TMI Blog2021 (3) TMI 1194X X X X Extracts X X X X X X X X Extracts X X X X ..... erves to be deleted. Since the impugned addition is purely made on the basis of statement u/s 132(4) of the Act without establishing any nexus with incriminating material found during the course of search, the finding of Ld. CIT(A) deleting the addition in the case of Shri Nitin Agrawal and M/s S.V. Infra Developers needs no interference and the same is confirmed. Unexplained cash - panchnama cash was found from the residence of the assessee and from the office premises - CIT-A deleted the addition - HELD THAT:- Shri Nitin Agrawal is one of the key person controlling the various business. The department has taken the basis of statement of Shri Nitin Agrawal for making various additions which interalia included surrender on behalf of various business concerns so this is an undisputed fact that though there are different entities running under the business group but they all are inter connected and controlled by some common persons of which one is Shri Nitin Agrawal. In the reconciliation statement cash balance as per the books is stated at ₹ 87,82,341/-. Revenue has not confronted this fact. The assessee has stated that the cash in hand found during the course of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord the valuation of the watches found during the course of search which thus makes the addition merely on the estimated basis and same therefore have been rightly deleted by Ld. CIT(A) relying on settled judicial precedents. Addition on account of foreign travel expenses - various documents were found about the foreign travel carried out by the assessee and his wife - HELD THAT:- As the assessee who is into the business of construction has conducted various foreign visits and expenses of the same were also debited in the books of accounts. Ld. A.O estimated the undisclosed expenditure at ₹ 2 lakh. We are however of the view that Ld. CIT(A) being fair to both the parties has rightly considered the issue and partly deleted the addition at ₹ 1 lakh which thus do not call for any interference. - IT(SS)A No.182/Ind/2019, ITA No.657/Ind/2019 - - - Dated:- 25-3-2021 - Hon'ble Kul Bharat, Judicial Member And Hon'ble Manish Borad, Accountant Member For the Appellant : Shri S.S. Deshpande, CA For the Respondent : Shri S.S. Mantri, CIT ORDER PER MANISH BORAD: The above captioned appeals filed at the instance of the revenue pertaining t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.657/ Ind/2019 for Assessment Year 2014-15 :- (1) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of ₹ 5,00,00,000/- made by Assessing Officer on account of admission of additional income u/s 132(4) of the Income Tax Act,1961 (2) The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal. 5. From perusal of the grounds raised by the revenue we find that the issue raised in Ground No.1 of each of the appeal is common through which the revenue has challenged the finding of Ld. CIT(A) deleting the addition made by the Ld. A.O on the basis of statement given u/s 132(4) of the Act wherein the assessee during the course of search admitted additional income. The remaining grounds pertains to the revenue s appeal in the case of Shri Nitin Agrawal. Since both the assessee(w) are from the same group and were subjected to the search u/s 132 of the Act on 29.1.2014, we will first take up this common issue raised in Ground No.1 of both the appeals by Revenue. As agreed by both the parties we will take the facts of Shri Nitin Agrawal for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f said statement by way of not offering the income in the return of income is not acceptable and Ld. A.O has rightly made the addition. 10. Per contra Ld. Counsel for the assessee supporting the finding of Ld. CIT(A) also made written submission which is reproduced below:- The assessee is an individual deriving income from development construction and sale of real estate. The assessee also derives income from various partnership firms. The assessee is filing the returns regularly. The books of accounts are audited and the TAR is filed. A search was conducted on the Signature Group and also at the premises of the assessee. During the course of the statement recorded u/s 132(4) the assessee declared an additional income of ₹ 5,00,00,000/- for the A.Y. 2014-15. In the statement Q.50 was asked as during the course of search in your house substantial jewellery was found. On verification of the projects, it is seen that the work-in-progress in various firms do not match with the amounts disclosed in the books of accounts. Besides this in your house at 1, Mount Villa, Ch una Bhatti, Bhopal substantial investment has been made. All these questions have not been sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has received any extra receipts or has incurred any unrecorded expense. Therefore, the assessee retracted from the declaration made for additional income u/s 132(4). 