9911796707
TMI Blog2004 (7) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... . yr. 1978-79. Thereafter, the assessee filed returns under s. 147 for the asst. yrs. 1979-80 to 1987-88 and regular return for the asst. yr. 1988-89 disclosing income from commission and brokerage. As per the statement of assessee recorded during the course of search, it was found that the assessee had brokerage income in cloth business besides income earned as money lending broker. From the asst. yr. 1983-84 onwards, the activities of the assessee were confined to brokerage in money lending and there was no income from brokerage in cloth business. In the course of search, two sets of diaries, marked 'A' and 'B' at the top of the diary, were found, which were written for the calendar years 1982 to 1987. In this statement recorded under s. 132(4), the assessee stated on oath that these diaries reflected the details of loan transactions that took place amongst different parties during the years from 1982 to 1987. It was further clarified by him that all the transactions recorded in 'B' type diaries took place in cash and as the broker he had arranged all the loans from various creditors. So far as 'A' type diaries are concerned, he stated that they related to the brokerage business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been reopened under s. 147. I have already completed assessment in case of one of the creditors, Sri Sampatmal Lakhotia, and in the assessment order the Unexplained investment on cash loans, as calculated from the seized diaries, has been considered in his hands under s. 69 of the IT Act. However, since the assessee has not been able to produce any evidence, circumstantial or otherwise, to substantiate the correctness of the entries made in the 'B' type diaries, to safeguard the interest of Revenue it is being held that all the cash loans advanced to different parties have been advanced by him. In Annex. A to this order, a cash flow statement has been prepared on the presumption that all the loans appearing in 'B' type diaries to have been advanced by different parties, were actually advanced by the assessee himself. From the cash flow it is found that the total unexplained investment comes to Rs. 4,15,500. This amount is being added to the income of the assessee as unexplained investment as a protective measure". 5. Thereafter, the AO stated that as per the seized diaries, the assessee had indicated brokerage received by him and his son, Shri Kailash Pd. Sanganaria which had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent years accordingly. 9. By the impugned order, the learned CIT(A) observed that the cash flow statement filed by the assessee indicated the incomes earned in various years from asst yr. 1979-80, onwards. Simultaneously, the assessee had also shown funds from HUF known as M/s Bholichand Matadin Sanganaria which derived income from house property over the past several years. The HUF itself had its nucleus in a bigger HUF known as Sheo Narayan Harbox which as per evidence produced at the time of hearing underwent a partition in 1941. Shri Bholiram, father of the assessee, was one of the coparceners of the bigger HUF. Along with the returns for the asst. yrs. 1979-80 to 1987-88, the assessee had filed a cash flow statement in respect of the HUF to indicate that funds from the HUF sources were available to him for explaining the various investments. In the said cash flow statement, credit for an opening balance of Rs. 15,000 was claimed as at the beginning of the accounting period relevant for asst. yr. 1979-80. After analysing the submissions of the learned Authorised Representative of the assessee made before him, the learned CIT(A) concluded as follows: "I have already consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved over the additions made to his income merely on a protective basis. I find for the asst. yr. 1983-84, out of total amount of Rs. 4,15,500, an amount of Rs. 2,75,000 has already been substantively assessed in the hands of one Sri Sampatmal Lakhotia, one of the creditors. I have confirmed the said addition in my order dt. 12th Sept., 1991, in ITA No. 544/ORB/1990-91. As would appear from the assessment orders in this case, the AO has either reopened the assessments in the case of the concerned parties or such action is under process. On the basis of the finding of the AO and my own finding in the appellate order mentioned above, the investments in money lending transactions cannot be attributed to the appellant. The additions made on a protective basis are, therefore, deleted". 