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TMI Blog2018 (7) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... rtnership firm engaged in carrying on the business of manufacturing and trading of jewellery, bullion and stones. A search was conducted by the Railway Police Authorities on a car at VIP gate of Railway Station, Jammu on 05/04/2010 and a black bag was recovered from the occupant of the car, i.e., the assessee. The bag was found to contain cash worth Rs. 53,90,000/- and an undated cheque of State bank of India amounting to Rs. 2,50,000/- which was signed by Kidarnath proprietor of M/s Kristian Kanyya Jewellers, however, the name of the drawee was not mentioned on the cheque. Consequent upon the receipt of above information by the Deputy Director of Income-tax (Investigation), Jammu, a warrant under section 132A of the Income-tax Act, 1961 (in short 'the Act') was obtained on 06/04/2010 and served on the Senior Superintendent of Police, Railway Zone, Jammu and the cash and cheque were seized by way of warrant of authorization for the search. 2.1 For the year under consideration, the assessee filed return of income on 28/03/2012, declaring total income of Rs. 2,66,180/-. The case of the assessee was selected for scrutiny and notice under section 143(2) of the Act was issued and compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 i.e. the year in which cash was seized as compared to turnover of Rs. 60,42,599/- in financial year 2009-10 and turnover of Rs. 54,16,762/-in financial year 2008-09 . (7) that it is highly improbable that the partner of the firm would carry entire amount of cash-in-hand of the firm instead of utilizing banking channels (8) that the assessee failed to produce a copy of the statement recorded by the SSP, Jammu on 06/04/2010. 2.3 In view of the above observations, the Ld. Assessing Officer held the entire cash of Rs. 53.90 Lacs and cheque amounting to Rs. 2.5 lakhs seized from the assessee as unexplained income. 2.4 On further appeal before the Ld. CIT(A), the assessee made various submissions to substantiate availability of cash in the hands of the firm including submissions challenging the warrant authorization issued. The Ld. CIT(A) after considering the submission of the assessee, upheld the finding of the Ld. Assessing Officer observing as under: "As against the above, the contentions of the Ld.AO holding the cash of Rs. 53,90,000/- as unexplained were as under:- (i) The appellant produced self serving documents in the shape of balance sheet of the head office, Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not satisfactorily explained by the appellant. (x) The fact that sum of Rs. 52,90,000/- was a loan taken by the appellant from its firm for its personal purposes was not mentioned at the time of the seizure proceedings, (xi) The production of the so called corroborative details pertaining to the seized cash was not instantaneous. In view of all the above facts, the Id.AO felt inclined to treat the money of Rs. 53,90,000/- as unexplained." 2.5 Aggrieved with the above finding of the Ld. CIT(A), the assessee is in appeal before the Tribunal, raising the grounds as reproduced above. 3. Before us, the Ld. counsel of the assessee produced copy of capital account of the assessee in the firm for the year under consideration and submitted that amount of the cash already stand explained in the hands of the firm by way of cash sales and same have already been assessed in the hands of the said firm, and, thus, the lower authorities are not justified in assessing the same as unexplained in the hands of the assessee. The Ld. counsel referred to the order of the Assessing Officer in the case of firm M/s Lakshit Jewellers. He submitted that assessee being partner of the said firm was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the cash found from his possession. He submitted that in the books of accounts of the firm the cash has been shown as generated, against the normal business conduct, just only to explain the cash in the hands of the assessee. According to him, the unexpected increase of cash sales particularly in the period before the cash is found, the purchase shown in credit before the cash is found etc. are against the normal business conduct. He also submitted that the assessee was only partner of two thirds share of the profit of the firm and in normal business affairs, he cannot be allowed to take away the entire cash in hand of the firm. In view of the above, he submitted that normal human conduct as well as business conduct do not justify and explain the source of cash in the hands of the assessee and accordingly the Assessing Officer has rightly assessed the same as unexplained in the hands of the assessee. 