2.The Id. A.O. did not consider the submissions of the assessee and made various additions on the basis of the loose papers and also on the basis of the investments made besides, the cash found, the jewellery and the investments in the residential house. During the course of the assessment proceedings, the matter was referred to the DVO regarding the investment in the residential house. On the basis of this report the additions were made in various years. The Id. A.O. further made additions of ₹ 26,42,910/- for alleged unexplained cash found, ₹ 48,Ol,948/- for alleged unexplained investment in jewellery, Rs.IO,OO,OOO/- for alleged unexplained investments in watches. On the basis of the loose papers, the Id. A.O. made the addition of ₹ 5O,OO,OOO/- for alleged unexplained advances to Mr. Lalwani and ₹ 2,OO,OOOI- for foreign travel. 3.In appeal, it was submitted before the Ld. CIT(A) that the assessee has incurred expenses on the project which are duly recorded in the regular books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar books of accounts which are not found to be incomplete or unreliable. The books of accounts are not rejected. 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 13/0212019 and in the case of M/s Ultimate Builders in ITA 134/2019 pronounces on 09108/2019. 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 the case of Shri Ganesh Trading eo. vis. CIT and the decision of Hon. Gujrat High Court in the case of Kailashben Mangarlal Choksi v/s. ClT. After considering the submissions made by the assessee and the papers filed during the course of the appeal the Id. CIT(A) allowed the appeal. In view of the above, it is humbly submitted that the order of the Id. CIT(A) is correct in deleting the said addition. Thus, the addition deleted by Id. ClT(A) is correct and may please be upheld. 11. The crux of the argument of Ld. Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng detailed finding on fact and placing reliance on various decisions. Relevant extract is reproduced below:- 4.2 Ground No. 3:- Through this ground of appeal, the appellant has challenged the addition of ₹ 5,00,00,000/- on account of admission of undisclosed income u/s 132(4). During the course of search no incriminating documents have been found from the office or from the project site of the appellant. There were other documents which were duly explained by the appellant. No undisclosed investment has been found. The accounts for the relevant years have also been examined by the Assessing Officer to reassess the income. The Assessing Officer did not find any irregularity of any sort so as to warrant any addition to the returned income. It is to be mentioned that there is no addition to the returned income in any of the years up to the A.Y. 2014-15. The AO made the addition in the A. Y. 2014-15 as a result of search is based on the Statement of Shri Nitin Agrawal recorded u/s 132(4). No documentary evidence has been brought in support of the addition. 4.2.1 The allegation that there is a huge difference in the work in progress found at site and that mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons cannot certainly be made the basis of addition in assessment; more so when there are no corroborating facts by way of incriminating documents found or proof of undisclosed income being discovered to support the statement. Neither during the course of search or post search enquiries nor during the course of assessment proceedings have revealed any unexplained or undisclosed investments, income or other expenditure. Further, the volume of the material at site is so small that it cannot by any means justify an undisclosed income of ₹ 5.00 crores. 4.2.4 While going through the statement at Page No. 10-11 of the statement in question it is observed that an amount of ₹ 3.50 crores has been stated against M/s S V Infra Developers as undisclosed investment; also a sum of ₹ 50 lacs has been shown towards undisclosed income with M/s Swadesh Developers and Builders. However, later on the same has been summed up at ₹ 5.00 crores in the case of SV Infra Developers and Nil in the case of Swadesh Deveoplers and builders. All it shows is that the discloser dose not reveals the true and correct picture of undisclosed income. Such a statement carries no weight in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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. A thoughtful consideration to the rival contentions of the appellant and AO. 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. The A.O. failed to eo-relate the disclosures made in the statement with the incriminating material gathered during the search. The Hon'ble ITAT Indore in the case of ACIT 1(1)Bhopal vis Shri Sudeep Maheshwari vide ITA no. 524/Ind/2013 A.Y. 2010-11 date 13.02.2019 deleted the addition on the similar facts. Respectfully following the decision of the Hon'ble Tribunal the addition m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter to Departmental Valuation Officer and he also could not controvert the fact that the concern M/s S.V. Infra Developers was new and there was no sale since the bunglows were under construction and in short Ld. A.O failed to corroborate the addition of ₹ 5 crores with the excess work in progress alleged to be found during the course of search. In the body of the assessment order also reference is only made to the statement given u/s 132(4) of the Act. 17. With regard to the above two aspects Ld. DR was also confronted to place any evidence to show that the alleged addition of ₹ 5 crores each made in the case of both the assessee(s) namely Shri Nitin Agrawal and M/s S.V. Infra Developers is having any nexus with any incriminating material or corroborative evidence found during the course of search. But Ld. Departmental Representative failed to bring any such evidence. Therefore the undisputed facts remains is that both the impugned additions were purely made only on the basis of statement given during the course of search and have no nexus whatsoever with any incriminating material found during the course of search. 