TMI Blog2003 (9) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... to Sh. G.D. Sharma. 3.1 Briefly stated, the facts of the case are that a search under s. 132 of the IT Act was conducted as at the residential premises of the assessee on 28th July, 1988. Some unexplained jewellery and incriminating documents regarding investment and expenses were found. One of the documents found during the course of search was a receipt dt. 28th April, 1984, of Rs. 2 lacs given to Shri G.D. Sharma, Managing Director of M/s Barauni Carbons (P) Ltd. The receipt states as under: "Received from Sh. Jatinder Sehgal S/o Sh. D.D. Sehgal of 99, Central Town, Street 3, Jalandhar City, a sum of Rs. 2 lacs as advance against future allotment of shares of proposed company (Barauni Carbons (P) Ltd.) to be registered in the State of Bihar." The AO stated that the receipt was issued at Barauni and the amount was paid to Shri G.D. Sharma at that place. However, the assessee explained that Rs. 80,000 was received by draft on 28th April, 1984, from M/s Moti Lal Co., Amritsar as a loan, Rs. 50,000 was withdrawn from Saving Bank Account No. 2022 of his wife Smt. Kiran Sehgal and the draft was prepared in favour of Sh. G.D. Sharma. Further, it was explained that Rs 50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42 in Bank of India, Jalandhar, belonging to Sh. J.K. Sehgal (HUF) of which assessee is the Karta. Rs. 20,000 Out of cash for which details were duly available on record. It may be pointed out that the detail of drafts was also available in the seized record at item No. 105. The AO verified the above position. However, in the order under s. 132(5) he observed that all the above drafts were got prepared on 28th April, 1984, and were with the assessee on that date. However, the receipt issued by Sh. G.D. Sharma at Barauni is on 28th April, 1984. According to the AO the drafts dt. 28th April, 1984, at Jalandhar/Amritsar could not have been delivered at Barauni on the same date. On this basis he treated the sum of Rs. 2,00,000 as income of the assessee from undisclosed source vide order under s. 132(5) dt. 24th Jan., 1989. During the course of proceedings under s. 143/147 the assessee vide letters dt. 30th Jan., 1996 and 8th March, 1996 reiterated the same position. In fact vide letter dt. 8th March, 1996, para 1(d) it was explained that the drafts and cash totalling Rs. 2 lacs had been handed over to Sh. G.D. Sharma on 28th April, 1984, at Jalandhar and not at Barau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the AO did not ask any further requirement in this regard. It was explained by the assessee that he had borrowed Rs. 12,000 from Sh. Daulat Ram, Rs. 8,000 from Sh. Mohan Singh and Rs. 6,000 from Sh. Kishori Lal and out of which Rs. 20,000 was given to Sh. G.D. Sharma in cash. According to the learned CIT(A), if the AO did not believe it to be genuine, he ought to have interrogated the creditors or made further enquiries. He accordingly, held that the addition made by the AO was not justified and the same was deleted. 3.4 We have carefully considered the rival submissions and perused the orders of the authorities below. In the present case, it is noticed that the AO made the addition only on the basis that the drafts were purchased on 28th April, 1984, at Jalandhar, but on the receipts, the place has been mentioned at Barauni and it was not possible for the assessee to reach Barauni on the same date. However, he has not doubted that the assessee had purchased drafts which were handed over to Sh. G.D. Sharma at Jalandhar. It is also true that the assessee explained the sources of the drafts. A draft No. 495576 amounting to Rs. 80,000 was purchased out of loan given by M/s Moti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee purchased the land in the name of his minor son Sh. Vivek Sehgal as per following detail: "(1) On 18th April, 1984, for Rs. 72,225 (plus only of Rs. 6,163) from Shri D.K. Sehgal. (2) On 18th April, 1984, for Rs. 64,800 (plus stamp duty of Rs. 5,525) from Shri D.K. Sehgal." The assessee explained the source of investment as under: "(i) Rs. 58,800 was received from Smt. Shakuntala Sehgal from her saving account No. 8672. Her affidavit and copy of account has been furnished and placed on record. (ii) A cheque of Rs. 50,000 from M/s Ravi Trading Co., Jalandhar was received and deposited in account of Shri Vivek Sehgal. (iii) A sum of Rs. 30,000 and Rs. 20,000 was withdrawn from savings account No. 16742 on 27th March, 1984 and 9th April, 1984, respectively. (iv) Rs. 66,225 favouring Shri D.K. Sehgal was issued from account No. 4237 of Vivek Sehgal with Canara Bank." The AO however, did not find merit in the explanation of the assessee for the reasons stated at p. 2 of the assessment order dt. 22nd March, 1986, and made the impugned addition. 