5. We have heard the rival submissions and perused the relevant material on record. The fact that in the search carried out by the Railway police authorities at Jammu, Railway Station on 05/04/2010, cash of Rs. 53,90,000 and cheque of Rs. 2,50,000 (without any name of drawee) were f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly Sale for A.Y. 2010-11 Month Delhi(A) Jammu(B) Total(A+B) Apr-09 676,410 676,410 May-09 266,978 266,978 Jun-09 38,742 38,742 Jul-09 1,543,558 1,543,558 Aug-09 211,792 211,792 Sep-09 2,680,623 2,680,623 Oct-09 712,567 401,200 1,113,767 Nov-09 746,937 746,937 Dec-09 18,867 18,867 Jan-10 1,620,837 445,117 2,065,954 Feb-10 1,627,264 414,763 2,042,027 Mar-10 4,488,842 4,488,842 14633417 1261080 15894497 Details of Monthly Purchase for for A.Y. 2010-11 Month Delhi(A) Jammu(B) Total(A+B) Apr-09 277,044 277,044 May-09 124,642 124,642 Jun-09 583,^85 583,685 Jul-09 469,525 469,525 Aug-09 311,525 311,525 Spp:09 2,623,035 2,623,035 Oct-09 1,219,679 992,504 3,615,539 Nov-09 981,250 981,250 Dec-09 872,578 872,578 Jan-10 782,501 144,739 927,240 Feb-10 537,078 537,078 Mar-10 2,976,971 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3,80,000/- from Royal Jewellers which is quite unusual. The sale bills for the month of March, 2010 has also been examined and the same are explained below:- Bill No. Description of Goods Weight Amount 379 dt.26.03.2010 Gold Ornaments 240.140 grms. Rs.3,68,663/- 378 dt. 20.03.2010 Silver Ornaments 18.180 kgs. Rs.2,24,014/- 377 dt. 15.063.2010 Silver Ornaments 15.240 Kgs. Rs.1,87,787/- 376 dt. 12.03.2010 Silver Ornaments 10.135 Kgs. Rs.1,25,907/- 375 dt. 10.03.2010 Silver Ornaments 10.200 Kgs. Rs.1,25,684/- 374 dt. 06.03.2010 Silver Ornaments 13.215 Kgs Rs. 1,63,370/- 373 dt. 05.03.2010 Silver Ornaments 18.495 Kgs Rs. 2,33,504/- 372 dt. 03.03.2010 Gold Ornaments 98.72 grms Rs. 1,51,954/- 371 dt. 03.03.2010 Silver Ornaments 20,520 Kgs Rs. 2,52,847/ Assessee has also booked sales in cash on 2nd April and 3rd April, 2010 as per description below:- Bill No Description of Goods Weight Amount 401 dt. 02.04.2010 Gold Ornaments 180.140 grms Rs. 2,76,551/- 402 dt. 02.04.2010 Gold Ornaments 215.830 grms Rs. 3,31,343/- 403 dt. 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2010 i.e. within 10 complete days only two other bills have been issued apart from bills issued to the assessee. For verification, letters u/s 133(6) were issued to the above mentioned three parties and reply has been received only from Mittal Associates. M/s Shri Parshav Silver Ware and M/s Mittal Brothers have not responded to the enquiries letters u/s 133(6) issued vide letter no. 544 dt. 11.03.201 and no. 546 dt. 11.03.2014 respectively. The discrepancies pointed out above are clear indication that there is no uniformity in the sale/purchase booked by the assessee and assessee has tried to temper with the purchase and sale in order to create the cash and otherwise also. E) Comparison of GROSS & NET PROFIT Ratio for last two years and for A.Y. 2010-11 &'2011-12 is as under:- Fin. Year Turnover Gross Profit Net Profit GP Ratio NP Ratio 2007-08 5416762 465014 10986 8.58% 0.20% 2008-09 6042599 481408 (-)24676 7.96% - 2009-10 15894498 1471917 216332 9.26% 1.36% 2010-11 22548663 943397 (-)496546 4.18% (-)2.20 From above, it is apparent that since assessee firm has booked cash sales during the month of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re are reasons to believe that the apparent is not the real and the tax authorities are entitled to look at the surrounding circumstances to find out the realities and the matter as to be considered by applying the test of human probabilities. 5.3 In the case of Sumati Dayal Vs CIT (1995) 214 ITR 801 (SC), the assessee shown winning from the horse races. The assessee stated that she started going to the races in 1969 and she won her jackpot on 12/12/1969, i.e., the 1st day on which she went to the races. She also stated that she worked out the combination of the winning horses on the basis of what her husband advised her but she used to add some horses of her own, however she knew nothing about the performance of those horses. She suddenly lost interest in the horseracing in 1972 (i.e. coincidently after race winning become taxable). The Hon'ble Supreme Court in the circumstances held that winning of the races was against human probabilities and it would not be unreasonable to infer that the taxpayer had not really participated in any of the races except to extent of purchasing the winning ticket after the event presumably with unaccounted funds. 5.4 In view of the facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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