TMI Blog2021 (11) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... s was also carried out by the partners of the firm and they have already surrendered income of ₹ 15,33,000/- for the alleged money lending business in their individual hands. Since the alleged seized documents referred for making alleged addition are not connected to the assessee firm, no addition was called for u/s 69 of the Act. We find no infirmity in the finding of Ld. CIT(A) and the same is confirmed. Accordingly ground no.1 2 of revenue s appeal for A.Y. 2016-17 stands dismissed. Unexplained cash found during the course of search - CIT-A deleted the addition - HELD THAT:- Opening balance of cash in hands as on 01.04.2015 in the audited books of accounts was ₹ 76,16,708/- but in the manual cash book the balance as on 01.04.2015 was taken at ₹ 26,13,010/- which was marked in pencil. Since the audit for F.Y. 2014-15 was undergoing when the search took place on 21.08.2015, the assessee subsequently completed books of account, got them audited and produced such audited books before Ld. AO. During the course of assessment proceedings no additions have been made during A.Y. 2015-16 for the alleged cash in hands shown as on 31.03.2015. Thus Ld. AO has neither ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... precedents, will of late Chameli Devi, Wealth Tax returns for A.Y..2011-12 of the beneficiaries referred in the will, affidavit of Devendera Jain brother of late Chameli Devi substantiating the gift and the statement during the course of search are sufficient enough to explain the jewellery of 10987 grams which was included in the stock of inventory but not accounted in the books as they were personal assets of the partners and not of the assessee firm. Further in light of the evidence filed before us which were also placed before lower authorities which are of the dates preceding to the date of search it cannot be said to be an afterthought submission to explain the gold ornaments weighing 10987.35 grams. CIT(A) has rightly appreciated the facts and documentary evidences in accepting the contention of assessee that the alleged unexplained stock of gold ornament weighing 10987 gms is the personal jewellery of partners and is therefore duly explained. Addition for value of 5686 gms of gold jewellery claimed to be purchased prior to the date of search but bills accounted for after the date of search and addition being deleted by ld. CIT(A), we find that the assessee has provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the order of Ld. Commissioner of Income Tax(Appeals)-3, (in short CIT(A) ), Bhopal dated 27.06.2019 arising out of the assessment order framed u/s 143(3) of the Act dated 26.12.2017 framed by ACIT-II Bhopal. 2. Brief facts as culled out from the records are that the assessee is a partnership firm engaged in jewellery business. The firm was incorporated on 01.04.2011. Search u/s 132 of the Act was carried out at the premises of the assessee and its partner on 21st August 2015. The assessee s shop is situated at the ground floor and the residence of partners and their family is situated on the upper floors. During the course of search various loose papers and documents were seized. Declaration of income under various heads was made by the partners on behalf of the assessee firm in the statement recorded u/s 132(4) placed at Pg.74-126 of PB-I. It was submitted by the partner that the cash balances are shown by pencil, however, in the computer data the exact cash balance are recorded. It was further submitted that as per the estimate the cash balance is around 42 to 45 lakhs. In the statement Shri Sanjay Jain surrendered the additional income of ₹ 1,60,00,000/- on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,86,975/- 4. Aggrieved assessee preferred an appeal before the Ld. CIT(A) and partly succeeded. Now both the assessee and revenue are in appeal before this Tribunal. 5. We will first take up assessee s appeal in ITANo. 383/Ind/2019 wherein sole ground raised by the assessee reads as follows: 1. That of the facts and in the circumstances of the case the Ld. CIT(A) III, Bhopal was not justified in confirming the addition of ₹ 1,60,00,000/- made solely on the basis of statement recorded under section 132(4) of the Income Tax Act, being the amount declared by one of the partner of the assessee, but not shown in the return filed. 6. Ld. counsel for the assessee contended referring to the following written submissions:- Addition in respect of declaration made of ₹ 1,60,00,000 under section 132(4) The Ld.A.O. has made the addition solely on the basis of declaration made by the partner Mr. Sanjay Jain. This addition is not based on any irregularity or any incriminating documents found during the course of search but is made on the basis of declaration made u/s 132(4) by Shri Sanjay Jain. The declaration is made in reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to presume it to be belonging to the year under consideration. Under these circumstances the additions sustained by the ld. CIT(A) are bad in law. It is further submitted that no addition can be made without finding any incriminating material merely on the basis of the declaration. In this connection the attention is drawn to the direct judgment of the Hon ble Indore Tribunal in the case of Shri Sudip Maheshwari in ITA 524/IND/2013 pronounced on 13/02/2019 and in the case of M/s Ultimate Builders in ITA 134/2019 pronounces on 09/08/2019. The Hon ble Tribunal has relied on the various judgments of the various High Courts specially the decision of the Hon. Jharkhand High Court in Shri Ganesh Trading co. v/s. CIT and the decision of Hon. Gujrat High Court in the case of KailashBen Mangarlal Choksi v/s. CIT. In view of this, it is humbly prayed that the addition sustained by the Ld. CIT(A) deserves to be deleted. 