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TMI Blog2014 (1) TMI 1026X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest free loan for the said persons through M/s. Burhani Quarzen Hasanah Trust - After examining the said persons except Mr. Burhanuddin Bhai, who was said to be residing in Kuwait, the claim in respect of two persons was admitted by the AO - The ld. CIT(A) rejected the contention of the AO in the case of Mrs. Zainab Gandhi observing that merely because the family income of Mrs. Zainab Gandhi was nominal, that itself could not be a ground to reject the contention of the assessee which was further corroborated with the statement of Mrs. Gandhi - Even if, one or two of them could not give the exact proof of purchase of jewellery in the shape of bills etc. that itself alone cannot be a basis to hold that said jewellery did not belong to the said persons, especially, in the presence of other correlating evidence supporting the claim of the assessee. In the case of Mr. Shabir Bhai Ahmedabadwala, the reasoning given by the ld. CIT(A) is not well founded - It is a common practice in India that people generally invest their money in purchase of gold because of the market trend of rise in prices of the gold - The purchase of gold is also a customary practice in India - The gold bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee in his appeal has taken the following grounds: "1.(a) The learned Commissioner of Income Tax (Appeals) ("learned CIT(A)") has erred in confirming the addition ofRs.1,44,542/- as unexplained investment in jewellery. (b) The learned CIT(Appeals) has failed to appreciate the submissions of the appellant and has confirmed the addition without any justification. (c) The appellant prays that the addition confirmed of Rs.1,44,542/- to the income of appellant be deleted. 2. (a) The learned CIT(Appeals) has erred in confirming the jewellery worth Rs.584319 belonging to Mr. Shabir BhaiAhmedabadwala of Rs.56000 belonging to Mr. Burhanuddin Najafi as unexplained investments of appellant. (b) The learned CIT (Appeals) has failed to appreciate the fact that the jewellery belonged to Mr. Shabir BhaiAhmedabadwala Mr. Burhanuddin Najafi and the same cannot be treated as unexplained investment in the hand of appellant. (c) The appellant prays that, in the facts and circumstances of appellant's case, the addition made of Rs.6,43,319/- to the income of the appellant be deleted. 3.(a) The learned CIT (Appeals) has erred in confirming the addition of Rs.8,49,000/-, Rs.4,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, hence, this order. 3. In the first ground of appeal, the assessee has contested the addition of Rs.1,44,542/- as unexplained investment in jewellery. During the course of search, jewellery worth Rs.22,42,399/- was found at the residence of the assessee out of which jewellery worth Rs.10,45,039/- was seized. In his statement recorded under section 131 of the Income Tax Act the assessee had stated that part of jewellery so found belonged to his wife namely Mrs. Tasneem M. Modi, claimed to be received by her from relatives at certain occasions such as at the time of her marriage and at the time of birth of children. The jewellery stood shown in the balance sheet of the assessee for assessment year 2001-02 at Rs.2,03,647/- and in the balance sheet of his wife Mrs. Tasneem M. Modi at Rs.1,48,657/-. The AO since had rejected the books of account for earlier years, he therefore also rejected the books of account for this year also. The AO thereafter estimated the receipt of gifts in the shape of jewellery at 350 gms. and worked out the value of jewellery by taking the rate of gold as on 31.03.06 and the value of the excess gold jewellery was added back into the income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.06. Accordingly, the contention of the ld. counsel for the assessee is accepted and the AO is directed to adopt the rates of the gold jewellery as on 31.03.01 and work out the unexplained investment, if any, accordingly. Ground No.2 6. During the search operation jewellery worth Rs.11,89,039/- was found which was claimed to be belonging to different persons as mentioned below: Name Amount 1. Mrs. Zainab Gandhi Rs.4,04,720/- 2. Mrs. Nasim Modi Rs.80,000/- 3. Mr. Shaukat Bhai Modi Rs.64,000/- 4. Mr. Shabir Bhai Ahmedabadwala Rs.5,84,319/- 5. Mr. Burhanuddin Bhai Rs.56,000/- 7. After considering the submissions of the assessee and examining the concerned persons, the AO rejected the claim of the assessee in cases of Mrs. Zainab Gandhi, Mr. Shabir Bhai Ahmedabadwala and Mr. Burhanuddin Bhai. In first appeal, the ld. CIT(A) deleted the addition of Rs.4,04,720/- relating to jewellery of Mrs. Zainab Gandhi. However, he confirmed the additions made in the case of other two persons observing that the assessee has failed to prove that the said jewellery belong to the said persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ahmedabadwala, the claim was rejected because the said Mr. Shabir Bhai Ahmedabadwala could not produce the bills of purchase of gold biscuits which were allegedly deposited by him with the assessee. It was further observed that there was no justification by him to firstly purchased the gold biscuits and then to deposit the same for getting the loan. However, in the case of Mr. Burhanuddin Bhai, the claim was rejected because the said person was not produced for his examination. 