TMI Blog2012 (12) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, no further benefit can be given to the assessee towards the cash found during the course of search. Upholding the addition made by the AO. Issue decides in favour of revenue. Unexplained investment u/s 69A - Addition on account of notings in the loose papers regarding purchase of jewellery – Assessee submit that inherited jewellery was given for remaking the new jewellery – Held that:- As it is clearly mention on loose papers that weight of old jewellery given for melting valued out of which new ornaments made, therefore, no justification on the part of the learned CIT(A) for sustaining the addition. Accordingly the same is directed to be deleted. Issue decides in favour of assessee - ITA NO. 1426,1427 and 1428/PN/2010 - - - Dated:- 23-7-2012 - Shri Shailendra Kumar Yadav and Shri R.K. Panda, JJ. Appellant by : Sri Sunil Pathak Respondent by : Sri Mukesh Verma, CIT ORDER PER R.K. PANDA, AM : ITA No. 1426/PN/2010 and ITA No. 1427/PN/2010 filed by the assessee are directed against the separate orders dated 27-01-2010 of the CIT(A)-I, Pune relating to assessment year 2006-07 2007-08 respectively. ITA No. 1428/PN/2010 filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F.Y. 2006-07 Short Term Cash Advances was made on 02-04-06 to Mr. Vinod- Rs. 5,00,000/-. The same was received back on 16-05-06 along with interest. On 18-05- 06 the above money of Rs. 5,00,000/- was further advanced to M/s. Goel Associates for short term period and was received back on 05-08-2006. 4. In support of the above, the assessee furnished additional cash flow account for the above Financial Years and submitted that the advances were made out of cash balance available as per the additional cash flow account which was lent, refunded and re-lent and received back. However, the AO did not accept the explanation given by the assessee. He observed that the assessee being engaged in the business of money lending, such cash transactions are not generally accounted for to avoid the rigours of section 269SS of the Income Tax Act. The AO doubted the claim of the assessee with the entries shown in the revised cash account prepared by the assessee on the ground that revised cash account cannot prove that the amount lend was the same as appearing in the seized documents. Further according to the AO the revised cash flow statement was prepared after the search operation. He, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of some of the loans advanced in earlier years. He rejected the above submission of the assessee that refunds of loan was considered on the basis of date of receipt of interest on the loans advanced in absence of any supporting documents and corroborative evidence. According to him the same is only an after thought. 6.1 The learned CIT(A) observed that although the assessee could not establish the refund of loans advanced, however, the assessee has admitted the following interest income for the assessment year 2001-02 to 2006-07 on the loans advanced to various parties in the returns filed after the search, the details of which are as under : A.Y. Interest income offered as additional income after the search 2001-02 Rs. 5,250/- 2002-03 Rs. 19,688/- 2003-04 Rs. 62,950/- 2004-05 Rs. 70,087/- 2005-06 Rs. 81,000/- 2006-07 Rs. 90,000/- TOTAL Rs. 3,28,975/- He noted that the above interest income was offered by the assessee as additional income in the return of income filed after the search operations and to the extent of Rs. 3,28,975/- telescoping benefit has to be given to the assessee. This income has already suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50.00 3,40,000.00 2004-05 70,087.00 Legal Expenses - 90,000.00 -39,913.00 Drawing - 20,000.00 1,10,000.00 2005-06 81,000.00 Drawing - 21.000.00 60,000.00 2006-07 90,000.00 Drawing - 30,000.00 60,000.00 2007-08 5,50,000.00 Gold - 4,50,000.00 1,00,000.00 TOTAL 6,80,087.00 He accordingly submitted that atleast an amount of Rs. 6,80,087/- should be allowed to the assessee for the benefit of investment in financing. 8.1 The learned D.R. on the other hand heavily relied on the order of the CIT(A). 9. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. There is no dispute to the fact that the assessee was engaged in the business of financing and certain loose papers were found during the course of search. As per the said loose papers loan of Rs. 6 lakhs has been given during the impugned assessment year which was added by the AO as undisclosed income of the assessee. We find on the basis of the additional income declared by the assessee after the search the learned CIT(A) gave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have considered the rival arguments made by both the sides. We have already gone through the chart filed by the assessee disclosing the additional income and the chart giving availability of income for set off which are reproduced in the preceeding paras while adjudicating the issue for A.Y. 2006-07. After considering the totality of the facts of the case and since we have already given set off of Rs. 2 lakhs in the assessment year 2006-07, therefore, a further set off of Rs. 50,000/- maximum in our opinion may be given for the impugned assessment year. Thus, the assessee gets relief of Rs. 50,000/- out of Rs. 9,10,000/- added by the learned CIT(A). This ground by the assessee accordingly is partly allowed. 