TMI Blog2008 (3) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... papers with the appellant. The addition is made on presumptions and surmises. 4. (a) Because, the authorities below have fallen in error of fact and in law in making and sustaining addition of Rs. 12,59,450 as 'undisclosed income'. Its source was fully proved by cogent evidence on records. Nothing was undisclosed income. The addition is liable to be deleted. (b) Because, the authorities below erred on facts and in law in adding explained cash of Rs. 12,59,450 which was verifiable with reference to material on records. Even otherwise, addition is not justified in assessee's hand. (c) Because, every reasoning and findings of the authorities below are baseless/frivolous and against the facts of the case. (d) Because, the learned CIT(A) erred in deciding the issue ex parte, the opportunity allowed was a mere formality looking to the facts of the case. The appellant craves your Honour's leave to add, amend, alter, and amplify either any or all the grounds of appeal either before or at the time of hearing with the kind permission of the Hon'ble Bench." 3. It was also submitted on behalf of the assessee that the assessee wishes to press additional ground sought to be raised. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 Rs. 39,020 1992-93 Rs. 41,470 Rs. 41,470 1993-94 Rs. 71,5,00 Rs. 71,500 1994-95 Rs. 90,930 Rs. 90,930 1995-96 Rs. 97,628 Rs. 97,628 1996-97 Rs. 80,032 Rs. 80,032 1997-98 Rs. 1,29,790 Rs. 1,29,790 1998-99 Rs. 3,37,970 Rs. 3,37,970 1999-2000 Rs. 1,92,111 Rs. 1,92,111 2000-01 Rs. 2,12,258 Rs. 2,12,258" 8. The AO after issuing notice required the assessee to reconcile the material found and seized during the search operation at the residential premises, D-15 and C-55, Kamla Nagar, Agra. 9. With regard to the jewellery the assessee furnished the details of family members and jewellery disclosed during the wealth-tax assessment for asst. yr. 1985-86 as well as the certificate in support of the disclosure made in VDIS, 1997. Apart from this, the assessee also filed a photocopy of the F.I.R. lodged with S.H.O. Thana, New Agra against the Addl. Director IT (Inv.). An addition of Rs. 24,303 was made by the AO pertaining to the asst. yr. 2000-01 following the block period observing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Rs. 51,328 {Rs. 43,753 (+) Rs. 7,575} in asst. yr. 2000-01]." 12. Aggrieved by these additions the assessee went in appeal before the first appellate authority. On behalf of the assessee it was contended that these additions of Rs. 24,303 + Rs. 21,466 + Rs. 43,753 + Rs. 7,575 totalling to Rs. 97,077 which have been made as unexplained investment in the purchase of jewellery made in the search conducted on the residential premises D-15, Kamla Nagar are not maintainable. It was submitted that these premises are occupied by the assessee, his wife Smt. Sheela Devi along with his two sons Shri Mukesh Agarwal and Shri Sanjay Agarwal and their wives Smt. Amita and Smt. Namita and also their children. 13. With respect to these specific documents which formed the basis of addition it was submitted that these were four rough sheets found at the residence. It was submitted that the assessee had submitted before the AO that these papers do not relate to him. Referring to the photocopies of these papers it was contended that these papers merely contain some noting about jewellery items and except for page No. 1 of the annexed pp. 1 to 4 none of the other documents even show whether these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery items generally used by ladies. The fact that these premises were jointly occupied by the assessee and his wife along with the wives of his two married sons and their children it was submitted is an admitted fact, thus, based on these documents it was submitted the additions cannot be made in the hands of the assessee. It was contended that nothing has been brought on record by the Revenue despite these specific arguments addressed by the assessee on this aspect all along. Referring pp. 9 to 12 of the paper book which contain the photocopies of these documents, it was pointed out that these appear to be mere estimates and how they were relatable to the assessee is again not found mentioned either in these documents nor in the orders of the tax authorities. Neither the dates it was submitted to which these documents pertain are mentioned nor the year to which these are relatable. Similarly, the person who made this estimate nor the name for whom it was so estimated is available from the records. Despite argument on this aspect right from the assessment stage by the assessee it was submitted nothing has been brought on record by the tax authorities. No reasons it was conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Pushkar Narain Sarraf v. CIT [1990] 86 CTR (All) 110 : [1990] 183 ITR 388 (All) and Jagdamba Rice Mills v. Asstt. CIT [2000] 67 TTJ (Chd) 838. 