7. Per contra Ld. DR vehemently argued relying on the detailed finding of Ld. CIT(A) and also submitted that the assessee has admitted undisclosed income of ₹ 1,60,00,000/- in the statement recorded on oath u/s 132(4) of the Act and this surrender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from moneylending business as per seized Diary BS-4, and unexplained transaction as per LSP-1. So it remains an uncontroverted fact that the addition of ₹ 1,60,00,000/- in challenge before us is purely based on the statement recorded u/s 132(4) of the Act. 11. Similar facts and the issues raised in the instant appeal came up for adjudication before this Tribunal in the case of Signature Builders vs. ACIT in ITANo.184 to 186/Ind/2018 and others dated 08.01.2021 wherein this tribunal apart from referring various other judicial pronouncements had also referred to other decision of this Tribunal adjudicating similar issue and identical facts in the case of Sudeep Maheshwari in ITANo. 524/Ind/2013 dated 13.02.2019 and M/s. Ultimate Builders vs. ACIT in ITANo.134/Ind/2019 dated 09.08.2019. Relevant finding of this Tribunal in case of Signature Builders (supra) extracted below:- 25. We have heard rival contentions and perused the records placed before us and carefully gone through the decisions relied by Ld. Counsel for the assessee. Through Ground No.3 raised for Assessment Years 2013- 14 2014-15 assessee has challenged the finding of Ld. CIT(A) confirming the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... totalling to ₹ 3.25 crores (₹ 25,00,000/- + ₹ 3,00,00,000/-) is based only on the statement given u/s 132(4) of the Act. 28. Now the moot question remains that whether the Ld. A.O was justified in making the addition purely on the basis of statement given u/s 132(4) of the Act without proving on record any corroborative evidence or incriminating material found during the course of search which could have direct nexus with the alleged addition of ₹ 3.25 crores . 29. We observe that similar issue came up before this Tribunal in another group concern M/s Ultimate Builders V/s ACIT ITA No.134/Ind/2019 order dated 09.08.2019. M/s Ultimate Builders was also subjected to search u/s 132 of the Act on 29.1.2014 being part of the same Signature group. From perusal of the impugned order of Ld. CIT(A) in the case of M/s Signature Builders observed at page 64 65, Ld.CIT(A) has given the brief details of the additional income admitted by the authorised person of M/s Signature group which is as follows; S.No Concern/F.Y 2012-13 2013-14 Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the judgments referred to and relied by both the parties. The sole grievance of the assessee raised in Ground No.1 of the instant appeal is against the order of Ld. CIT(A) confirming the addition of ₹ 2,25,00,000/- made by the Ld. A.O on account of undisclosed income surrendered during the course of search by the partner of the assessee firm. 10. At the cost of repetition we would like to recite and recapitulate the facts once more. The assessee is a partnership firm engaged in real estate business. It is the part of Signature Group. Search action was initiated in the Signature Group and its associates on 29.1.2014. The assessee's association with the Signature group is on account of the common partners in various concerns. Assessee is separately assessed to tax. Search u/s 132(4) of the Act was initiated in the case of the assessee on 29.1.2014 and was concluded on 31.1.2014. This fact is proved on the basis of panchanama prepared by the officer of the search team which is placed at page 62-64. No surrender was made in the statements taken by the search team during the course of search from 29.1.2014 to 31.1.2014. There is no mention of any incriminating mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her submitted that no incriminating material was found during the course of search and as held by Hon'ble Tribunal in the latest decision in the case of ACIT(1) vs. Sudeep Maheshwari (supra) that no addition was called for which has been made merely on the basis of the statement without correlating the disclosure made in the statement with the incriminating material gathered during the course of search . 13. So the contention of the Ld. Counsel for the assessee can be summarised that the addition cannot be made merely on the basis of statement which too was taken after conclusion of the search and no correlation has been made with the incriminating material found during the course of search. 14. On the other hand Departmental Representative gave reference to various judgements referred above. She mainly placed emphasis on the judgment of Hon'ble High Court of Madras in the case of Kishore Kumar V/s DCIT (supra) holding that when there was a clear admission of undisclosed income in the statement sworn in u/s 132(4) of the Act there is no necessity to scrutinise the documents . 