4.1 The assessee carried the matter to the CIT(A) and submitted that the land had been purchased by his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a sum of Rs. 1,25,025 (Rs. 58,800 + Rs. 66,225) was fully explained, as such there remained a difference of Rs. 23,688. For this amount, the learned CIT(A) observed that the assessee had withdrawn Rs. 30,000 and Rs. 20,000 from his own saving bank account and if the drawings of Rs. 30,000 on 27th March, 1984, was treated to have been diverted on the same date against cash deposit of Rs. 17,000 in the bank account of Sh. Vivek Sehgal, even then there remained a balance of Rs. 13,000. He also pointed out that there was no link between this withdrawal of Rs. 20,000 on 9th April, 1984, and deposit of Rs. 20,000 in the account of Smt. Shakuntala Sehgal on 16th April, 1984. Accordingly, the learned CIT(A) held that there was no valid reason to reject the assessee's explanation to explain the investment of Rs. 23,688 out of withdrawals of Rs. 50,000 from his own saving bank account. The learned CIT(A), therefore, deleted the addition made by the AO. 4.3 After considering the rival submissions and going through the assessment record as well as impugned order, it appears that the explanation given by the assessee was supported by the evidence on record. The learned CIT(A) after verifyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions of the assessee observed that the AO himself admitted the receipt of Rs. 1,38,410 as duly explained. He further pointed out that the entry of Rs. 25,000 for purchase of Lathe machine and Rs. 400 for the octroi pertained to M/s Hiteshi Rubber Works and hence Lathe Machine also related to M/s Hiteshi Rubber Works, since the assessee had no factory of his own and if that amount of Rs. 25,400 was to be excluded, then the balance remained at Rs. 53,000 and odd. The learned CIT(A) pointed out that the assessee by letter dt. 30th Jan., 1996, had submitted that the household expenses were met out of agricultural income which was shown in his hand as Karta of J.K. Sehgal (HUF) and withdrawals from bank accounts of his family member. The learned CIT(A) further found from the record that in the accounting period relevant to asst. yr. 1985-86, the assessee had purchased substantial agriculture land in the name of his minor son and the AO had not given any credit for the agricultural income. He opined that the expenses which could be related to the household expenses were covered by the agricultural income and the expenses related to the factory of M/s Hiteshi Rubber Works could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the AO as well as before the learned CIT(A) was that those expenses were incurred out of agricultural income. However, the AO did not give credit for the same, inspite of the fact that he himself during the course of assessment proceedings for the asst. yr. 1985-86 found that the agricultural land was purchased by the assessee in the name of minor son for Rs. 1,48,713. Therefore, there was agricultural land in the possession of the family of the assessee and, if that was the position, the assessee was also earning agricultural income. In that view of the matter, the learned CIT(A) was justified in holding that the household expenses were covered by the agricultural income. We, do not see any flaw in the aforesaid observation of the learned CIT(A). In that view of the matter, we are of the view that the learned CIT(A) rightly deleted the addition made by the AO. Accordingly, we do not see any merit in this ground of the Departmental appeal. 6. Now, we will take up Departmental appeal in ITA No. 360/Asr/1997 for the asst. yr. 1989-90. The Department has raised following grounds in this appeal: "1. That on the facts and in the circumstances of the case the learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve given about 25 tolas in the marriage of her daughter and thereafter she would be left only with about 35 tolas. The AO also did not allow any rebate for the impurities etc. He assumed that some jewellery must have been in person of Smt. Kiran Sehgal and thus as against the 8 tolas actually found at the residence, he estimated it at 15 tolas. The AO accordingly worked out net weight of jewellery found at 991-7 gms, he allowed a credit for 402.500 gms and worked out the difference at 589.200 gm by applying the rate of Rs. 210 per gram, the addition of Rs. 1,23,732 was made. 7.2 The assessee carried the matter to the CIT(A). Before the CIT(A), the assessee filed written submissions, which read as under: "These grounds pertain to the addition of Rs. 1,23,732 on account of alleged unexplained jewellery found from the residence and locker of the assessee and his wife during the course of search proceedings. The assessee's residence was searched on 28th July, 1988 at 8.30 a.m. when he was away to Madras. The assessee's wife Smt. Kiran Sehgal, who is a regular income tax and wealth-tax assessee was present. Her statement was recorded on 28th July, 1988, in which she claimed to abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry available with her. 35 Tolas The AO, therefore, treated 59 tolas (94-35) as unexplained and treated its value of Rs. 1,42,590 as income from undisclosed sources in the order under s. 132(5) dt. 24th Jan., 1989 passed jointly in the name of the assessee and his wife Smt. Kiran Sehgal. During the course of proceedings under s. 143, the AO vide letter dated Nil afforded an opportunity to the assessee to explain why 59 tolas of jewellery (as worked out above) may not be treated as unexplained. The assessee vide letters dt. 6th March, 1996 and 12th March, 1996, pointed out that there were following discrepancies in the calculation of total weight of jewellery: (a) The weight of jewellery had been adopted at gross figures mentioned in the two list, whereas only the net weight had to be taken into account. (b) In the valuation of jewellery of locker, no margin for impurities had been given by the valuer in respect of items at Sr. Nos. 1 and 2 i.e., 14 Churries and 2 Churies in respect of which net weight and gross weight had been taken at the same figure. (c) The weight of pearl necklace had been wrongly included in the weight of gold jewellery. (d) The weight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mother cannot give a Har to her daughter for keeping. There can be numerous personal family reasons for this action. At any rate the assessee had furnished a sworn affidavit of Smt. Chand Rani Bahri. The AO has not controverted the said affidavit and, therefore, as held by the Supreme Court in the Mehta Parkash Co. vs. CIT (1956) 30 ITR 181 (Bom), the contents of affidavit are deemed to have been accepted. Thus this item explains 190 gms of gold. (iii) The AO has not discussed the contention of the assessee raised vide para 5 of the letter dt. 12th march, 1996, that the impurities in respect of items Nos. 1 2 of list of jewellery found in locker had not been taken into account. This itself should account for a difference of about 60 gms. (iv) In the letter dt. 6th March, 1996, vide para (iv) it had been submitted that no jewellery had been given by the assessee to his daughter at the time of her marriage. The AO has not cared to even refer to this letter and has given a finding merely on conjectures that the assessee must have given 25 tolas jewellery to her daughter without any basis or material. Net weight of jewellery in Locker as correctly worked out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er-in-law of the assessee was also filed. The learned CIT(A) accordingly deleted the addition of Rs. 1,23,732 made by the AO on account of unexplained jewellery. At the same time, the learned CIT(A) held that the value of 16.700 gms. which was unexplained jewellery should be added in the hands of Smt. Kiran Sehgal. He further directed the AO to examine Smt. Chand Rani Bahri, mother-in-law of the assessee who had filed an affidavit before the AO deposing that Smt. Kiran Sahgal had visited Bangalore in connection with the marriage of her grandson in April, 1988 and she handed over golden 'Har' weighing about 16 or 16-1/2 tolas to Smt. Kiran Sehgal. He further directed the AO to get the verification made from the bank manager of Bank of Baroda, Karol Bagh, New Delhi, regarding operation of locker No. 939 held jointly by the assessee and his wife Smt. Kiran Sehgal, as to the date on which the locker was operated after 21st April, 1988, being the date of marriage in Bangalore, in order to find the truth in the contentions of the assessee that the Har belonged to his mother-in-law and was given to his wife at Bangalore which on her way back was kept in the locker. However, he has held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have been clarified to him that there was no element of income in the proceeds of ULIP Policy." 8.2 After considering the above submissions, the learned CIT(A) found that as per letter dt. 6th March, 1996, in para 2 addressed to the AO, the assessee had submitted that a cheque of Rs. 20,320.19 was credited to his SB a/c No. 4422 in Oriental Bank of Commerce which was received from UTI and its original counter-foil was confiscated during raid and was lying with the seized record. In that view of the matter, the learned CIT(A) held that there was no reason to treat the credit entry as unexplained and he accordingly deleted the same. 8.3 After going through the entire records, we do not see any infirmity in the findings of the learned CIT(A) on this issue. It is true that the amount of Rs. 20,320.19 was credited to the saving bank account of the assessee which was received from the UTI as proceeds of ULIP and its original counter-foil was confiscated during the raid and was lying with the seized record. We do not see any merit in this ground of appeal and accordingly the same is dismissed. 9. In the result, all the three Departmental appeals are dismissed. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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