17. The learned Departmental Representative on the other hand placed heavy reliance upon the orders of the tax authorities. 18. Having heard the rival submissions and perused the material available on record, it is seen that the argument advanced on behalf of the assessee right from the beginning as is evident from page No. 4 of the paper book which are written submissions advanced before the CIT(A) and on a perusal of the assessment order it shows that the assessee has repeatedly been contending that firstly these documents pertained to articles of usage of ladies as such are not relatable to the assessee on account of these specific facts. Apart from this the fact that the premises are jointly occupied by the assessee, his two sons along with their respective spouses and children is also the consistent stand. The fact that these premises are visited by different relatives over the years also cannot be disputed. Moreover, a perusal of paper book pp. 9 to 12 clearly brings out that no date is found mentioned in any of these documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mukesh Kumar and Smt. Amita Gupta and Rs. 1,08,000 further found from his room. Shri Mukesh and Smt. Amita Gupta will explain the source thereof. Rs. 20,170 relates to the birthday gifts which has been received from the room of Shri Sanjay and Namita Gupta. The source will be explained by them. In question No. 3 it was further required to explain that Rs. 3,80,000, Rs. 2,64,000 and Rs. 2 lakhs were received on 15th Feb., 2000, 14th Feb., 2000 and 13th Feb., 2000, respectively and which is evident from the slips found in the respective bags and the said facts were also admitted by Smt. Sheela Devi, wife of the assessee that these amounts were received on the dates as stated in the preliminary statement, therefore, why the said amount of Rs. 7,64,000 may not be considered as undisclosed income. In reply to this, the assessee simply stated that the money was given by him to his wife on these dates but as regards Rs. 1,08,000 which was found from his room as per question No. 6 of the statement he is unable to explain. On the basis of statement the assessee was further required to explain the source of cash found Rs. 12,79,620 out of which Rs. 12 lakhs were seized. In reply dt. 27th No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Iron Industries, M/s Das Cold Storage (P) Ltd. and M/s Singhal Castings Co. is an afterthought story and is not acceptable. Therefore, entire amount of cash of Rs. 12,79,620 found during the search at assessee's residence D-15 Kamla Nagar is considered unexplained and be added to the income of the assessee as undisclosed for the block period relevant to asst. yr. 2000-01. (Addition Rs. 12,79,620 in asst. yr. 2000-01)." 20. Aggrieved by this the assessee went in appeal before the CIT(A). Some of the arguments raised before the CIT(A) are being extracted hereunder for ready reference : "Ground of appeal No. 5 is against the addition of Rs. 12,79,620 as unexplained cash found in search. The Annex. C to Panchnama will show that the cash was found in 6 bags as under : Bag No. 1 - 3,00,000 Bag No. 2 - 2,64,000 Bag No. 3 - 2,00,000 Bag No. 4 - 1,08,000 Bag No. 6 - 20,170 --------- 12,79,620 --------- Vide explanation dt. 27th Nov., 2001 it was submitted that the cash belonged to different members of the family (Annexure pp. 6 to 9) as per main objection is that in the prelimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of cash book enclosed -------------------------------------------------------------- Rs. 2,00,000 This belongs to Shri Mukesh Agarwal who had sold lands for Rs. 3,80,000 on which sale proceeds were received on different dates during 1999-2000 (prior to date of search), these are seven deeds and produced for your Honour's kind perusal. The capital gains was shown in the return of income for asst. yr. 2000-01. -------------------------------------------------------------- Rs. 20,170 This was recovered from the room of Sanjay and Namita. This represents gifts received on festive occasion. -------------------------------------------------------------- Rs. 12,79,620 -------------------------------------------------------------- Except for certain alleged discrepancies in the preliminary statement and subsequent statements, the AO has not expressed any opinion as to why the cash found cannot be accepted as explained with reference to the cash balances in the regular books of account. The only observation in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Wing on 27th March, 2000 and from this only general register from 1st April, 1999 to 15th Feb., 2000 of M/s Agarwal Iron Industry was found. Thus, the authenticity of the cash book produced by the assessee was held to be not established. The CIT(A) further observed that the hard disk of the computer was found damaged, as such, the claim of the assessee was held to be not established. As such, the books were considered to be not reliable. 