18. Under these given circumstances we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute that various other additions have been made by the Ld. A.O for the undisclosed investment u/s 69B, undisclosed investment in projects of land and unexplained unsecured loan as well as unexplained cash u/s 69A of the Act. However specifically with regard to the addition of ₹ 25,00,000/- and ₹ 3,00,00,000/- made for the Assessment Years 2013-14 and 2014-15 the same is purely based on the statement given on oath u/s 132(4) of the Act by the authorised representative on behalf of the assessee which was collectively surrendered as additional income on behalf of various group concerns. But without the support of any incriminating material on which the revenue authorities were able to lay their hands, this addition 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 add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the case of M/s Ultimate Builders also additional income was surrendered in the statement given u/s 132(4) of the Act for which the addition was made by the Ld. A.O without corroborating it with any incriminating material and the addition was confirmed by Ld. CIT(A). When the matter travelled before this Tribunal the addition of ₹ 2.25 crores was deleted by this Tribunal observing as follows:- 9. We have heard rival contentions and perused the records placed before us and carefully gone through 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the books of premises. Relevant questions asked about the loose paper found were duly replied in the statement. 12. Ld. Counsel for the assessee further contended that since the search in the case of assessee was concluded on 31.1.2014 the alleged statement of the partner Mr. Vipin Chouhan taken on 02.02.2014 cannot be construed as a statement given during the course of search u/s 132(4) of the Act so far as relating to the assessee since the search in its case already concluded on 31.1.2014. He further 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the conclusion of the search in the case of the assessee on 30.01.2014. 18. There may have been some force in the contention of the revenue authorities if the statement u/s 132(4) of the Act was taken during the course of search at the assessee s premises or during the continuation of search, the statement may have been recorded on other places but the fact is that so far as the assessee M/s. Ultimate Builders is concerned the search concluded on 31.01.2014 and before 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were being run by 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onceived and divorced from real facts. It was contended that the declaration was made after persuasion, which, according to the learned counsel for the assessee, Shri Binod Poddar, in fact, was because of coercion exerted by the search officers. In explanation, it was submitted that the firm or the individual had no undisclosed income. The assessee s said retraction was not accepted by any of the authorities below on the ground that the statement given 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of search without correlating the addition with the incriminating seized material. Therefore the decision relied by Ld. Departmental Representative laying down the ratio that addition can be made even on the basis of statement given during the course of search u/s 132(4) of the Act irrespective of the fact whether any incriminating material is found or not, will not support Revenue in the instant case. 26. In the given facts 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 Chouhan 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A No.182/Ind/2019 and ITA No.657/Ind/2019 respectively stands dismissed. 20. Now we take up the remaining grounds of the Revenue s Appeal No. IT(SS)A No.182/Ind/2019 in the case of Shri Nitin Agrawal. With regard to Ground No.2 top 6 revenue has challenged the following additions deleted by Ld. CIT(A). Ground No. Particulars Amount 2 Unexplained cash ₹ 26,42,910/- 3 Unexplained jewellery ₹ 24,88,216/- 4 Unexplained advance to Shri Lilwani ₹ 50,00,000/- 5 Unexplained investment in watches ₹ 10,00,000/-. 6 Unexplained foreign travel expenses ₹ 1,00,000/- 21. For all the above stated grounds Ld. Departmental Representative vehemently argued supporting the order of Ld. A.O and prayed for confirming the additions made by Ld. A.O. 22. Per contra Ld. Counsel for the assessee supported the finding of Ld. CIT(A) and also argued r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni Group. He further stated that Shri Nitin Agrawal has also advanced the similar loan. The statement of the assessee was recorded. In the statement recorded on 10/01/2014, the assessee admitted that he has advanced cash to Shri Dinesh Lalwani for purchase of floor adjacent to the office of the assessee. Subsequently, this transaction was cancelled. It was further stated that on cancellation of the agreement two cheques were given by the party for repayment of the advance. On the request of the party two cheques were given by them. The