11. It is an admitted case that the jewellery/gold claimed to be belonging to different persons was found in separate packets under their name. The assessee had also given a reasonable explanation that the said persons had deposited the gold with the assessee for the facilitation of grant of interest free loan for the said persons through M/s. Burhani Quarzen Hasanah Trust. After examining the said persons except Mr. Burhanuddin Bhai, who was said to be residing in Kuwait, the claim in respect of two persons was admitted by the AO. Further the ld. CIT(A) rejected the contention of the AO in the case of Mrs. Zainab Gandhi observing that merely because the family income of Mrs. Zainab Gandhi was nominal, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in holding that the said jewellery did not belong to Mr. Shabir Bhai Ahmedabadwala. Accordingly, the addition made relating to the jewelry belonging to Mr. Shabir Bhai Ahmedabadwala is hereby ordered to be deleted. 14. So far the case relating to jewelry of Mr. Burhanuddin Bhai is concerned, the evidentiary position is same as in the case of other persons except that he was not produced for examination before the AO. His absence had been well explained by the assessee that he was not in India at that time but was residing in Kuwait. However, his duly sworn statement/affidavit was filed before the AO vide which he claimed that the said jewellery belonged to him. Under such circumstances, the addition made in case of Mr. Burhanuddin Bhai cannot be sustained and is hereby ordered to be deleted. Ground No.2 of the assessee's appeal is thus allowed and ground No.1 of the Revenue's appeal is dismissed. Ground No.3 15. During course of search, certain loose papers were found. Assessee was asked vide letter dated 18.08.2008 that the said loose papers showed money distributed to various persons and hence to explain the source of such cash and purpose for the same. In response , the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh balance of Rs.19,00,000/- in his books of account to establish that money was received by him. Thus it was held that this amount was advanced to one Mr. Mohammad other than assessee and hence added as unaccounted loan advanced amounting to Rs.19,00,000/- to Mr. Mohammad and outstanding on the date of search. (iii) Page 2 (back) of the seized material To get from Nasim's husband --- Rs.2,00,000/- Received August, 2006 --- Rs.10,000/- Received Sep., 2006 --- Rs.10,000/- Received Oct., 2006 --- Rs.10,000/- Received November, 2006 --- Rs.10,000/- Received December, 2006 --- Rs.10,000/- Received January, 2007 --- Rs.10,000/- Received February, 2007 --- Rs.10,000/- The AO observed that the above entries denoted money advanced to Nasim's husband amounting to Rs.2,00,000/- out of which Rs.70,000/- was received back on various dates. Hence, the balance of Rs.1,30,000/- was added as unaccounted loan advanced and outstanding on the date of search. (iv) Page 3 of the seized material Rashid has been given --- Rs.2,50,000/- Taken back --- Rs.1,65,000/- Balance --- Rs.85,000/- Yusuf has been given --- Rs.2,40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the cash book, it was seen that there was cash balance exceeding Rs.20,00,000/- available in the books of the company, the appellant and other family members. Therefore, there was no justification to doubt the availability of cash of Rs.19,00,000/- at the assessee's residence. He did not agree with the observation of the AO that Mr. Mohammad Modi to whom the amount of Rs.19,00,000/- was advanced was some person other than the assessee. He accordingly, deleted the addition of Rs.19,00,000/- pertaining to the entry in the name of Mohammad Modi . In respect of addition of Rs.4,10,000/- made on page 3, he confirmed the additions made by the AO finding the same to be correctly made by the AO. With regard to the addition made at Rs.13,32,000/-, with regard to page 4 5, he observed that there was no explanation for the source of the money and even the identity of Mr. Rashid had not been established to prove his business connection with the assessee, he confirmed the addition made at Rs.13,32,000/- as unexplained cash credit from Mr. Rashid. 17. We have heard the ld. representatives of both the parties and also have gone through the records. The contention of the ld. representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees and the payment of salary was made to them through banking channels. The Revenue has also contested the identity of Mr. Mohammed as being not the name of assessee. A perusal of the assessment order as well as order of the ld. CIT(A) reveals that the contentions of the assessee have not been properly looked into by the lower authorities. We, accordingly, set aside the issue relating to addition/deletion made on account of unexplained cash on the basis of loose papers for fresh adjudication. Needless to say the AO will give proper opportunity to the assessee to present his case and also admit the necessary evidences which may be sought to be produced by the assessee before him and thereafter to pass a speaking order on merits, relating to the above issue. Additional Ground Nos.1 2: 19. The ld. A.R. has contended that in relation to addition made on amount of payment made to labourers of Rs.1,90,800/-, the identical issue has been decided by the Tribunal vide order dated 24.11.10 for assessment years 2001- 02 to 2007-08. He has further contended that the said issue has not been adjudicated by the ld. CIT(A). Similarly relating to second additional ground, the ld. A.R. has co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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