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TMI Blog2011 (3) TMI 1627X X X X Extracts X X X X X X X X Extracts X X X X ..... the satisfaction of the Assessing Officer and which was not done by the assessee. 3. The CIT(A) has erred in law in allowing loss of Rs. 1,26,820 despite the fact that no documentary evidences regarding the loss from M/s Arohi International were produced before the Assessing Officer during the course of assessment proceedings. 4. That the order of the ld. CIT(A) being erroneous and on facts be vacated and the order of the Assessing Officer be restored. 5. That the appellant craves leave to amend anyone or more of the grounds of the appeal as stated above as and when need for doing so may arise. 6. The first issue vide grounds No.1 and 2 relates to the deletion of addition of Rs. 16,42,480 made by the Assessing Officer on account of unexplained cash credit. 7. The facts of the case in brief are that a search and seizure operation u/s. 132 of the Income-tax Act, 1961 was carried out in Pandey Group of cases on 19.4.2006. In the said operation, residential premises of the assessee at 133/88-M Block, Kidwai Nagar, Kanpur was covered. During the course of search and seizure operation, cash, jewellery, valuables, various books of account, documents and loose papers related to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.20,000/- -do- Pankai Gupta Rs.45,000/- -do- R.S. Tiwari Rs.20,000/- -do- Ramesh Arora Rs.45,000/- -do- Usha Rs.45,000/- -do- Vishwa Nath Gupta Rs.45,000/- 2005-06 Santosh Tripathi Rs.27,000/- 2006-07 Anil Chand Tripathi Rs.25,000/- -do- Wmesh Chand Saxena Rs.38,000/- 2007 -08 Ram Gopal Tiwari Rs.70,000/- 9. On the basis of the above facts, the Assessing Officer was of the view that the assessee did not have the cash balance of Rs. 16,42,480 as on 1.4.2001, as claimed. He, therefore, held that the cash has been introduced by the assessee only to explain the investment of expenses in the subsequent years. He accordingly added a sum of Rs. 16,42,480 to the income of the assessee. 10. The assessee carried the matter to the ld. CIT(A) and the submissions made by the assessee as mentioned in para 11 of the order of the ld. CIT(A) read as under:- "The Ld. A.O. arbitrarily and without assigning any cogent reason and without bringing any evidence on record treated the opening balance of Rs. 16,42,480/- as on 01.04.2000 of cash in hand to be that of unexplained nature and added it back to the income of the appellant. But naturally the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hesh Chand Jewellers. M/s N.B. Impex and M/s P.B. Society Jewelers as per their purchase memos enclosed in the paper book as were submitted before the Ld. AO. The appellant had partly utilized the money by investing in FDR's and balance amount it held as cash in hand which has continued since then. The Ld. AO has formed his belief about non availability of cash in hand with the appellant, mainly due to the reason that the appellant has taken loans/overdrafts facilities from various persons and institutions during various assessment years and no wealth tax returns have been filed. These observations made by the Ld. AO are of little consequence because business dealings can not be merged with personal assets. The Ld. AO has simply presumed and doubted about the existence of the opening cash balance. It is settled principle that presumption howsoever strong can not take place of a legal proof. The Ld. AO could have examined the availability of cash balance as on 01.04.2000 from the return for A.Y 2000-01 instead of adding the opening balance of cash as unexplained. The Ld AO had failed to take cognizance of the return for A.Y 2000-01, which was on his records while deciding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinuing even before the assessment year under consideration, therefore, the brought forward balance was sub-matter of verification in the preceding year. According to the ld. CIT(A), the Assessing Officer ignored the record and documents of the assessee available with the Department and the capital of Rs. 16,42,480 of the assessee was proved as per documents filed with the Department, namely return of income, VDIS certificate and balance sheets of the earlier years. He, therefore, deleted the addition of Rs. 16,42,480 made by the Assessing Officer. 12. Now the Department is in appeal. 13. The ld. D.R. strongly supported the order of the Assessing Officer and reiterated the observations made by the Assessing Officer in paras 7 to 7.4 of the assessment order dated 31.12.2008, 14. In his rival submissions, the ld. counsel for the assessee reiterated the submissions made before the authorities below and strongly supported the order of the ld. CIT(A) on this issue. 15. We have considered the submissions of both the parties and carefully gone through the materials available on record. In the instant case, it is not in dispute that a search and seizure operation was carried out u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the photocopy of acknowledgment of return of income without any computation and annexure but it is stated that return filed on 21.01.02 may be treated as return filed in compliance of notice u/s. 153A. From the perusal of the copy of the acknowledgment of the return, it is noticed that the assessee has claimed the loss of Rs. 1,26,820/- from M/s Arohi International. The details of business, final account have not been filed. The assessee has thus not been able to prove loss. In view of the above facts, the loss will not be allowed to reduce from Income from Other Sources and business loss is being treated as Nil." 18. The assessee carried the matter to the ld. CIT(A) and the submissions made before him as mentioned in para 7 of the impugned order are reproduced verbatim as under:- "The assessee was proprietor of the firm M/s Arohi International engaged in the business of trading in Kirana Goods, which was started in the year under consideration. It is submitted before your Honour, that in February, 2005, the bag containing the whole set of books of accounts, vouchers, files etc. of M/s Arohi International was lost in transit and constraining the assessee to produce the records d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer could not have included items which were disclosed in the original assessment proceedings. Reliance was placed on the decision of the ITAT Mumbai bench in the case of Anil Khimani v. DCIT 2010 TIOL 177. 20. Now the Department is in appeal. 21. After considering the submissions of both the parties and the materials available on record, it appears that the Assessing Officer disallowed the business loss of Rs. 1,26,820 while framing the assessment u/s. 153A of the Act on the ground that the final accounts of the business relating to M/s Arohi International have not been filed by the assessee. The claim of the assessee was that he had filed complete set of final accounts along with the original return filed on 21.1.2002 and the same were already on record with the Department. In the instant case, the Assessing Officer acknowledge in his assessment order that the assessee attached profit and loss account and balance sheet with the regular return of income filed on 21.1.2002, therefore, the Assessing Officer was not justified in making the disallowance when the assessee had already disclosed the relevant documents in the original return of income, therefore, the Assessing Officer ..... 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