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TMI Blog2007 (1) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... e first ground, the learned CIT(A) has erred in allowing the opening capital Rs. 47.50 lakhs on 1st April, 1997 of Shri Gopi Lal Mor in the status of HUF" The assessee has also raised the solitary effective ground in his cross-objection as under: "On the facts and in the circumstances of the case, the learned CIT(A) should have allowed credit of opening capital as on 1st April, 1997 in the hands of Shri Gopi Lal Mor, HUF, at Rs. 51.30 lakhs instead of credit allowed by him to the extent of Rs. 47.50 lakhs only." 3. Briefly stated, the facts of this case are that the search and seizure operations under s. 132 were carried out at the residential and business premises of the assessee and his three sons viz., Shri Sohan Lal, Shri Man Mohan and Shri Yashwant and his concern, M/s M.R. Mor Co., Fatehnagar, on 23rd Oct., 2002. Certain incriminating documents were found. Returns far the block period were furnished on 24th April, 2003 by the assessee and his three sons declaring undisclosed income at nil. Cash of Rs. 71,71,820 was found out of which Rs. 69 lakhs were seized. During the course of block assessment proceedings, the explanation of cash was stated as under: "(a) Rs. 2,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who established business in 1922 in the concern named Manroop Radha Kishan. After his death in 1949, his elder son, Shri Shiv Prasad, became proprietor and continued the business till 1959. In this year the firm's business was converted into partnership and Shri Gopi Lal Mar and Shri Chanchal Kumar also became partners. Family partition took place in 1981 and the business was again converted into proprietorship concern of Shri Gopi Lal Mor. In this 1981 partition, Shri Shiv Prasad took over the business of M.R. More. Sons, Udaipur, and M.R. Automobiles, Chittor, and M.R. Fabrics, Udaipur, and residential bungalow situated at Sarvritu Vilas, Udaipur. Shri Gopi Lal Mor's family got, besides Kirana business, petrol pump and cash worth Rs. 10 lakhs deployed in Sahukari business and also got ancestral residential house and 10 bighas of agricultural land at Fatehnagar. Pursuant to this partition, Shri Gopi Lal Mor and his three sons took complete control and possession of the business activities at Fatehnagar. Accretion due to interest earned year to year made the original capital of Rs. 10,00,000 to Rs. 47,50,000 till 29th March, 1995 when again there was a partition amongst Shri Gopi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in contradiction to assessee's own submission made vide his Authorised Representative's letters dt. 22nd April, 2003 (attached with the R/1), under para I (e) of which it is clearly mentioned that the so claimed money-lending business was in continuation even after 29th March, 1995. Thus, there is a contradiction even in assessee's own submission because if the so claimed money-lending business was in continuation, it is impossible not to have any loan debtor as on particular day i.e. 29th March, 1995. In money-lending business, it is impossible not to have any outstanding debtor at any point of time. In this business, the continuous process of receipts of repayments of principal amount and interest besides giving fresh loan is always going on, which should have been present in the case of assessee also. (c) It is often a practice by the big assessee groups to keep such family partition deeds or other paper mentioning therein the availability of cash and/or other assets as on such particular day which is barred by limitation under IT Act. Nevertheless, if the assessee wants the cognizance of such papers to be taken by the Department, the onus is on the assessee to prove the ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'the balance of Rs. 16,32,877 being accretion during block period is shown in the R/1s filed by four HUFs', whereas these HUFs have returned the entire undisclosed income only for the asst. yr. 2003-04 which is also not correct as per assessee's own contention. In fact, this income should have been offered in the block period i.e. asst. yrs. 1997-98 to 2002-03 and asst. yr. 2003-04 (1st April, 2002 to 23rd Oct., 2002). It is pertinent to mention here that all the four HUFs have filed their R/1s for the first time for the asst. yr. 2003-04. It is vital to note here that these returns were filed only after the date of search Le. 23rd Oct., 2002. It is not out of place to mention here that during the course of search proceedings, the members of Mar family in their preliminary statements had stated that 'no assets of them are lying with anyone or else nor assets of anyone else are lying with them'. It proves that the members of Mor family consider themselves as a single unit and not as a partitioned unit. (vi) Both the documents do not bear any signature of witness. And the same does not appear to have been executed in the presence of a person of social repute who can