23. Still aggrieved, the assessee is in appeal before the Tribunal. 24. The learned Authorised Representative contended that all along the case of the assessee has been not considered in the correct perspective. The factual position borne out from the records has been completely ignored and the facts have wrongly been appreciated by the tax authorities. It was contended that the assessee had filed the return just 9 months after the search and till this time the assessee did not have the records which would enable him to prepare the accounts and get the accounts audited; accordingly in these circumstances the return was filed in whatever shape the assessee could file. It was his contention that this position of fact has deliberately been ig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the reason for non availability of books of accounts on account of the seizure by the search party and thus not getting the accounts audited for this reason was found to be valid and as such remained uncontroverted as no penalty proceedings under ss. 271A and 27IB were initiated for non-maintenance of accounts and for not getting the books of accounts audited in the case of M/s Das Cold Storage. Thus, in these circumstances, it was submitted that the action of the Department in not accepting the bona fide explanation of the assessee in the facts of the present case is surprising since the same AO has accepted the assessee's bona fide explanation in the case of M/s Das Cold Storage. However, while verifying the books of accounts it was submitted while giving the remand report to the CIT(A) the said AO for no stated reasons has taken a 'U' turn. In these circumstances, it was canvassed that the issue of computer and the books duly updated being in the computer which was seized stands established. 27. It was further submitted that the assessee has all along been contending that its books duly updated were in the computer which was seized and if for a moment it is presum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rthought. It was submitted that no effort has been made by the AO or by the appellate authority to point out any discrepancy in debits and credits mentioned in the books of accounts which are open for verification. 28. Specific attention was invited to the order of the Lucknow Bench in the case of Ashok Kumar v. ITO [2002] 5 MTC 404 (All) wherein a survey under s. 133A of the business premises of the assessee was carried out. In the fact of the said case, it was submitted cash book and ledger were not available at the time of survey and subsequently produced in response to notice under s. 131. The action of the AO in rejecting the books of accounts on the ground that they were not available at the time of survey which was upheld by the CIT(A), it was submitted reversed by the Tribunal. Accordingly, in these circumstances, since the AO did not point out any defect in the books of account which were produced all along, the addition made was deleted by the Tribunal. Copy of the said order it was submitted is placed at paper book page Nos. 72 to 73. Reliance was also placed upon the judgment of the Allahabad High Court in the case of CST v. Shyam Lal Co. [1984] 57 STC 31 (All), cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined. With respect to amounts of Rs. 3,87,450 and Rs. 2,54,000 inviting attention to paper book page No. 7 it was contended that relying upon paper book p. 29 before the CIT(A) appearing as p. 37 in the paper book before the Tribunal it was contended that this belongs to M/s Das Cold Storage in which the assessee along with his son Shri Mukesh Agarwal were directors. The amount of Rs. 2,64,000 it was reiterated had been received for payment to parties from whom wood was purchased and even after this the cash balance as on 16th Feb., 2000 was Rs. 24,87,776.71. With respect to the amount of Rs. 2 lakhs which was explained to have been belonging to Shri Mukesh Agarwal i.e. the son of the assessee, it was submitted that Shri Mukesh Agarwal had sold land for Rs. 3,80,000 on account of which sale proceeds on different dates during 1999-2000 had