11. We have considered the rival contentions, carefully gone through the orders of the authorities below and find from the record that the addition on account of unexplained investment was made by the AO on the basis of cash flow statement prepared by him. Thus, an addition of Rs. 10,000 in the asst. yr. 1983-84, Rs. 6,065 in the asst. yr. 1985-86, Rs. 9,462 in the asst. yr. 1987-88 and Rs. 23,378 in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO and the same was also appreciated by him. On the basis of material on record, there is no reason to disbelieve the accumulation of capital at Rs. 15,000 in HUF hand in the year 1978. 12. In view of the above, we do not find any infirmity in the order of the learned CIT(A) for deleting the addition made by the AO by recasting the cash flow statement on the plea of unexplained investment. 13. Regarding addition made on protective basis in respect of investment recorded in the diaries seized by the Department, we find that the AO himself has categorically observed that the entries found recorded in the seized diaries pertain to the other creditors so as to reach to the conclusion that the assessee was just a broker and money belongs to the others and in whose hands the AO has already made the addition on substantive basis, the AO himself has stated that only to safeguard the interest of the Revenue, the additions were made in the hands of the assessee on protective basis, whereas substantive additions have been made in the hands of the persons to whom the funds actually belong. Before parting with the matter, it is pertinent to bring on record that Tribunal had recently pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e file of the AO with a limited purpose of finding out the availability of cash with the Lakhotia group with reference to the alleged loans found recorded in 'B' type diaries of Sanganaria. Thus, principally the Tribunal have already observed that the alleged funds given on loans and advances and was found in the 'B' type diaries, seized from the residence of Sanganaria, were belonging to the Lakhotia group. 14. In view of the findings recorded by the learned CIT(A) as well as the observations made by the AO himself in his order and keeping in view the order of Tribunal dt. 30th June, 2004, as discussed above, we do not find any reason to interfere in the order of the learned CIT(A) deleting the addition made on protective basis. We direct accordingly. 15. The next grievance of the Revenue in the asst. yr. 1988-89 relates to deletion of addition in respect of value of jewellery and silver articles found at the time of the search and part of which was treated unexplained. 16. Rival contentions have been heard and records perused. 17. In the course of search, gold ornaments, jewellery, silver articles and utensils valued at Rs. 5,61,476 by the registered valuer, were found in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From parents and brothers at the time of marriage 70 Tolas of gold and Dhiva gamana .... ornaments. (ii) From elder sister, Smt. Madhi Bai, and 20 Tolas of gold Smt. Gini Devi ....... ornaments. (iii) From uncle, Bholaram 25 Tolas of gold Bhut ...... ornaments. (iv) From father-in-law, 25 Tolas of gold Bholichandji..... ornaments. (v) From family members, 600, Tolas of silver relatives, ornaments and Friends and well-wishers utensils. ....... -------------------------------------------------------- It was stated in the affidavit that in those old days the market price of gold was only Rs. 40 to Rs. 45 per tola and considering the special position and financial status of his family they had presented 70 tolas of gold ornaments and 600 tolas of silver articles as marriage presentations. It was explained that out of the total 140 tolas of gold ornaments which Smt. Ganga Devi received in 1942, she had presented during the period from 1942 to 1979 about 50 tolas on different occasions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or nearly 583 grams may be considered as belonging to assessee's wife, Smt. Ganga Devi. The AO further stated that most of gold ornaments have already been released by the Department by passing order under s. 132(5). The gold ornaments now under possession of the Department and which had been valued at Rs. 74,474, are to be assessed as unexplained in the hands of the assessee under s. 69A. Similarly, out of the total silver articles, the AO treated the articles worth Rs. 18,395 to be unexplained and added the same in the hands of the assessee. 19. By the impugned order, the learned CIT(A) deleted the addition by observing that the dispute in this case is about 30 tolas of gold ornaments and 4 kgs. of silver articles treated as unexplained and that it is a matter of record that the HUF of the appellant was an old income-tax assessee in 1940s and that he was married way back in 1942 into a well renowned business family of Jhargaon in West Bengal. The learned CIT(A) further observed that as per letter of Smt. Ganga Devi dt. 8th Feb., 1988, addressed to the AO, Smt. Ganga Devi had contended that the ornaments were old and antiquated pattern which could be verified from any goldsmith ..... 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