2015 (8) TMI 282 - HC - Income Tax

Assessment of cash balance recovered at the time of search - assessment confirmed by the Tribunal rejecting the case of the assessee that the manager of his brother, who is the proprietor of a Jewellery shop, had handed over the above amount on the day previous to the search - Held that - This was rightly rejected stating that a search was simultaneously conducted in the premises of the brother of the assessee and that nothing was recovered evidencing the payment claimed by the assessee and that the assessee also had not maintained any books of accounts evidencing the receipt of the amount. Unexplained investment in gold biscuits - Held that - Admittedly, during the search, 18 gold biscuits worth ₹ 9,36,000/- were recovered. The assessee surrendered a sum of ₹ 4,66,000/- as his undisclosed income. In so far as the balance amount of ₹ 4,70,000/- is concerned, the assessee claimed that the said amount was received from his brother and his brother s source of payment was explained by stating that his brother had withdrawn ₹ 3 lakhs from his Jewellery shop and the balance of ₹ 1.70 lakhs was realised by sale of his wife s jewellery. This contention of the assessee was rejected by all authorities stating that the assessee did not maintain any books of accounts regarding receipt of ₹ 4.70 lakhs from his brother. The assessee did not also having any sales tax registration and there was nothing to connect the unexplained investment of ₹ 4.70 lakhs was that of his brother, or the sale of jewellery. Excess expenditure over receipts - Held that - During the search, a note book containing the cash transaction between 03.09.2000 to 14.11.2000 was recovered, which showed receipts to the tune of ₹ 73,345/- and total expenditure of ₹ 7,02,227/-. The claim of the assessee was that the excess amount represented his agricultural income. However, he did not furnish any material to substantiate the receipt of agricultural income and no material regarding the agricultural income was also available. Excess amount of ₹ 6,28,882/- should be treated as loss from business contention was rightly rejected by the Tribunal stating that an amount assessed as investment from undisclosed source cannot be treated as loss from business. Contention raised by the assessee was that the income determined for the assessment year 1994-1995 to 1999-2000 after giving effect to the order of the CIT(A) was less than the non-taxable limit in each of the assessment years and therefore are liable to be excluded from undisclosed income was also rejected by the Tribunal referring to Sec.158BB (1)(c) of the Act. - Decided against assessee.

Summary

Issues Involved:
1. Assessment of cash balance recovered during search
2. Assessment of unexplained investment in gold biscuits
3. Assessment of excess expenditure over receipts

Analysis:

Issue 1: Assessment of Cash Balance
The Tribunal confirmed the assessment of cash balance of Rs. 1,30,000 recovered during the search, rejecting the assessee's claim that the amount was received from the manager of his brother's Jewellery shop. The Tribunal noted that the search at the brother's premises yielded no evidence of the claimed payment, and the assessee failed to provide any accounting records supporting the receipt of the amount. Consequently, the Tribunal upheld the assessment of the cash balance against the assessee.

Issue 2: Assessment of Unexplained Investment in Gold Biscuits
Upon recovery of 18 gold biscuits worth Rs. 9,36,000 during the search, the assessee admitted undisclosed income of Rs. 4,66,000. However, the remaining Rs. 4,70,000 was claimed to be received from the brother, with the source explained as withdrawal from the brother's Jewellery shop and sale of wife's jewellery. Authorities rejected this claim due to the absence of accounting records regarding the receipt from the brother, lack of sales tax registration, and insufficient evidence linking the unexplained investment to the brother or jewellery sale. Consequently, the unexplained investment was upheld against the assessee.

Issue 3: Assessment of Excess Expenditure
A notebook found during the search revealed cash transactions showing receipts of Rs. 73,345 and total expenditure of Rs. 7,02,227 between specific dates. The assessee asserted that the excess amount represented agricultural income but failed to substantiate this claim with supporting material. Additionally, no evidence of agricultural income was presented. The Tribunal rejected the claim that the excess amount should be treated as a loss from business, emphasizing that an amount assessed as investment from an undisclosed source cannot be classified as a business loss. Furthermore, the contention that certain income should be excluded based on non-taxable limits was dismissed by the Tribunal, citing the relevant provisions of the Income Tax Act.

In conclusion, all contentions raised by the assessee were consistently rejected by the authorities based on factual findings, leading to the dismissal of the appeal as no legal questions were deemed to arise for the court's consideration.