been received by the son of the assessee much prior to the date of search. Referring to the written submission filed before the CIT(A), it was contended that in all, there were 7 sale deeds which were produced before the CIT(A) for perusal and on account of the said sale Shri Mukesh Agarwal had shown capital gain in the return of income filed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took an advance of Rs. 60,000 odd on 12th Feb., 2000 which is supported by paper book p. 35, we do not find as to what the AO was trying to state so as to reject Rs. 3 lakhs from M/s Agarwal Industries since more than sufficient cash balance from the said concern was available to the assessee as Karta of the HUF. The relevance of referring to the opening balance of 17th Feb., 2000 is not understood since admittedly the closing balance as on 15th Feb., 2000 was Rs. 2,90,505.52 which has been noted by the AO himself though he refers it as opening balance on 16th Feb., 2000 since admittedly on 16th Feb., 2000 the same was the opening as well as the closing balance since on the said date search was conducted upon the assessee and as per submissions no transactions took place. Similarly, with respect to the availability of Rs. 1,08,000 as cash balance from M/s Singhal Casting Co. wherein Shri Mukesh Agarwal, son of the assessee is proprietor, the AO comments that on 17th Feb., 2000 Rs. 1,25,240 was the opening balance of 17th Feb., 2000. Thus, the said amount was the closing balance of 15th Feb., 2000. Accordingly, Rs. 1,08,000 was easily available at the residence of the assessee which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intout was taken. The tax authorities when they proceed to seize any particular computer or books of account are expected to take necessary care and maintain the relevant record etc. of it. The fact that necessary evidence has not been maintained by the Department or the computer which was in the custody of the Department during which it got damaged, the assessee cannot be saddled with the responsibility of the same. It is for the Department to ensure that once evidences in the form of computer, laptop etc. are seized then they are handled with due care and caution and necessary back up copies, printout etc. should be made available to the assessee with due promptness in the presence of computer literate people who can handle and obtain necessary information from these sensitive storage devices. After having seized the computer and retained it in its custody, the evidences relied upon by the assessee in its favour obtained from the printouts made available to the assessee in the case of M/s Das Cold Storage cannot be rejected merely on the ground that at the time of the survey these printouts were not available despite the fact that all the evidences were available to the AO and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count books when produced subsequently in support of his claim by the assessee and if any error is found in them, then in that event there would be justification for holding that they were not maintained properly or that they were subsequently manipulated and got prepared after the survey was done. But the account books cannot be rejected outright merely because they were not produced for inspection at the time of survey." 33. Reference may also be made of the following decisions, copies of which are placed at paper book pp. 49-51, 52-53 and 72-73 respectively : (1) Satnam Singh Chhabra v. Dy. CIT; (2) Jagdamba Rice Mills v. Asstt. CIT; (3) Ashok Kumar v. ITO. 34. Accordingly, ground No. 4 raised by the assessee is allowed. 35. With respect to the additional ground, the submission of the learned Authorised Representative was that the CIT(A) on facts was not justified in rejecting the ground of the assessee. Reliance was placed upon certain unpublished orders of the Agra Bench of the Tribunal and published order in the case of Om Prakash Sharma v. Dy. CIT [2004] 83 TTJ (Jp) 246 : [2004] 4 SOT 369 (Jp), copy of which is placed at paper book page Nos. 106 to 138. Relying u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 16th Feb., 2000. During the course of search, the documents marked as 'Annex. A-11' loose sheets No. 71, 'Annex. A-41' loose sheet No. 111 and 'Annex. A-43' pp. 4 and 5 were found and seized. On the basis of these documents, the AO had made addition of Rs. 97,077 comprising of separate additions of Rs. 24,303 + Rs. 21,466 + Rs. 43,753 + Rs. 7,575. These additions were made by the AO after perusal of the documents, with the observations made in paras 4.1, 4.2 and 4.3 of his order, which are being reproduced below : "4.1 During the course of search Annex. A-11 