vouch safely t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons were found during the course of search. The AO has not disputed the contents of the original partition deed of 1981 as a result of which Shri Gopi Lal Mor got ancestral property and his HUF came into existence. It is further borne out from the facts noticed during the course of search that the business was done in a joint family notwithstanding the family settlement dt. 29th March, 1995 and further no partition took place. Thus, it becomes clear that the HUF of Shri Gopi Lal Mor continued to be in existence. When this ancestral property devolved upon Shri Gopi Lal Mor on the death of his father, which was continued and later distributed amongst the sons and self, there cannot be any dispute about the existence of HUF. It is only due to this reason that the assessee agreed during the first appellate proceedings that the old undisclosed income could be taxed in the hands of Shri Gopi Lal Mor, HUF. The learned CIT(A), in our considered opinion, was justified in directing the AO that the undisclosed income is required to be taxed in the hands of the HUF and not in the individual status. Further, the change of status would not make any difference because the rate of taxation in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how that this money was lent by the assessee after 29th March, 1995. Even the learned Authorised Representative could not point out any evidence for bringing home the point that the income of Rs. 3,80,000 was earned in the period after the date of settlement and upto 31st March, 1996, i.e., before the beginning of the block period on 1st April, 1997, Such an assertion, made in the air, does not merit acceptance. We, therefore, hold that the learned CIT(A) was justified in directing to allow credit of Rs. 47.50 lakhs being capital balance as on 1st April, 1997 while making out undisclosed income of the group in the hands of Shri Gopi Lal Mor, HUF. 7. In the result, the appeal of the Revenue as well as the cross-objection of the assessee stand dismissed. Shri Yashwant Goyal [IT(SS)A No. 36/Ju/2006 C.O. No. 17]: 8. This appeal by the Revenue and cross-objection by the assessee arise out of the order passed by the learned CIT(A) on 15th Feb., 2006 in relation to the block period comprising of asst. yrs. 1997-98 to 2002-2003 and upto 23rd Oct., 2002. 9. The following three grounds have been raised by the Revenue: "1. On the facts and in the circumstances of the case, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the three sets of the assessee's wife also weighed 30 Tolas. He also took into consideration the birth of two children, which took place before the date of search. Benefit of five Tolas of gold ornaments per child was allowed. Thus, total of 40 Tolas [30 gms. + 10 gms (5 x 2)] i.e. 466 gms was held to be explained and addition for the remaining jewellery 267.93 gms (733.93 gms minus 466 gms) was made for Rs. 1,07,455. The learned CIT(A) deleted this addition. 13. We have heard both the sides and perused the relevant material on record. CBDT Instruction dt. 11th May, 1994 provides that no seizure should be made in the search for the jewellery held by the ladies at 500 gms, girls at 250 gms and males at 100 gms each. This instruction came to be considered by several Benches all over India in which it has been held that it would be relevant for the purposes of making addition as well. The Hon'ble Rajasthan High Court in the case of CIT vs. Kailash Chand Sharma (2005) 198 CTR (Raj) 201 : (2005) 147 Taxmann 376 (Raj) has upheld this view. When this instruction is applied to the facts of the case, we observe that the possession of gold jewellery of 733.930 gms by the family of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal of the Revenue as well as the cross-objection of the assessee stand dismissed. Shri Sohan Lal Goyal [IT(SS)A No. 38/Ju/2006 C.O. No. 15]: 19. This appeal by the Revenue and cross-objection by the assessee arise out of order the passed by the learned CIT(A) on 15th Feb., 2006 in relation to the block period comprising of asst. yrs. 1997-98 to 2002-03 and upto 23rd Oct., 2002. 20. The following three grounds have been raised by the Revenue: "1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in accepting the money-lending business in the status of HUF since 1981 to 29th March, 1995 because the money-lending business is not evident, status of HUF was never disclosed and it is neither supported by evidence found in the course of action under s. 132 nor produced by the assessee in the course of assessment or appellate proceedings. 2. Without prejudice to the first ground, the learned CIT(A) has erred in allowing the opening capital Rs. 47.50 lakhs on 1st April, 1997 of Shri Gopi Lal Mor in the status of HUF 3. On the facts and in the circumstances of the case, the learned CIT(A) has erred in allowing the gold ornaments found even in exc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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