15. Now so far as the first contention of the assessee that the statement re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusion of the search no surrender of undisclosed income was made in the statement recorded u/s 132(4) of the Act by the persons available at the assessee's business premises. 19. As regards the statement of Mr. Vipin Chouhan given on 02.02.2014 is concerned, we find that this statement contains the surrender for various group concerns and not specifically for the assessee M/s. Ultimate Builders. Reference was also given to other business concerns namely M/s. Virasha Infrastructure, Signature Infrastructure, Signature Builders and Signature Builders and Colonisers. Certainly the search in the case of concerns other than the Ultimate Builders did not conclude on 02.02.2014 but at that point of time on 02.02.2014 the search in the case of Ultimate Builders stood concluded two days before on 31.1.2014. 20. We therefore are of the considered view that the alleged statement given by Mr. Vipin Chouhan on 02.02.2014 may be construed as the Section 132(4) of the Act for all the other concerns named above except for the assessee i.e. M/s. Ultimate Builders. Therefore the statement referred to by the Ld. A.O on the basis of which the addition have been made in the ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y assessee, assessee could not be basis for making the assessee liable for tax and the assessee retracted from such admission and revenue could not furnish any corroborative evidence in support of such evidence. It was further urged by the assessee that admission should be based upon certain corroborative evidences. In the absence of corroborative evidences, the admission is merely a hollow statement. We have given our thoughtful consideration to the rival contentions of the parties. It is undisputed fact that the statement recorded u/s 132(4) of the Act has a better evidentiary value but it is also a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the contents of the statement. In the case in hand, revenue could not point out as what was the material before the A.O., which supported the contents of the statement. In the absence of such material, coupled with the fact that it is recorded by the Ld. CIT(A) that the assessee himself had surrendered a sum of ₹ 69,59,000/- and ₹ 75,00,000/- in A.Y. 2008-09 and 2009-10 respectively. The A.O. failed to co-relate the disclosures mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the assessee appears to be voluntarily given statement disclosing undisclosed income of ₹ 20 lacs. According to the learned counsel for the assessee, Shri Binod Poddar, the Assessing Officer had full jurisdiction to proceed for further enquiry and could have collected evidence in support of alleged admission of undisclosed income of the assessee. 6. We are of the considered opinion that statement recorded under section 132(4) of the Income Tax Act, 1961 is evidence but its reliability depends upon the facts of the case and particularly surrounding circumstances. Drawing inference from the facts is a question of law. Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the assessee. The statement on oath of the assessee is a piece of evidence as per section 132(4) of the Income Tax Act and when there is incriminating admission against himself, then it is required to be examined with due care and caution. In the judgment of Kailashben Manharlal Chokshi (supra), the Division Bench of Gujarat High Court has considered the issue in the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances of the case and respectfully following the judgements and decisions referred above we find that firstly the statement given by Mr. Vipin Chouhan u/s 132(4) of the Act on 02.02.2014 cannot be considered as the statement given u/s 132(4) of the Act in the instant case of the assessee firm since the search action in case of assessee was concluded on 31.1.2014 by the Authorised Officer. Secondly as regards to other business concerns referred by Mr. Vipin in his statement given on 02.02.2014 and in case of such business concern wherein search action u/s 132 of the Act was continuing the said statement dated 02.02.2014 will be considered as the statement u/s 132(4) of the Act. Thirdly, no reference has been given by the Revenue Authorities to any incriminating material found during the course of search at the business premises of the assessee, which could be correlated to the alleged surrendered income earned by the assessee from undisclosed sources. 27. We therefore are of the considered view that the finding of Ld. CIT(A) needs to be set aside and the addition of ₹ 2,25,00,000/- deserves to be deleted since it has been made on the basis of a statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of ₹ 3,07,500/- made by assessing officer u/s 69 of the Income Tax Act, 1961 on account of undisclosed investment in loans in money lending business as per diary BS-4. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of ₹ 60,00,000/- made by Assessing officer on account of unexplained cash found during course of search. 4. On the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the addition of ₹ 2,25,544/- made by Assessing Officer u/s 69 of the Income Tax Act, 1961 on account of undisclosed investment in loans in money lending as per diary BS-44. 