loose sheet No. 71 was found and seized which contains the purchase of diamond jewellery, ring, top etc. worth Rs. 35,603 against which cash of Rs. 15,000 has already been shown to have been paid to the jeweller and after making some adjustment returned jewellery of Rs. 11,300, an amount of Rs. 9,305 remained still to be paid. The jewellery worth Rs. 24,303 was purchased and found unaccounted for. Vide notice dt. 14th March, 2002 the assessee was required to explain the said Annexure but he failed to explain the same. Therefore, an amount of Rs. 24,303 be added to the income of block period as undisclosed income relevant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the CIT was right in drawing an inference against the assessee. The Hon'ble Karnataka High Court had also relied upon the case of Collector of Customs v. D. Bhoormal 1974 CTR (SC) 175 : AIR 1974 SC 859. In this case, the Hon'ble Supreme Court holds that in terms of s. 106 of the Evidence Act, the Department is deemed to have discharged its burden if it adduces only so much evidence, circumstantial and direct as is sufficient to raise a presumption in its favour with regard to the existence of the facts sought to be proved. By making a reference of ss. 106 and 110 of the Evidence Act, it can be presumed that the appellant is the owner of these three documents. Reliance can also be placed on the decision of Chuharmal v. CIT [1988] 70 CTR (SC) 88 : [1988] 172 ITR 250 (SC), wherein it was held as under: "(i) That what was meant by saying that the Evidence Act did not apply to proceedings under the IT Act, 1961, was that the rigour of the rules of evidence contained in the Evidence Act was not applicable; but that did not mean that when the taxing authorities were desirous of invoking the principles of the Evidence Act in proceedings before them, they were prevented from do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has rightly sustained the addition of Rs. 97,077 for unexplained investment in the purchase of jewellery on the basis of the seized documents, as mentioned in this order. 9. Now, I shall deal with the addition of Rs. 12,59,450, sustained by the learned CIT(A) for unexplained cash found, and deleted by the learned JM. 10. During the course of search, cash of Rs. 12,79,620 was found. Annexure C to Panchnama will show that the cash was found in five bags from the residence of the appellant, the details of which are as under : Bag No. 1 - 3,00,000 Bag No. 2 - 2,64,000 Bag No. 3 - 2,00,000 Bag No. 4 - 1,08,000 Bag No. 6 - 20,170 --------- 12,79,620 --------- 11. The facts pertaining to ground No. 4 regarding addition of Rs. 12,59,450 have been discussed by the AO in para 4.5 of his order, which reads as under : "4.5 During the search cash amounting to Rs. 12,79,620 was found at assessee's residence D-15, Kamla Nagar, Agra. In the preliminary statement, it was stated that an amount of Rs. 2 lakhs may be available at the time of search. In the final statement the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3,87,450 found from the room of Shri Mukesh Kumar and Smt. Amita Gupta in her statement to question No. 9, it has been stated that this amount relates to her and her husband Shri Mukesh Kumar and the source of availability of the cash will be explained later on. If it is presumed that it relates to the business of Shri Mukesh Kumar of which he is proprietor i.e. M/s Singhal Casting Co. there is only opening balance of Rs. 1,25,240 on 17th Feb., 2000. Similarly Shri K.P. Agarwal's reply to question No. 1 that Rs. 3 lakhs which was found from his room is related to the cash of Agarwal Iron Industries of which he is a proprietor as Karta of M/s Om Prakash Kanti Prasad, HUF, is also not matching with the opening balance of Agarwal Iron Industries which shows opening balance as on 17th Feb., 2000 Rs. 2,90,505. As regards Rs. 2,64,000 stated to be cash belonging to M/s Das Cold Storage for purchase of wood also not matching with the preliminary statement given and the final statement of the assessee. In reply to questionnaire he has not been able to correlate the facts as per question No. 9 and the statement given at preliminary stage because there is variation that the three slips wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee stated that Rs. 3,00,000 is Roker of Agarwal Iron Industries, Rs. 2,64,000 were for payment of wood of Das Cold Storage, Rs. 3,87,450 and Rs. 1,08,000 were found in the room of Smt. Amita and Mukesh about which Mukesh will be able to explain. The cash of Rs. 12,79,620 found in search (seized Rs. 12 lakhs) is thus, explained as under : -------------------------------------------------------------- Rs. 3,00,000 