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TMI Blog2017 (11) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions, viz., firstly, addition of Rs. 5,34,000/- made on account of unexplained cash found during the course of search;: and secondly, addition of Rs. 10,52,124/- made on account of alleged unexplained jewellery found during search. 2. The brief facts qua the issue involved are that a search and seizure operation u/s 132 (4) was carried out on 4.8.2011 at the business and residential premises of Nirala group which also covered the premises of assessee. During the course of search at the residential premises of Shri Rakesh Mahajan, cash amounting to Rs. 5,34,000/- was found. In his explanation, the assessee before the AO submitted that he has received sum of Rs. 5 lacs from M/s. Nirala Developers Pvt. Ltd. as imprest on 3.8.2011 and in support, the assessee submitted a copy of cash book from the period 1.8.2011 to 31.8.2011 of the said company. The Ld. AO noted that there is no entry of Rs. 5 lacs in the name of imprest account of Shri Rakesh Mahajan as on 3.8.2011 and neither there is any entry of imprest in the name of any Director in the books of M/s. Nirala Developers Pvt. Ltd. He held that, since assessee is director in various group companies and looking after day to day ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee stands fully explained out of cash-in-hand reflected in the books of the Nirala Developers Pvt. Ltd.; and are alternatively it is covered in the surrender of Rs. 1,95,47,000/- made in the case of the said company. 4. However, the Ld. CIT(A) rejected the assessee's contention on the ground that:- * Firstly, the assessee's explanation gives contradictory claim of ownership and does not lead to inference that cash found from the residence of the assessee belonging to Nirala Developers Pvt. Ltd.; * Secondly, the assessee's contention that cash of Rs. 5,34,000/- was included in the disclosure of Rs. 1,95,47,000/- made in the case of Nirala Developers Pvt. Ltd. is not correct, because there is no linkage of such claim given by the assessee; * Thirdly, the entries of the cash book of Nirala Developers Pvt. Ltd., filed before the AO gives a different narration and do not match entries appearing in the cash book of the said company. It was filed during the course of assessment proceedings. * Fourthly, he also highlighted following discrepancies from the entries in the cash book of the company:- * The appellant has claimed that Rs. 53,98,000 (comprising of Rs. 5 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the residence of these Directors were the cash belonging to the company and duly reflected in the cash book of the company. The observation and findings of the Ld. CIT (A) to point out that the entries do not match and there discrepancy is absolutely erroneous, because Rs. 53,98,000/- was on account of imprest account and not the advanced tax because the advanced tax on the same date was separately shown as Rs. 13,81,000/- and it was on after two days of offer of undisclosed income cash was to be deposited for advance tax. Thus, the amount of cash found duly stands duly explained from the cash-in-hand of the assessee company. 6. On the other hand Ld. CIT DR strongly relied upon the order of the Ld. CIT(A) and pointed out that the explanation given by the Ld. Counsel is again not correct, as Ld. CIT(A) has clearly brought out that the sum of Rs. 53,98,000/- is appearing on the date 6.8.2011 and shows the payment of advance tax. Thus such a cash cannot be said to be available as source of cash found at the premises of the assessee. 9. We have heard the rival submissions, perused the relevant findings given in the impugned order as well the material referred to before us. The mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s discrepancy in the entries in the cash book, in our humble opinion, such observations are not correct from the very face of the cash book, because he has completely missed the point a very vital fact, whether any cash in hand was available on the date of search or not. He is only going by the fact that an amount of Rs. 53,98,000/- has been shown against advance payment of tax on 6.8.2011. The payment of advance tax on 6.8.2011 is merely utilisation of cash for the payment of tax for the amount offered by the company during the course of the search. He has not rebutted that on date of search, whether this much amount of cash was available in the cash book or not; and whether at the time of search the cash recorded in the cash book was either found from the premises of the company or from somewhere else, especially when global search was carried out at various places of the Nirala group. So far as his allegation that assessee has been giving varied explanation that, firstly, the said cash found should be included in the disclosure of Rs. 1,95,47,000/-; and secondly, the source of cash is explained from cash-in-hand of the company, in our opinion it does not tantamount to changing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not for explaining the source of acquisition. In support, he also relied upon the judgment of Hon'ble Madras High Court in the case of VGP Ravidas and V.G. Selvaraj vs. CIT, 2014 - TIOL-1731-HC-MAD-IT. 12. Before us, Ld. Counsel submitted that looking to the fact that total jewellery found was 1236.24 grams and assessee has family members consisting of two married women, i.e., wife and mother and one unmarried daughter and two minor children. If one goes by the circular issued by the CBDT then almost the entire jewellery stands explained. If the total jewellery of the entire family members as per the CBDT instruction is to be presumed, then it comes to 1700 grams as against this, only 1236.24 grams have been found. Thus, such a jewellery cannot be treated as unexplained. 13 On the other hand, Ld. CIT DR strongly relied upon the order of the Ld. CIT(A) and submitted that the CBDT instruction are only for the purpose of seizure and not to explain the source. Nowhere the assessee before the AO or Ld. CIT(A) could explain the source of acquisition of jewellery and Ld. AO has already given a huge benefit of the jewellery found based on the CBDT instruction. Hence, no further reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iages, birthdays, marriage anniversary and other festivals. These gifts are customary and customs prevailing in a society cannot be ignored. Thus although the circular had been issued for the purpose of non-seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in Hindu society. In the circumstances, unless the Revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery stated in the circular stands explained. Thus, the approach adopted by the Tribunal in considering the extent of jewellery specified under the said circular to be a reasonable quantity, cannot be faulted with. In the circumstances, it is not possible to state that the Tribunal has committed any legal error so as to give rise to a question of law." 15. Applying the ratio of the aforesaid judgement on the facts of the present case and looking to the assessee's family consisting of assessee himself, his wife, his mother, one major unmarried daughter, one minor daughter and one minor son and the status of the assessee being owner and director of various companies then it has to be presumed that certain amount of jewell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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