5. On the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the addition of ₹ 5,00,000/- made by Assessing Officer u/s 69C of the Income Tax Act, 1961 on account of undisclosed expenditure on basis of LPS-1 seized from the residence cum showroom at railway station road, Vidisha. 6. On the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the addition of ₹ 4,18,16,751/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Rajeev Jain, Smt. Bhawna Jain, Smt. Monica Jain for A Y. 2010-11 to 2016-17 191-300 3. Copy ITR and Computation of income of Shri Alok Jain for A Y. 2012-13 to 2016-17 and Balance Sheet, P L Alc for AY. 2010-11 to 2016-17 301-321 4. Copy of assessment order of Shri Sanjay Jain 322-344 5. Copy of assessment order of Shri Rajeev Jain 345-365 6. Copy of BS-44 Pg.ll 366-367 7. Copy ofLPS -1 Page 2, 3, 19,21,50,62,63 64 368-375 8. Details of Donations given to Pandit Todarmal Smarak Trust 376-381 INDEX-III S.NO. PARTICULARS PAGE NOS. 1. List of inventory of jewellery found and seized 382-385 2. Copy of ledger account of purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous person against pledge of gold ornaments received as security. They were also physically found and inventorised. Details of the dates on which the loan/advance was given and other condition of the loans were found attached to the pledged jewellery items based on which the year wise amount of loans given were tabulated and mentioned at Page No. 11to 14 of the assessment order. During the course of assessment proceedings it was submitted before the Ld. AO that the pawning business was carried out by the partners of the assessee and their family members. It was submitted that all such transactions were recorded in the books of accounts of the individual family members and such books of accounts were produced before the AO for his verification and copy of the same was also filed. Cash/fund flow statement and the balance sheets of the partners for various years were also furnished before the AO. Details of investment made in the pawning business and the income earned from it by various persons were submitted before the AO during the course of their respective assessments. While framing the assessment the Ld. A.O. made the addition in the hands of the firm of ₹ 18,84,500/- on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere made u/s 69 of the act. Detailed submission were made before the AO submitting that the activity of moneylending business was undertaken by the partners and their family members in their individual capacity and the income from the same is duly offered to tax in their ITR and the diary had no relation with the assessee firm. Many transactions which have in fact been squared up were not deleted and remained in the diary and did not represent any investment. The submission of the assessee were ignored by the AO and additions were made u/s 69.The Ld. CIT(A) deleted the additions holding that the money lending business is conducted by the partners and hence the addition cannot be sustained. 22. We further observe that Ld. CIT(A) had examined the facts in detail and deleted the impugned addition observing as follows: 5.1.2 I have considered the facts of the case, evidence on record inter-alia plea raised by the appellant and findings of the AO. During the course of search diary BS-4 was found and seized which contain details of date wise loans given to various persons against pledge of gold ornaments. The Jewellery received as security against the loan amounts given were a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andhit hai thatha heere ke jewar jo kee almari se mile hai wah meri firm Alankar Jewelers ke hai , The statement of Shri Shikar Chand jain itself explain that the only diamond jewelry found in the almirah belongs to appellant firm and not the jewelley pledged against loans given by Shi Shikar Chand Jain. Further, Shri Shikhar Chand jain in reply to Question No 11 has admitted that this diary (ES-4) has been written by him and is related to 'Girvi'. However, another partner Shri Sanjay Jain was asked to explain the transactions mentioned in the impugned diary which are not recorded in books of accounts of the firm. In reply Shri Sanjay Jain admitted that these transactions are not recorded in books vi accounts of the appellant firm and made declaration of additional income without consulting with other partners. 5.1.4 The AO on the contrary has made a presumptive belief that the appellant firm is only involved in pawning and money lending business and stated in para that no regular income on account of interest on such lending activates have been shown by the family members in regular return of income. ,However, it is important to mention that the partners have quanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 23. From perusal of the above finding of ld. CIT(A) and the facts placed before us, we are of the considered view that the alleged pawning business was not carried out by the assessee firm and it was carried out by the family members of the partners and the income from pawning business have been shown in the income tax return filed by them. This fact is supported by copy of income tax return computation of income and balance sheet placed in the paper book. Thus no addition was called for u/s 69 of the Act at ₹ 18,84,500/- and has been rightly deleted by the Ld. CIT(A). 