Cash balance of M/s Agarwal Industries of which HUF is proprietor. The assessee is the Karta. The cash balance as on 15.02.2000 was Rs. 2,90,525 (extract enclosed) -------------------------------------------------------------- Rs. 1,08,000 Cash balance of Singhal Casting Co. of which Shri Mukesh Agarwal is proprietor. The cash balance as on 15.02.2000 was Rs. 1,25,240 extract from cash book enclosed -------------------------------------------------------------- Rs. 3,87,450 This belongs to M/s Das Cold Storage of which the assessee and Mukesh are directors. -------------------------------------------------------------- Rs. 2,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully explained with reference to the cash balance in the books of account. The cash found is fully explained. Your Honour may kindly delete the same." 13. The learned JM deleted the addition sustained by the learned CIT(A) for the reasons that sufficient cash balances on the relevant dates were available as per the cash books of M/s Agarwal Industries, M/s Singhal Casting Co. and M/s Das Cold Storage and Rs. 2,64,000 received for payment of parties for purchase of coal and Rs. 2,00,000 belonged to Shri Mukesh Agarwal. The learned JM observed at p. 23 of the draft order that the AO has made the assessment in the case of M/s Das Cold Storage relying upon the photocopy of the printout obtained from the seized computer. While making the remand report, he observed that on operation of the computer, hard disc was found damaged and the said computer had no information. 14. The Department's stand is that no books of accounts were found during the course of search and the information contained in the computer was found damaged/corrupted. The books of accounts have subsequently been prepared on the basis of certain loose papers. These books of accounts had not been audited. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 16. During the course of search, no cash was found from the premises of M/s Das Cold Storage, M/s Singhal Casting Co. and M/s Agarwal Iron Industries. According to the appellant, all the three firms had opening balance of Rs. 35,60,000 as on 17th Feb., 2002. According to the assessee, the following firms had a cash balance as given below : Opening balance Amount 1. M/s Agarwal Iron Industries 17.02.2000 2,90,505 2. M/s Singhal Casting Co. 17.02.2000 1,25,240 3. M/s Das Cold Storage (P) Ltd. 16.02.2000 31,44,336 --------- 36,60,081 --------- 17. The total of cash balance comes to Rs. 35,60,081 whereas only Rs. 12,79,620 were found at the residence of the appellant. No explanation has been submitted regarding the distinction of cash shown by the appellant on the basis of books, which had been subsequently written on the basis of seized documents and some other information. 18. The learned JM has relied upon the case of CST v. Shyam Lal Co. The facts of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ination of receipt of cash from the cash books of these firms which had been written after the date of search. 22. In the result, the appeal of the assessee is partly allowed as discussed in this order. REFERENCE UNDER S. 255(4) OF THE IT ACT, 1961 B.L. Khatri, A.M. : 31st Jan., 2006 The questions proposed by me are enclosed herewith for forwarding to the Hon'ble President, Tribunal, as there are points of difference on the questions proposed. I am forwarding herewith the following questions on the points of difference under s. 255(4) in the abovereferred case for reference to the Hon'ble President with a request that the same may be referred to the Third Member, for nomination of Third Member : (A) Addition for unexplained investment in jewellery : (1) Whether the documents, Annexs. A-11, A-41 and A-43 contained rough estimate of jewellery ? (2) Whether these documents are dumb documents especially when there is specific mention of items of jewellery and the amounts spent ? (3) Whether the appellant can be considered the owner of these documents, which were admittedly seized from the residence of appellant D-15, Kamla Nagar, Agra ? (4) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made by the AO. First addition of Rs. 24,303 pertains to the asst. yr. 2000-01 and was made by AO because Annex. A-11 loose sheet No. 81 found during the course of search and seized contained the purchase of diamond jewellery, ring, top etc. worth Rs. 35,603 against which cash of Rs. 15,000 has been shown to have been paid to the jeweller who after making some adjustment returned jewellery of Rs. 11,300. An amount of Rs. 9,305 remained to he paid. The jewellery worth Rs. 24,303 was purchased and found unaccounted for. Vide notice dt. 14th March, 2002 