12. Second issue in the grounds raised by the assessee relates to the order of the CIT(A) in sustaining Rs. 6,69742/- made by the AO on account of cash found during the search. 13. Facts of the case, in brief, are that during the search operations cash of Rs. 10,88,100/- was found in the possession of the assessee. However, during survey operation u/s.133A in the office premises of the assessee on 10-08-2006, it was noticed that the cash balances as per the computerized acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was not found acceptable by the Assessing Officer who observed that the retraction of the assessee was only an after thought as unaccounted loan transactions were noticed during the search operations. In the opinion of the Assessing Officer, the excess cash could not have been generated out of cash loans. Otherwise he would have clarified the issue at the time of search itself. Accordingly, the explanation offered by the assessee was rejected and the excess cash worked out at Rs. 6,69,742/- was added to the income of the assessee. 15. In appeal the assessee reiterated the same submissions as made before the AO. However, the learned CIT(A) was also not convinced with the explanation given by the assessee and upheld the addition made by the AO. While doing so, he noted that the total cash found during the search was Rs. 10,88,100/- out of which credit was duly given by the AO for cash balances available in the books of account of M/s. Rajat Glasses and M/s. Ravish Enterprises and the cash claimed to be belonging to the family members of the assessee, in all totalling to Rs. 4,18,358/-. He noted that as regards the balance cash amount of Rs. 6,69,742/- the assessee has already ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as per the cash flow statement has already been given credit for the financing business, therefore, no further benefit can be given to the assessee towards the cash found during the course of search. In this view of the matter we find no infirmity in the order of the CIT(A) upholding the addition made by the AO. Second issue in the grounds raised by the assessee is dismissed. ITA No. 1428/PN/2010 (A.Y. 2006-07) : 17. The assessee in Ground of appeal has challenged the order of the CIT(A) in confirming the addition of Rs. 3,78,674/- and Rs. 11,183/- on account of notings in the loose papers regarding purchase of jewellery. 18. Facts of the case, in brief, are that during the course of search and seizure action u/s. 132 of the Act on 10-08-06 certain loose documents were found and seized from the residence of the assessee which indicated purchase of jewellery/silver articles which are marked as Page 25 to Page 30 of Bundle No. 1. The details of such pages are as under : Page No. Date Amount Description Name of the shop 26 24-12-2005 3,300 Silver Utensils Shri Surana Silver, Nagori, Rajasthan 27 -- 2,00,192 Gold/Diamond Jewelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. It was submitted that the loose papers seized during the search action contain the explanation which was given during the course of assessment proceedings. However, while making the assessment, the AO made addition of the value of the old jewellery given for melting valued at Rs. 3,78,674/- and arrived at the figure of Rs. 6,04,378/-. It was submitted that during the search operation the declaration made during VDIS 97 was already brought to the notice of the search party. The valuation report, affidavit etc. were also filed before the AO who ignored all those documents and made the addition of Rs. 6,04,378/-. It was submitted that the jewellery totalling to 2817.00 grams found during the search operation was explained as under : 1. Jewellery pertaining to four family members and HUF (well within the limits prescribed in CBDT inst. Dt. 11-05-1994) 1125 gms 2. Jewellery declared in VDIs 97 1211 gms. 22. So far as excess jewellery of 441 grams found during the course of search proceedings it was submitted that amount of Rs. 4,50,000/- was declared in the hands of the husband of the assessee and therefore making further addition of this issue will amount to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that in absence of any evidence on record the conversion of old jewellery to new jewellery amounting to Rs. 3,78,673/- has been confirmed by the learned CIT(A) being investment in jewellery. He submitted that the notings on various loose papers show the conversion of old jewellery to new jewellery. Referring to the decision of Hon ble Bombay High Court reported in 110 ITR 145 and the decision of the Pune Bench of the Tribunal reported in 71 ITD 245 he submitted that the seized document have to be read as a whole and part of the same cannot be treated as correct and the other part as incorrect or not correct. The learned DR on the other hand heavily relied on the order of the CIT(A). 27. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO made addition of Rs. 6,04,378/- as unexplained investment in jewellery and ornaments u/s.69C of the I.T. Act. We find the learned CIT(A) on the basis of notings in the loose papers regarding the conversion of old jewellery to new jewellery deleted an amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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