24. Similarly, regarding the addition for money lending business we find that this was also carried out by the partners of the firm and they have already surrendered income of ₹ 15,33,000/- for the alleged money lending business in their individual hands. Since the alleged seized documents referred for making alleged addition are not connected to the assessee firm, no addition of ₹ 3,07,500/- was called for u/s 69 of the Act. We find no infirmity in the finding of Ld. CIT(A) and the same is confirmed. Accordingly ground no.1 2 of revenue s appeal for A.Y. 2016-17 stands dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intaining books of account on computer and such books were written up till 30.06.2015. Even the entries made prior to 30.06.2015 in the books were also open to changes as was specifically mentioned by the partner during the course of search. The observation of the AO that the cash balance was determined at ₹ 10 lac after consultation is not factually correct. Reference in this regard is drawn to concluding statement of the partner S.C. Jain recorded on 22.08.2015 (Pg.115-126 of PB-I) in which he has stated (pg.118) that Computerized books are completed up till 30.06.15. Some entries pertaining to period prior to 30.06.15 are also not recorded. I am unable to produce the P L/Balance sheet/Stock Register up to 20.08.2015 due to above reason . The Partner has also stated that (reply to Q-8) after recording of sale bills up till 20.08.15 the cash balance would work out to around 40-45 lakh. However cash physically found will be in excess of such cash by app 25-30 lakh which I am unable to explain, and hence accept the same as unexplained income of Alankar Jewelers for FY 15-16. These statements clearly indicate that the books of accounts were not completed and the partners have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as wrongly surrendered ₹ 60 lakhs. The declaration was contradicted during the search proceedings itself, and was based on a wild guess work without making any calculations and thus, no reliance could have been placed on the same. Under these circumstances the additions deleted by the ld. CIT(A) is quite correct and the deletion of this amount may please be confirmed.It may be submitted that the Hon ble Indore Bench in Urmila Agrawal V/s. ACIT reported in 24 ITJ 786 has held that where the cash book produced is neither rejected nor any deficiency found, no addition can be made disallowing the credit in day to day balances. The surrender made by the partner on a wrong notion cannot be the ground for making any addition. In this connection, attention is drawn to the judgment of the Hon ble Indore Tribunal in the case of Shri Sudip Maheshwari in ITA 524/IND/2013 pronounced on 13/02/2019 and in the case of M/s Ultimate Builders in ITA 134/2019 pronounces on 09/08/2019. 29. We further find that Ld. CIT(A) has deleted the addition of ₹ 60,00,000/- for the alleged unexplained cash found during the course of search observing as follows: 5.6 Ground No 6 for AY 2016-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant were not completed and the cash balance of ₹ 10,00,000/- was calculated after verification and reconciliation of cash book and (ii) Shri sanjay Jain has admitted undisclosed income of ₹ 60 lakhs. (i) Incomplete books of account of the appellant as on date of search.- Shri Shikhar Chand Jain during the course of search explained that books of account had been written till 30.06.2015 in tally software and few of the entries made prior to 30.06.2015 are also not entered in books of accounts. Shri Shikhar Chand Jain further explained that after recording of all sales bills and after making other postings till 20.08.2015 the cash balance would work out around 40-45 lakhs and regarding physical cash found in excess to 25-30 lakhs he is unable to explain the same. During the course of search a manual cash book was found and seized according to which the cash balance of appellant as on 08.08.2015 was ₹ 10,15,919/- and opening cash balance as on 01.04.2015 was taken as ₹ 26,13,010/-. However, it is important to mention that as per audited financial statement as on 31.03.2015 the closing cash balance is of ₹ 76,16,708.71 which has been accepted by the AC. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was recorded on oath wherein he was confronted with the manual cash book. He in reply has accepted additional income of ₹ 60,00,000/- on account of excess cash found during the course of search. It is seen that statement given by both Shri Shikar Chand Jain and Shri Sanjay Jain were on the basis of seized manual cash book and not as per true and correct facts of the case which is also one of the reasons for retraction made by the appellant from disclosure made by Shri Sanjay Jain. Therefore, the same cannot be considered as reliable and correct. However, the books of accounts- were_ completed by the appellant~ and were also examined by the AD and no specific defect or discrepancy was found by the AO. Thus, it can safely be presumed that the cash in hand as per books of accounts is correct. 