the assessee was required to explain the contents of the said Annexure but he failed to explain the same. Second addition of Rs. 21,466 again for asst. yr. 2000-01 was made because Annex. A-41 loose sheet No. 111 dt. 6th Feb., 2000 contained the account of some gold ornaments purchased, the first entry being of Kara and Kundals weighing 29.700 gms. purchased @ Rs. 4,550 per 10 gms. amounting to Rs. 13,513 and the second entry being of purchase of some other ornaments weighing 16.930 gms. amounting to Rs. 7,953 both aggregating to Rs. 21,466 for which the assessee simply stated that the paper did not relate to him. The AO observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the premises were occupied by him along with his wife and two married sons with their spouses and children was not of any help. Similarly, the contention that these loose documents did not show the nature of the transaction, if any, and appeared to be mere estimates could not be linked with the assessee was not accepted. The argument that these loose sheets made a reference to certain jewellery items used by ladies and, as such, not relatable to the assessee was also rejected. 5. Aggrieved by this, the assessee is in appeal before the Tribunal and there struck a difference of opinion. The learned JM, held that no case was made out for addition and deleted the addition. She observed that the articles of jewellery were of usage of ladies, as such, not relatable to the assessee; that the premises searched were jointly occupied by the assessee, his wife along with the wives of his two married sons and their children and these premises were also occupied by different relatives; that no dates are found mentioned in any of the documents; that these documents appear to be only estimates; and that these are dumb documents and do not prove as to how these documents are relatable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J (Chd) 838. 7. The learned Departmental Representative, on the other hand placed heavy reliance upon the orders of the tax authorities. He submitted that the AO, on the basis of the documents marked as. Annex. A-11 loose sheet No. 71, Annex. A-11 loose sheet No. 111 and Annex. A-43 pp. 4 and 5, had made addition of Rs. 97,077. The assessee resides at D-15, Kamla Nagar, Agra, from where, admittedly, the documents were seized. Therefore, these documents had clear nexus with the assessee. Reliance is placed in the case of Collector of Customs v. D. Bhoormal 1974 CTR (SC) 175 : AIR 1974 SC 859 and the decision of Chuharmal v. CIT [1988] 70 CTR (SC) 88 : [1988] 172 ITR 250 (SC). It is further submitted that the documents are not dumb documents as there is specific mention on them for the purchases of jewellery and also payment/adjustment of Rs. 35,000, moreso in view of the fact that the assessee himself has also admitted that an addition of Rs. 15,000 can be made in his hands. Therefore, these documents represent actual purchase of jewellery and could be considered only estimates. The assessee has not rebutted the presumption raised against him under s. 69A of the IT Act, providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avour with regard to the existence of the facts sought to be proved. By making a reference of ss. 106 and 110 of the Evidence Act, it can be presumed that the assessee is the owner of these three documents. In Chuharmal, it was held that what is meant by saying that the Evidence Act did not apply to proceedings under the IT Act, 1961, was that the rigour of the rules of evidence contained in the Evidence Act was not applicable, but that does not mean that when the taxing authorities were desirous of invoking the principles of the Evidence Act in proceedings before them, they were prevented from doing so; and that s. 110 of the Evidence Act, 1872, embodies a salutary principle of common law jurisprudence that where a person was found in possession of anything, the onus of proving that he was not its owner was on that person and this principle could be attracted to a set of circumstances that satisfy its conditions and was applicable to taxation proceedings. The addition on account of this unexplained jewellery is accordingly upheld. 