul Jain and balance added (Rs. 25,83,000/-) in the hands of assessee, even without giving reduction of opening balance and some leverage of unaccounted-sales, despite having found that the books of account were not updated for last 5-6 days. Thus, taking into accounta holistic view of the statements/explanations given by the assessees, we make work out available cash-balance at Rs. 11,01,807/- as on 29.03.2014:
Opening cash-balance of M/s Rachna Jewellers as disclosed 2,76,416/- by books Opening cash-balance of M/s Rahul Jewellers as disclosed by 75,391/- books Unaccounted sales of M/s Rachna Jewellersas explained in the 5,00,000/- statements Unaccounted sales of M/s Rahul Jewellers as explained in the 2,50,000/- statements Total cash balance available on 29.03.2014 11,01,807/-
Therefore, after deducting available cash-balance of Rs. 11,01,807/- from the physical cash of Rs. 32,83,000/-, there remains undisclosed cash of Rs. 21,81,193/-. Out of this, the authorities have attributed Rs. 7,00,000/- to Shri Rahul Jain, hence the remaining cash of Rs. 14,81,193/- is assessable in the
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hands of assessee. We, therefore, direct the Ld. AO to restrict addition to Rs. 14,81,193/- in the hands of assessee and delete the addition for balance.We believe this exercise would give a reasonable relief to the assessee and resolve the grievance judiciously.
Resultantly, this appeal of assessee is partly allowed.
Order pronounced as per Rule 34 of ITAT Rules, 1963 on 24.01.2023
Sd/- Sd/-
(MADHUMITA ROY) (B.M. BIYANI) JUDICIALMEMBER ACCOUNTANTMEMBER Indore �दनांक /Dated : 24.01.2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
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Date of taking dictation 13.1.23
Date of typing & draft order placed before the 13.1.23 Dictating Member
Date on which the approved draft comes to the 13.1.23 Sr. P.S./P.S.
Date on which the fair order is placed before the Dictating Member for pronouncement
Date on which the file goes to the Bench Clerk
Date on which the file goes to the Head Clerk
Date on which the file goes to the Assistant Registrar for signature on the order
Date of dispatch of the Order