5.6,3 In, view of the above discussion, the AO was firstly no justified in presuming that the declaration made by partner on higher side is the exact amount of unexplained cash which was found during the course of search. The AO ought to have provided sufficient reasoning behind dropping the declaration made by Shri Shikhar Chand Jain of ₹ 25 -30 lakhs. Secondly, no books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized diary BS-44 at page no 11 represents outstanding debtors recorded in regular books of accounts. Further, balance sheets for A Y 2012-13, 2013-14 2016-17 were already submitted with return of income filed uls 139(1) of the Act. on perusal of copy of list of outstanding debtors it was observed that the list of persons whose name are mentioned on page no 11 of the said diary are list of outstanding debtors as on date of search which are fully recorded in regular books - of accounts. Thus, the addition made by the AO amounting to ₹ 1,12,QOO/ in AY 2012-13, ₹ 1,92,125/- in AY 2013-14, ₹ 4,70,446/- in AY 2014-2015 and ₹ 2,25,544/- in AY 2016-17 is Deleted. Therefore, appeal on this ground is Allow. 33. We further observe that the contentions made by the assessee before lower authorities and before us are duly supported by the audited balance sheet for preceding years and the alleged names appearing in the seized diary BS-44 are name of the outstanding debtors and have no relation with the alleged moneylending business. Ld. CIT(A) has rightly appreciated the facts and deleted the additions which thus no interference is called for. Ground No.4 of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said temple. Further, various members of the Jain community of Vidisha and nearby places have agreed to make contribution of ₹ 12,50,000/- for installation of idols at the temple managed by Pandit Todarmal Smarak Trust, Jaipur and the amount was collected by Shri Shikhar Chand Jain on behalf of the trust. The amount collected from various devotees was handed over to trust and receipt was issued by the trust. The appellant in support has filed confirmation of' the recipients and details of receipts as additional evidence which were also forwarded to the AO. The AO in reply submitted that the additional evidence provided by the assessee firm does not have any relevance as there is no mention of donation, donation receipts, done and other supporting evidences during the course of search. On perusal of copy of letter and details of donation receipts it was found that the receipts as mentioned on the loose paper matches exactly the same with the details submitted by Pandit Todarrual Smo-ak Trust, Jaipur. As per list submitted by the said trust the collection of donation from 22.07.2012 to 31.07.2014 was ₹ 7,51,000/- and amount of ₹ 2,82,500/- was received from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e search the assessee got its books completed and reconciled the stocks with the available information and offered to tax ₹ 3,03,10,439/- determined as unexplained investment . Detailed reconciliation with reasons for adjustments is given below to substantiate the correctness of the income offered:- Stock found during the course of the search (Gold and Diamond) 33,853.86gms. ₹ 8,10,16,131/- Stock as per books of accounts as on the date of search 6,105.938 gms. ₹ 1,33,84,194/- Difference 27747.922 gms ₹ 6,76,31,937/- Difference in stock of silver 157gms ₹ 42,95,253/- Total difference in stock ₹ 7,19,27,190/- Stocks surrendered in the return (wrongly taken by A.O. at 3,01,10,439/- 11075 gms ₹ 3,03,10,439/- Balance addition challenged 16672 gms. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the assessee are summarized herein below. Para No Observation of the AO 7.16 Jewellery mentioned in the W.T return was not physically found Proof of conversion of gold into stock in trade was not furnished Assessee could not match the items in the W.T returns with the stock physically found The assessee has accepted the difference in stock as his undisclosed income in the statement u/s 132(4) 42. As regards bills accounted after search for purchases made before search(gold) 5685.92 grams Diamonds, ₹ 21,94,174/- following submissions are made by Ld. counsel for the assessee:- In some cases of purchase of jewellery/diamonds, though the material was received prior to the date of search, the invoices were not accounted in the books of account as on the date of search. Due to this quantity of gold purchased reflected in these invoice was not included in the book stock and therefore the difference in stock calculated was not correct. Subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble from the copy of her pass port. During post search enquiries this fact was brought to the knowledge of the Investigation wing which issued summons to the said persons and duly recorded their statement in which both the persons confirmed these facts. They also filed an affidavit before the investigation wing confirming these facts. The copy of the statement recorded was not provided to the assessee. 