9. The second point of difference is for the addition of Rs. 12,79,620 as unexplained cash found in search in 6 bags respectively containing Rs. 3,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile filing the return of income in the case of M/s Das Cold Storage for asst. yr. 2000-01 : "Note : There was income-tax search/seizure under s. 132 IT Act of assessee's premises on 16th Feb., 2002. All papers, documents registers, books were seized. Accounts kept in computer were sealed and; on opening found lost. No register, account books, therefore, exist. In the absence of regular account books, auditing was not practicable. The assessee has prepared the income and expenditure statement and computation of income on the basis of capacity of the cold storage and zerox copies of seized papers, etc." 11. In view of this fact since no data was found from the computer, the claim of the assessee was rejected by the CIT(A) holding that no cash book of any of these concerns as such was found in the computer. He observed that the computer seized from the assessee was operated by the Investigation Wing on 27th March, 2000 and from this only general register from 1st April 1999 to 15th Feb., 2000 of M/s Agarwal Iron Industry was found. Thus, the authenticity of the cash book produced by the assessee was held to be not established. The CIT(A) further observed that the hard disk of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of accounts was noticed. The source of the cash balance of Rs. 3 lakhs was explained to be cash balance of M/s Agarwal Industries of which HUF the assessee is a Karta. It is submitted that the closing balance of Rs. 2,90,505=52 was available as on 15th Feb., 2000 and on 12th Feb., 2000 the assessee had taken an advance of Rs. 60,000 which explains the cash balance of Rs. 3 lakhs from M/s Agarwal Industries lying at the time of search and found from his premises. Similarly, cash of Rs. 1,08,000 was explained to be cash balance in the books of M/s Singhal Castings Co. of which Shri Mukesh Agarwal, son of the assessee is proprietor. The amounts of Rs. 3,37,450 and Rs. 2,54,000, claimed to be belonging to M/s Das Cold Storage in which the assessee and his son Shri Mukesh Agarwal were directors. The amount of Rs. 2,64,000 was received for payment to parties from whom wood was purchased and even after this the cash balance as on 16th Feb., 2000 was Rs. 24,87,776. The amount of Rs. 2 lakhs belonged to Shri Mukesh Agarwal i.e., the son of the assessee, who had sold land for Rs. 3,80,000 on account of which sale proceeds on different dates during 1999-2000 had been received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required examination of receipt of cash from the cash books of these firms. 16. The parties are heard and rival contentions considered. The AO cannot be said to be right in concluding that the opening balance of M/s Agarwal Iron and M/s Singhal Casting Co., cannot be available. As the cash as per books was claimed to be more than the amount found at the time of search, the rejection thereof on the ground that the books of accounts were not found during the search does not have any force. This is because the books of account in the seized computer from which accounts have been taken note of by the same AO who has made assessment in the case of M/s Das Cold Storage. The face that the computer which was seized by the Department for the specific reason contained relevant data cannot be ignored nor the fact that all the family members of the assessee are subjected to tax and different concerns of the assessee are also subjected to tax. The preliminary statement of Smt. Sheela Devi stating that few bags recovered from her almirah and the bags had slips mentioning about Rs. 3,00,000, Rs. 2,64,000 and Rs. 2 lakhs in each bags further supports the case of the assessee. Similarly, the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for purchase of wood and sale proceeds of sale of land also to be examined. These are all to be verified before accepting the availability of cash found at the time of search. In my opinion, the matter requires to be set aside as observed by the learned AM. 18. In the result, the appeal of the assessee is to be partly allowed. D.C. Agarwal, A.M. : 14th March 2008 In this case, the assessee has raised following grounds : "1. Because, the warrant of authorization dt. 1st Feb., 2000 as mentioned in Panchnama dt. 16th Feb., 2000 is bad and illegal as the authority (DI) at Kanpur issuing it had no requisite reliable material/information in his possession so as to form a reasonable belief to direct action under s. 132 against the assessee. All proceedings taken under Chapter XIV-B are bad and illegal. 2. Because, all proceedings and consequent block assessment made by Asstt. CIT, CC, Agra are without jurisdiction and void. The impugned block assessment made is liable to be annulled. 3. (a) Because, the authorities below have fallen in error of facts and in law in making and confirming additions of Rs. 97,077 for alleged purchase of jewellery in the ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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