party however, stopped the payment of these cheques which were found during the course of search. During the course of the post search enquiry, a statement of Shri Dinesh Lalwani was recorded on 27/05/2014 and 22/07/2014. In the statement Shri Dinesh Lalwani stated that they had purchased 6 duplex flats in the building of the assessee for a consideration of 6 crores which were registered on 31/03/2013. He further stated that 1 crore is required to be paid. He stated that post dated cheques were issued for renovation of the six duplex flats. Since the renovation was not completed within the time, they stopped the payment. It was submitted be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were given for the purchase of the property in cash. There was a sufficient cash balance available with the assessee. The statement of Shri Dinesh Lalwani is totally unreliable and no evidence has been put up to corroborate the evidence. The duplex flats were registered in January 2013 and the possession was handed over. There is no evidence to show that the assessee was asked to renovate the house. No person will give any post dated cheque for the renovation of the newly constructed house. The cancellation agreement of the premises duly signed by the party and the cheques given by them which are mentioned in the agreement clearly prove that the cheques were issued for the repayment of the advance given. The fact is further strengthened that subsequent cheques were issued replacing the earlier cheques. The assessee's version is further proved that the complaint was filed in the Magistrate's Court for dishonouring the cheque which is pending. In view of the above, it is humbly submitted that the Id. CIT(A) was justified in deleting the addition. The order of the Id. CIT(A) may upheld. Ground No.5 Deletion of addition of Rs.I0,OO,OOO/- on account of alleged un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cash recorded in the books of accounts was furnished but the same was not accepted by Ld. A.O When the matter came up before Ld. CIT(A) the addition for unexplained cash was deleted observing as follows:- 4.3 Ground No. 4 :- Through this ground of appeal, the appellant has challenged the addition of ₹ 26,42,910/- on account of unexplained cash. During the course of search cash amounting to ₹ 26,42,910/- was found out of which ₹ 25,00,000/- was seized. The AO during the course of assessment proceedings required the assessee to explain the acquisition of the cash found during the course of search. The assessee in reply submitted that the cash found physically is completely matched with books of accounts. 4.3.1 The appellant during the course of appellate proceedings submitted that cash amounting to ₹ 26,42,910/- was found from residential premises and sum of ₹ 3,16,630/- was found from official premises. The appellant has been maintaining combined cash balance for all the units run by him and submitted reconciliation of cash found during the course of search. 4.3.2 I have considered the factual matrix of the case, plea raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of search, when he was asked only to explain source of cash amounting to ₹ 26,42,910/-. Thus, in view of the above, the AO was not justified in considering the facts and evidences before him and thus, the addition made by the AO amounting to ₹ 26,42,910/- is Deleted. Therefore, appeal on this ground is Allowed. 25. From perusal of the above finding and the facts placed before us, we find that Shri Nitin Agrawal is one of the key person controlling the various business. The department has taken the basis of statement of Shri Nitin Agrawal for making various additions which interalia included surrender on behalf of various business concerns so this is an undisputed fact that though there are different entities running under the business group but they all are inter connected and controlled by some common persons of which one is Shri Nitin Agrawal. In the reconciliation statement cash balance as per the books is stated at ₹ 87,82,341/-. Revenue has not confronted this fact. The assessee has stated that the cash in hand found during the course of search from his residence was part of the cash in hand of the group. There is no contrary finding by Ld. A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48,01,948/- as unexplained and after considering the surrender of ₹ 5 crores made by the assessee for the best reason known to the Ld. A.O he made addition of ₹ 48,01,948/- observing that remaining amount of unexplained jewellery of ₹ 1 crore is to be covered in the addition of ₹ 5 crores. When the matter came up before Ld. CIT(A) addition for unexplained jewellery was partly deleted at ₹ 24,88,216/- observing as follows:- 4.4. Ground No.5: Through this ground of appeal, the appellant has challenged the addition of ₹ 48,01,948/- on account of unexplained jewellery. During the course of search, gold weighing 2371.070 gms was found from residence and 1835.02 gms was found from bank locker and silver weighing 1927 gms was also found from residence of the assessee. The AO during the course of assessment proceedings required the assesse to explain the source of acquisition of such jewellery along with documentary evidences. The assessee in reply before the AO submitted that the wife of assessee has been filing wealth tax return and has duly shown 735 grms of