44. When the matter came up before the ld. CIT(A) all the necessary details were filed. The affidavits of the supplier of the jewellery were also filed. The affidavits of the advocate, the executor and the witnesses in respect of the will of Smt. Chamelidevi were also filed. The affidavits of Smt. Meena Jain and her husband along with the summons issued were filed. All these papers alongwith an application under rule 46A were filed before the Ld. CIT(A) (pg.33 of the PB). The Ld. CIT(A) has admitted these papers, and were sent to the Ld. A.O. for his comments. The remand report was submitted on 06/05/2019 (Pg.38 of Ld. CIT(A) order).The Ld. CIT(A) after considering all the papers submitted before the Ld. A.O. and before him under rule 46A has allowed the appeal giving the compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that out of total jewelley 10987 gms belongs to partners and the same has been included in stock. Bills of jewellery of 5685.92 gms were pending as on date of search and were received after search. Jewellery of 448 gms belongs to Smt Meena Jain and jewellery of 331.64 gms belongs to Shri Ashok Jain. The AO after considering reply of the assessee did not find the same acceptable and stated that no such jewellery was found as mentioned in wealth tax return as physically found during the course of search. The assessee could not prove the conversion of such gold in stock in trade. Further, the bills received by the assessee after date of search are relating to parties not trading with assessee. Also, jewellery belonging to Smt Meena Jain and Shri Ashok Jain has not been claimed' to have been kept in showroom of the assessee. 5.5.1 The appellant during the course of appellate proceedings submitted late smt. Chameli Devi had executed a will on 30.05.2000 making distribution 0: her assets including gold/gold jewellery among various family members. The will was drafted by advocate Mr Ajay Khanerkar and Vias signed in presence of two witness Shri Maluk Chand Jain and Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 21,94,174/- After considering the plea- raised by the appellant I find it considerate to discuss this issue in depth and wider- . (a) Personal Jewellery of Partners (10987 gms) The appellant during the course of assessment proceedings as well as appellate proceedings has claimed that out of total jewelley found during the course of search jewellery of 10987 gms belongs to family members and partners of the appellant firm. The appellant has also explained the acquisition of jewellery and stated that Mrs. Chameli Devi the wife' of the partner Mr. Shikar Chand Jain got married appx. 65 years back and belonged to an affluent family. She got married to a family of jewelers and as per the prevailing custom in the Indian society got substantial quantity of jewellery as gift from her parents and in laws and on other important occasions. However, she died on 04.06.2COO. Prior to her death she had executed a will on 30.05.2000 making distribution of her assets including gold/gold jewellery amongst her various family members, Tile will was drafted by her advocate Mr. AjayKhanerkar and was signed by two 'witnesses namely Maluk Chand Jain Kalyan 1-1 ! Jain. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm for which no accounting entry has been made in the books of account. Person wise details' of gold ornament aggregating to 10987.35 gram so included in the stock were also mentioned in the statement recorded: Therefore, it cannot be said that the assessee did not provide the details of jewelley of 10987 gms. As regard to observation made in (iii) (v) it is seen that the assessee has submitted affidavits of four persons i.e. advocate (preparer of will), two witness and executor of the will, confirming the genuineness of the will, however, the AO did not raise any doubt on affidavits filed. The family members and partners have disclosed the jewellery in their wealth Tax Return which \Va3 submitted before the search. This cannot be called a case of afterthought. It may further be appreciated that no item wise inventory was prepared and the quantification/valuation was done on weight basis only in a lump SUD. manner as would be verifiable from the copy of inventory/valuation sheet enclosed. The fact that total jewelry found with the assessee and his family members during the course of search was 33853.86 grams whicl: have totally been considered as the stock in hand of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s brought to my notice that it has been dealing with few of the suppliers since inception of the business. The brief details of dealing with these suppliers are as under:- Raviraj Bullion Jewellers since 23.08.2012 Ankur Jewellers since March 2014 Kanak Gems since September 2013 Jaina Jewellers since 06.02.2012 Shilpi Jewellers since inception of the business Nonetheless, the AO has held that the assessee was provided various opportunity to complete its books of accounts, however, failed to do so. The appellant on contrary has stated that it was not provided any opportunity to complete the books during the course of search. The assessee was made to prepare a reconciliation statement of the jeweller; by incorporating details of sales/purchase available in an excel sheet. Shri Shikar Chand Jain in his sworn statement recorded on oath on 22.08.2015 has clearly admitted that books of accounts are completed till 30.06.2016 and some entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of affidavits obtained from Mis Kiran Dhaore, Mis Mansa Jewelers, Mis Raviraj Bullion Jewelers, Ankur Jewelers, Kanak Gems, Jaina Jewelers Shilpi Jewelers confirming the fact that the ornaments under consideration were