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TMI Blog1996 (12) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... said cash to the assessee firm to be sent to different stations. The assessee had furnished the names and the amounts claimed to be belonging to the said parties. The AO, however, rejected the assessee's explanation on the ground that it had not furnished the confirmation letters from the said parties. 2.3 On appeal, the learned CIT(A) confirmed the addition on the ground that the cash of Rs. 89,428 was found at the business premises of the assessee and the assessee had not discharged the onus to prove the source of such cash. 2.4 During the course of search three packets of rough diamonds valued at Rs. 2,29,674 had been seized from the assessee's-firm's office at Ahmedabad. Vide his statement under s. 132(4) Shri Anubhai Patel, the partner of the assessee-firm had claimed that two packets of rough diamonds were given by Shri Kishore L. Patel while the third packet was given by Shri Ravjibhai. The assessee also contended before the AO that Shri Kishore L. Patel had given two packets of rough diamonds to be transported to Shri Ramjibhai A. Badhiwala, Botad whereas the packet sent by the other party was meant for Shri Chimanbhai V. Patel Botad. The AO asked the assessee to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng our attention to the provisions of s. 69 of the Act, the learned counsel submitted that the provisions of that section would be applicable only in the case in which "the assessee is found to be the owner of.....". In the instant case on the proper appreciation of the facts and circumstances obtaining in the case, it cannot be held that the assessee was the "owner" of the articles found in the possession at its business premises. The learned counsel relied upon the decision of the Tribunal Ahmedabad 'C' Bench in ITA No. 842/Ahd/1984 in the case of the assessee relating to asst. yr. 1981-82 where it was held that in view of the nature of the business carried on by the assessee, the assessee was the mere custodian of the articles handed over to him which were to be transported from one place to another. 2.8. Shri Sunil Agarwal, the learned Departmental Representative submitted that the cash and three packets of rough diamonds were found in the possession of the assessee and the assessee should be deemed to be the owner of the same. He submitted that the assessee could not explain the source of the cash amounting to Rs. 89,428 and as such the AO was justified in treating the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue as usual is chasing the shadow instead of catching the real person. We make this observation as according to us, the Revenue has failed to appreciate the well-recognised business of Angadia in its proper perspective. If the assessee had failed to give any explanation regarding the amounts involved, perhaps the Revenue may have a case to make additions in the manner it has been done in the instant case. However, in our opinion, as regards Rs. 3 lacs, the assessee has clearly discharged the initial onus which lay upon it. Both S/Shri Sunderlal Shroff and P.A. Patel have clearly stated that they had used the agency of the assessee to remit Rs. 3 lacs from Delhi to Bombay. In fact, Shri Sunderlal Shroff has given complete narration and details as to how he obtained loan and how and why the amount was sent to Delhi for purchasing a property there. He has also explained as to under what circumstances he was forced to recall Rs. 3 lacs urgently to Bombay. He has also given full details regarding his activities as well as the activities of the AOP of which he was a member and other members of his family. Similarly, Shri P.A. Patel also has given complete account as to how he carried the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds raised by the assessee are accordingly allowed and the ground raised by the Revenue in respect of the addition of Rs. 91,335 on account of alleged unexplained cost of rough diamonds is dismissed. 3. The next common ground raised by both the parties relates to an addition on account of alleged unexplained unaccounted business activity. There was a survey under s. 133A at the Bombay branch of the assessee during the course of which excess cash of Rs. 2 lacs was found with the assessee. The assessee immediately surrendered the said amount for taxation. The AO noted that the presence of excess cash of Rs. 2 lacs at the business premises of the assessee indicated that the assessee was carrying on business outside the books of accounts. He also noted that during the course of action under s. 132 there was a cash shortage of Rs. 97,794. Before the AO the assessee contended that the cash shortage was due to the fact that its accountant could not deposit the amount of Rs. 1 lac in the bank since he had to suddenly leave for his native place. It was also contended that on his return from the native, place, the accountant gave back the sum of Rs. 1 lac. However, the AO rejected th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue at the time of survey. The AO's observation that the presence of excess cash was indicative of the fact that the assessee was carrying on business outside the books of accounts, is not supported by any corroborative evidence and as held by the Punjab Haryana High Court in the case of Gumani Ram Siri Ram vs. CIT (1972) 85 ITR 67 (P H), "there may be hundred reasons for the assessee to surrender an amount irrespective of the fact that whether it was his income or not". Under the circumstances we see no justification on the part of the AO to presume that since the assessee surrendered the amount of Rs. 2 lacs it was earning commission outside the books of accounts and in estimating such commission/income at Rs. 10 lacs. In all fairness the AO ought to have accepted the amount of Rs. 2 lacs which was surrendered by the assessee at the time of survey for taxation to buy peace with the Department. The CIT(A) simply followed the observation of the AO without appreciating the facts of the case though he reduced the addition from Rs. 10 lacs to Rs. 5 lacs again on estimate. We do not approve this approach of the CIT(A). 3.6 Coming to the case of CIT vs. H.M. Esufali relied upon by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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