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2019 (2) TMI 111 - AT - Income TaxUnexplained cash found - unexplained jewellery - Held that - The impugned order of the CIT(A) wherein he deleted the aforesaid additions of ₹ 5,05,550/- and ₹ 69,92,195/, needs no interference. The cash found, amounting to ₹ 5,05,550/- is fully explained by cash balance, as on 01.08.2011. The AO erred in making addition of the aforesaid amount of ₹ 5,05,550/-, without any reasoning and in the absence of any evidence to show that the cash found was unaccounted or unexplained or undisclosed. Similarly, the Jewellery found from the premises of the Assessee is also fully explained by Wealth Tax Records of various persons. AO erred in making the addition of the aforesaid amount of ₹ 69,92,195/- without proper reasoning, and in the absence of any evidence to show that the Jewellery found was unaccounted or unexplained or undisclosed. AO had no basis to make the addition, when the Jewellery found is fully disclosed in Wealth Tax Records. In view of the foregoing, there is no material to warrant any interference by us with the impugned order of the Ld. CIT(A). We find that in view of the facts and circumstances of this case, the order of the Ld. CIT(A) is sound in law - decided against revenue.
Issues:
1. Addition of unexplained cash found during search proceedings. 2. Addition of unexplained investment in jewelry found during search. Analysis: Issue 1: Addition of unexplained cash found during search proceedings The Assessing Officer (AO) made an addition of ?5,05,550 as unexplained cash found during the search operation. The Assessee claimed that the cash found was duly disclosed in the books, supported by a cash balance of ?5,74,762 as on 01.08.2011. The Learned Commissioner of Income Tax (Appeals) (CIT(A)) deleted this addition, emphasizing that the cash found was not seized during the search, indicating it was disclosed. The CIT(A) highlighted that the AO failed to provide any evidence or reasoning to support the addition. The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision, stating that the cash found was fully explained by the cash balance in the books, and there was no evidence to suggest it was unaccounted for. Issue 2: Addition of unexplained investment in jewelry found during search The AO added ?69,92,195 as unexplained investment in jewelry found during the search. The CIT(A) overturned this addition as well. The CIT(A) noted that the total jewelry found was less than the jewelry disclosed in the Wealth Tax Returns of the Assessee and family members. Only one item of jewelry valued at ?10,10,275 was seized, which was duly disclosed in the Wealth Tax Records of a family member. The ITAT concurred with the CIT(A)'s decision, stating that the jewelry found was fully explained by the Wealth Tax Records. The ITAT held that the AO lacked a basis for the addition, as the jewelry was disclosed and accounted for in the records. In conclusion, the ITAT dismissed the Revenue's appeal, upholding the CIT(A)'s order to delete the additions of both the unexplained cash and unexplained investment in jewelry. The ITAT found no grounds to interfere with the CIT(A)'s decision, as both the cash and jewelry were adequately explained by the Assessee's records and there was no evidence of undisclosed income or investments.
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