supplied and sold by them prior to 21.08.2015, the date of search. A copy of these affidavits were also provided to the AO. The AO' has not doubted the genuineness of the invoices and affidavits but \Va3 0 f the opinion that the assessee did not intent to show the same in b':'0ks of accounts. On perusal of copy of invoices, ledger account and affidavits it was observed that payments were made through cheques and various payments were made before the date of search which shown that intention of the assessee is correct and is not to hide any-purchase. The reason of non-reflection of these purchase in books of accounts was that the bills and invoices were pending from these parties and were recorded when received. The appellant has submitted that in certain cases the assessee had. purchased gold bars which were dully recorded in the regular books of accounts. These gold bars were sent for conversion into ornaments. In the conversion process the ornaments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Ashok Jain was found during the course of search. The valuation report clearly indicates that the jewelry of779.64 gms belongs to Smt Meenajain and Shri Ashok Jain which was kept with Shri Sikhar Chand Jain (father of Smt Meena jain) partner of the appellant for security reasons because Smt Meena Jain was travelling to Canada which was also verified from copy of passport filed by the appellant. Thus, the AO cannot be too harsh on appellant to make addition w.r.t jewellery of Smt Meena Jain and Shri Ashok Jain and therefore, the total quantity of 'jewellery found during the course of search be reduced to this extent. The appellant by taking an additional plea submitted that the rate adopted for determining the book value of stock was estimated with estimated purity of 80% whereas the physical stock found was valued by adopting varying purity as was determined by the valuer. Further, the purity of the ornaments considered in physical stock and book stock should have been considered at The same level and accordingly the valuation should have been done at the e rates for determining the difference in value of stock. Also, If the same urity would have been adopted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 938 gms. ₹ 1,33,84,194/- Difference 27747.922 gms ₹ 6,76,31,937/- Difference in stock of silver 157gms ₹ 42,95,253/- Total difference in stock ₹ 7,19,27,190/ Stocks surrendered in the return (wrongly taken by A.O. at 3,01,10,439/-) 11075 gms ₹ 3,03,10,439/- Balance addition challenged 16672 gms. ₹ 4,16,16,751/ 47. Bifurcation of the alleged quantity of Gold arnaments weighing 16672 gms is as follows: It was explained before the Ld. A.O. that the stock of 16,672 gms is explained as under: i. Personal jewellery of the partners 10987 gms. ii. Bills accounted after the search wherein the Purchases were made before the search 5686 gms. iii. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pared at the time of search and the assessee could not lead evidence of conversion or remaking of jewellery, it cannot be said that jewellery to this extent was unexplained . c. Rakesh R. Purohit, 14 DTR 414 (Jaipur Bench) It has been held that jewellery disclosed by the assessee in past cannot be lost site in view of the non-availability of item-wise tally. 49. We further note that the Central Board of Direct Taxes has issued Guidelines/ Instruction No. 1916 dated 11th May, 1994. Instances of seizure of jewellery of small quantity in the course of operation under section 132 have come to the notice of the Board. The question of a common approach to situation where search parties come across items of jewellery has been examined by the Board and following guidelines are issued for strict compliance. In the case of a wealth tax assessee, gold jewelry and ornaments found in excess of the gross weight declared in the wealth tax return only needs to be seized. Various High Courts, relying on the above referred instructions of the CBDT, has consistently held that the possession of the jewellery and ornaments to the extent of the quantities specified in the instruct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 28.07.15 and 6,00,000/- was made on 08.07.15 through account payee cheques drawn on HDFC Bank. (1147 grams) (854.200) (Pg.451 and 451A of PB) iii. Invoice of Raviraj Bullion Jewellers dated 13.08.15 for ₹ 3,40,000/- had escaped accounting as on the date of search and was submitted during the assessment proceedings, the payment for this purchase was made by RTGS through account payee cheque dated 13.08.15 for ₹ 3,40,000/- drawn on HDFC Bank .(131 grams) (Pg.451B) iv. Kiran Dhaore 80.712 grams date of purchase 27/04/2015 payment made through banking channel. v. Ankur Jewellers Guna bill dated 14/05/2015 and 19/08/2015 payment made through baking channel ₹ 17,72,494/- (842.440 grams) (pg.454) and ₹ 39,08,632/- ( 1825.440 grams) (Pg.458) Shipli jewelers Mumbai bill dated 18/08/2015 payment made through cheque ₹ 9,15,865/- (409 grams) (Pg.457) v. Diamonds purchased from Mansha Jewelers, Alankar Jewellers and Kanak Jems were prior to the search but accounted for after the search. 53. We further find that all the above stated bills along with copy of invoices of the suppliers, details of payments made and confirmations r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