gold jewellery and item wise details will be submitted later on. The AO after conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the facts of the case, the written submissions of the learned AR and various decision cited and also perused the assessment order. The appellant stated that the total gold jewellery 2371.07 gms was found from residence at Ho. No 1, Mount view villas, Chunna bhatti, Bhopal and 1835.02 gms from bank locker with State Bank of India, Shahpura, Bhopal, during the course of the search. Reliance is placed on instruction no. 1916 of CBDT: Instruction No. 1916 (F.No. 286/63/93-IT{lNV.II), dated 11-5-1994, issued by the Central Board of Direct Taxes ('CBDT') directs the income tax authorities, conducting a search, to not seize jewellery and ornaments found during the course of search of varying quantities specified in the instructions, depending upon the marital status and the gender of a person searched. The guidelines are issued to address the instances of seizure of jewellery of small quantity in the course of search operations u/s. 132 that have been noticed by the CBDT. A common approach is suggested in situations where search parties come across items of jewellery for strict compliance by the authorities. The CBDT directed that in the case of a person not assessed to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Held, no - Whether therefore, Assessing Officer was unjustified in treating only 400 gms as 'reasonable' and treating remaining jewellery as 'unexplained' - Held, yes - Whether, therefore, addition made was to be deleted - Held, yes {In favour of assessee) . In the case SmtPati Devi vs Income Tax Officer and others Reported in 240 ITR -727 (Karnataka High Court) it has been held that: by referring to instruction no 1916 it was held that it is not the value which is considered but it is the weight which is considered reasonable looking to the social circumstances prevailing in the country . 4.4.4 Considering the aforesaid facts and circumstances of the case and the various decisions cited above the findings on this issue are as below: i). The appellant assessee is married for about 30 years and the search took place in January 2014. For an individual and for married lady, collecting jewellery in the form of stri-dhan or buying jewellery on other important occasions is very normal and common in Hindu families. This depends to a large extent on the status and income of the family. In this case the appellant's status is reflected from the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y members of an assessee belonging to an ordinary Hindu household. The approach adopted by the Tribunal in following the said circular and giving benefit to the assessee, even for explaining the source in respect of the jewellery being held by the family is in consonance with the general practice in Hindu families whereby jewellery is gifted by the relatives and friends at the time of social functions, viz., marriages, birthdays, marriage anniversary and other festivals. These gifts are customary and customs prevailing in a society cannot be ignored. Thus although the circular had been issued for the purpose of non- seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in Hindu society. In the circumstances, unless the Revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery stated in the circular stands explained. Thus, the approach adopted by the Tribunal in considering the extent of jewellery specified under the said circular to be a reasonable quantity, cannot be faulted with. In the circumstances, it is not possible to state that the Tribunal has committed any legal er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of the appellant along with his wife Smt. Mamta Agarwal to the extent of 835 (735 + 100) grams is reasonable. Keeping in view Board's circular 1916, the breakup of gold jewellery to the extent of 835 grams taken as reasonable is given as under; In grams Nitin Agarwal (Appellant Assessee) 100 Mamta Agarwal (Appellant Assessee's wife) 735 (As per Wealth Tax Retum filed in year 1991-92 and 1992-93) Total 835 It is, therefore, held that out of the total gold jewellery found in possession, as claimed by the appellant's wife and appellant only 835 grams amounting to ₹ 24,88,216/- ( 835 gms X ₹ 2979.90) is reasonable. Addition on account of 835 grams of gold jewellery amounting to ₹ 24,88,216/- out of the total gold jewellery in possession and claimed by the appellant and his wife Smt. Mamta Agarwal is hereby, deleted and balance addition of ₹ 23,13,732/- is Confirmed. Therefore, appeal on this ground is Partly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptable as the amount has been paid almost before six months. Further, the amount is quite big amount which should have been recorded in the books of accounts at the time of payment itself. Therefore, the assessee s contention in this regard is not acceptable. As earlier discussed in this order, the books of account of the assessee and his concerns cannot be relied upon, the assessee s this contention that the source of cash paid to M/s Shrimati Big Saree Mall is out of cash in hand available is not acceptable. Further, the explanation offered by the assessee in this regard is not acceptable. In absence of satisfactory explanation, an addition of ₹ 50,00,000/- is made to the total income of the assessee on account of unexplained investment u/s 69 of the I.T. Act for A.Y 2014-15. Penalty proceedings u/s 271AAB of the I.T. Act are initiated for A.Y. 2014-15. 