TMI Blog1999 (12) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... -87 52,300 5,437 1987-88 56,205 6,289 1988-89 75,644 11,997 1994-95 4,65,105 1,54,700 1995-96 5,71,851 1,61,124 Total 12,21,105 3,39,547 2. Briefly the facts are that the assessee is an individual who mainly derives income from salary as a Joint Managing Director of M/s Electrotherm (India) Ltd. Prior to joining M/s Electrotherm (India) Ltd. in 1993, the assessee was working with M/s Alfa-Laval (I) Ltd. and Tetrapak (I) Ltd. Pune. There was a search and seizure operation under s. 132 of the IT Act, 1961 in the case of M/s Electrotherm (India) Ltd. group of concerns and their Directors on 12th Dec., 1995 and along with the other Directors, the assessee's premises were also searched at 19, Uganda Park Society, Memnagar, Ahmedabad During the course of search at the residence of the assessee and also of a locker No. 477 at Bank of Baroda. Vijay Char Rasta, Ahmedabad in the joint names of Mrs. Usha Gupta and the assessee, total cash amounting to Rs. 2,67,050 and jewellery valuing Rs. 3,87,381 were found. Out of this, the cash amounting to Rs. 2,50,000 was seized. Thereafter a notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 9 at pp. 3 to 9 of the assessment order. The AO has made the addition on the basis of statements of the assessee as well as his wife recorded at the time of search wherein the assessee has admitted that he will be having cash of about Rs. 2 lacs lying in the house which solely belonged to him. As regards the cash of Rs. 76,000 found from the locker, the explanation of the assessee at the time of search was that this contains Rs. 20,000 on account of tour advance drawn by him in the last month and debited in the books of the company and the balance was belonging to the wife and daughter of the assessee which was kept for buying jewellery meant for the marriage of the daughter. As regards the source of cash found from the locker, the assessee's explanation during the course of search was that this represents the amount received by his wife from her mother, brothers and savings of herself and their daughter who was employed with Mardia Chemicals. However, during the course of assessment proceedings the assessee changed his stand and claimed that out of the total cash found, Rs. 1,50,000 belonged to the company M/s Electrotherm (India) Ltd. and Rs. 20,000 was the tour advance. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted that the entire cash found from the residence as well as the locker was satisfactorily explained and the AO was not justified in making the addition of Rs. 2,50,000 on account of alleged unexplained cash found at the time of search. 4.2 The learned Departmental Representative strongly relied on the order of the AO and further submitted that right at the beginning of the search, the assessee spontaneously accepted that he will be having cash of approximately Rs. 2 lacs at his residence which entirely belonged to him. As such the subsequent story that Rs. 1,50,000 out of this cash belonged to the company M/s Electrotherm (India) Ltd. was only an after-thought to escape from tax liability. It was submitted that even wife of the assessee Mrs. Usha Gupta has stated that the cash found at the residence belonged to the assessee and not to the company M/s. Electrotherm (India) Ltd. It was submitted that the certificate from Shri Shailesh Bhandari, Director of M/s Electrotherm (India) Ltd. stating that Rs. 1.5 lacs found from the residence belonged to the company and the same was left with the assessee on 10th Dec., 1995, by Shri Bhandari while going on tour on 10th Dec., 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mrs. Usha Gupta has not deposited the cash accumulated over a period in her bank account, cannot make the same as the undisclosed income of the assessee particularly when at the time of search both the assessee as well as his wife admitted that the money found from the locker belonged to the wife Mrs. Usha Gupta. In this view of the matter we are of the opinion that the AO was not justified in taxing the entire amount of Rs. 2,50,000 as undisclosed income because the consistent stand of the assessee during the course of statement recorded at the time of search and even subsequently with regard to the tour advance of Rs. 20,000 and the amount of Rs. 76,000 found from the locker remained the same. Accordingly we will uphold the addition on account of cash found from the residence to the extent of Rs. 1,54,000 only because we are unable to believe the subsequent explanation given by the assessee during the course of assessment proceedings that Rs. 1.5 lacs belonged to the company M/s. Electrotherm (India) Ltd. Accordingly the addition on account of unexplained cash found is sustained to the extent of Rs. 1,50,000 and this ground of appeal is partly allowed. 5. Ground of appeal No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... running expenses, telephone expenses, etc. It was submitted that the assessee clarified this position during the search itself wherein he explained that the household expenses were approximately Rs. 5,000 per month which fact has been ignored by the AO. It was further submitted that the AO has further erred in making extra addition of Rs. 1 lac for the period 1st April,1995 to December, 1995 as educational expenses of the sons of the assessee. It was submitted that during the course of assessment proceedings the assessee has produced the evidence by way of receipt of school fees, etc. to prove that the educational expenses were approximately Rs. 5,000 per annum and, therefore, the addition of Rs. 1 lac on account of educational expenses disregarding the factual data is totally unwarranted. He accordingly submitted that the addition of Rs. 4,63,000 (including Rs. 1 lac for educational expenses) on account of alleged unexplained household expense, should be deleted. 5.2. The learned Departmental Representative strongly relied on the order of the AO and further submitted that Mrs. Usha Gupta is an educated lady and she submitted before the AO that their monthly expenses were Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 967 to 31st Aug., 1992 with M/s Alfa Laval (I) Ltd. From 1st Sept., 1992 to 31st Oct., 1993, he was working as Managing Director of Tetrapack India Ltd. From 1st Nov., 1993, onwards he was working as Jt. Managing Director of M/s Electrotherm (India) Ltd. Except the statement of the wife of the assessee, there is no other material brought on record by the AO to justify the addition of Rs. 4,63,000. However, the fact remains that at the time of search a sum of Rs. 1,91,050 in cash was found from the residence and a sum of Rs. 76,000 was found from the locker. The finding of so much cash itself indicates a fairly high standard or living enjoyed by the assessee and his family members. During the course of search the assessee's wife Mrs. Usha Gupta admitted that the assessee was receiving commission from M/s. Electrotherm (India) Ltd. However, no such commission was disclosed in the returns filed by the assessee. It is no doubt true that in order to invoke the provisions of s. 69C the AO is required to establish the condition precedent as to the existence of the expenditure or understatement of that expenditure by evidence/material on record to justify the addition by enumerating variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyee and TDS was deducted at source from the salary paid to the assessee and in support of this the assessee has furnished details of salary certificates issued by the employer for asst. yrs. 1986-87, 1987-88 and 1988-89 in Form No. 16 at pp. 11, 12 and 13 of the paper book. The assessee has also furnished statement of income for asst. yr. 1994-95 along with the salary certificate in Form No. 16 along with the challans for the tax paid at pp. 19 to 32 of the paper book and for asst. yr. 1995-96 at pp. 33 to 40 of the paper book. It was submitted that the income declared in the returns though filed belatedly cannot be considered as undisclosed income within the meaning of s. 158BB as these are to be considered while framing regular assessment of each assessment year. Reliance was placed on the decision of the Gujarat High Court in the case of N.R. Paper and Board Ltd. Ors. vs. Dy. CIT (1998) 146 CTR (Guj) 612 : (1998) 234 ITR 733 (Guj) as well as the decision of the Bombay Bench of the Tribunal in the case of Sunder Agencies vs. Dy. CIT (1997) 59 TTJ (Mumbai) 610 : (1997) 63 ITD 245 (Mumbai) and the decision of the Madras Bench of the Tribunal in the case of J.K. Narayanan (HUF) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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