30. When the matter came before Ld. CIT(A) the addition of ₹ 50 lakhs was deleted considering the cash reconciliation statement filed by the assessee showing that there was sufficient cash balance in the books of group concerns to cover up the alleged cash advance given to Shri Dinesh Lilwani. The finding of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with copies of the documents relating to the housing transactions entered into with the Lalwani Family which are self explanatory. There is yet one more transaction relating to the purchase of floor area belonging to the Lilwani family adjacent to the assessee's office at E5116, Arera Colony. The documents relating to which have been found at the time of search. The assessee reiterates that all the transactions have been duly recorded in the audited books of account of the assessee and there is no transaction pending as at the date which have carried out of the books of the assessee. It may also be pertinent to point out that there is a civil 1 criminal suit against the Lalwani family for dishonor of the cheques in violation of the agreement to sell office premises. The cash receipts of ₹ 1 Crore are duly recorded in the books of account of the assessee in the year prior to the year of search when the sale took place. A perusal of the books of account would have obviated the need of this observation, please. 4.6.1 The appellant during the course of appellate proceedings submitted that the AO has relied upon the statement of Shri Dinesh Lilwani against the appellant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and when the work was not completed in time the same were stopped for payment. 4.6.3 The appellant by taking an alternate plea stated that the AO has used statement of Shri Dinesh Lilwani against him without providing sufficient opportunity of cross examination. After considering the entire facts in totality I have reached to final conclusion that the AO ought to have provided opportunity of cross examination before making any addition on the basis of third party statement. Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. Commissioner of Central Excise Kolkata in Civil Appeal No.248 of 2006 has held that in absence of cross-examination of parties, the assessment proceedings to be quashed. Further, the Hon'ble Gujarat High Court in the case of Praful Chunilal Patel Vs. M.J. Makwana [236 ITR 832 (Guj)] and JCIT Ors. Vs. George Willimson (Assam) Ltd. [258 ITR 126 (Guj)] has held that statement of third party cannot be relied upon without having any corroborative evidence. Similarly, Hon'ble Supreme Court in the case of Kishanchand Chellaram V/So CIT 125 ITR 713 (SC) has held that adverse inference cannot be drawn against the assessee from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before the Ld. A.O assessee submitted that these watches are duplicate Chinese made watches. Ld. A.O was not satisfied and he made addition for ₹ 10 lakhs . When the matter came before Ld. CIT(A) the addition were deleted since there was no evidence to support the valuation of ₹ 10 lakhs brought by the Ld. A.O. Ld. CIT(A) deleted the addition of ₹ 10 lakhs for unexplained investment in watches observing as follows:- 4.7 Ground No. 9:- Through this ground of appeal, the appellant has challenged the addition of ₹ 10,00,000/- in A.Y. 2014-15 on account of unexplained investment in watches. During the course of search, 17 watches were found from residence of appellant. Therefore, the AO during the course of assessment proceedings required the assessee to furnish source of investment in these watches. The assessee in reply submitted that the watches purchased by the appellant are all duplicate Chinese make watches, The AO after considering reply of the assessee submitted that the watches are branded watches and estimated the price of these watches at ₹ 10,00,000/-. 4.7.1 The appellant during the course of appellate proceedings submitted that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettled judicial precedents. Ground No.5 of the Revenue s appeal in IT(SS)A No.182/Ind/2019 stands dismissed. 34. Now we take up Ground No.6 is regarding deletion of addition on account of foreign travel expenses at ₹ 1 lakh. Brief facts relating to this issue are that during the search proceedings various documents were found about the foreign travel carried out by the assessee and his wife. The assessee claimed them to be duly recorded in the books. However Ld. A.O made addition for ₹ 2 lakhs for Assessment Year2014-15. Subsequently when the matter travelled before Ld. CIT(A) he sustained it at ₹ 1 lakh considering the addition of ₹ 2 lakh on a little higher side. We in the given facts and circumstances of the case find that the assessee who is into the business of construction has conducted various foreign visits and expenses of the same were also debited in the books of accounts. Ld. A.O estimated the undisclosed expenditure at ₹ 2 lakh. We are however of the view that Ld. CIT(A) being fair to both the parties has rightly considered the issue and partly deleted the addition at ₹ 1 lakh which thus do not call for any interference. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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