Income Tax Appellate Tribunal - Jaipur
Santosh Ahluwalia, Jaipur vs Assessee on 13 June, 2016
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, JM
vk;dj vihy la-@ITA No. 06/JP/2013
fu/kZkj.k o"kZ@Assessment Year : 2010-11
Santosh Ahluwalia, cuke A.C.I.T.,
65, Gopal Bari, Jaipur. Vs. Circle-2, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABWPA 2764 Q
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No. 08/JP/2013
fu/kZkj.k o"kZ@Assessment Year : 2010-11
MJS Ahluwalia, cuke A.C.I.T.,
65, Gopal Bari, Jaipur. Vs. Circle-2, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABYPA 1038 R
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Manish Agarwal &
Shri O.P. Agarwal (CA)
jktLo dh vksj ls@ Revenue by : Shri Kalika Singh (CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 01/06/2016
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 13/06/2016
vkns'k@ ORDER
PER: LALIET KUMAR, J.M. Both are the appeals filed by the assessees arise against the orders dated 27/11/2012 and 26/11/2012 passed by the ld CIT(A)-I, Jaipur. The effective grounds of both the appeals are as under:-
2 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT Grounds of ITA No. 06/JP/2013 "1 On the facts and in the circumstances of the case, the Ld. CIT(A) has grossly erred in upholding the addition of Rs. 5,74,100/- made u/s 69 on account of cash by treating the as unexplained, arbitrarily.
1.1. That the Ld. CIT(A) has further erred in ignoring the fact that the cash found was belonging to M/s Rajasthan Mining & Engineering Pvt. Ltd. which is duly supported by necessary evidences, thus the addition so confirmed deserves to be deleted.
1.2 That the Ld. CIT(A) has further erred in misinterpreting the statements of the assessee recorded during the course of search.
1.3 That the Ld. CIT(A) has further erred in ignoring the fact that assessee is one of the director of company M/s Rajasthan Mining & Engineering Pvt. Ltd., who owned the cash available with assessee and the cash book submitted of the company was not doubted by Ld. AO or Ld. CIT(A).
Grounds of ITA No. 08/JP/2013 "1 On the facts and in the circumstances of the case, the Ld. CIT(A) has grossly erred in upholding the addition of Rs.14,13,100/- made u/s 69 on account of cash by treating the same as unexplained, arbitrarily. 1.1 That the Ld. C1T(A) has further erred in ignoring the fact that the cash found was belonging to M/s Rajasthan Mining & Engineering Pvt. Ltd. which is duly supported by necessary evidences, thus the addition so confirmed deserves to be deleted.
3 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT 1.2 That the Ld. CIT(A) has further erred in misinterpreting the statements of the assessee recorded during the course of search.
1.3 That the Ld. CIT(A) has further erred in ignoring the fact that assessee is one of the director of company M/s Rajasthan Mining & Engineering Pvt. Ltd., who owned the cash available with assessee and the cash book submitted of the company was not doubted by Ld. AO or Ld. CIT(A).
2. The brief facts of the case is that the assessee is an individual and one of the promoter directors of M/s Rajasthan Mining Engineering Pvt. Ltd. for the year under appeal the assessee had filed her return of income declaring total income of Rs. 3,40,380/-. A search and seizure action u/s 132 of the Income Tax Act,1961 was carried out on 12-11-2009 at the business and residential premises of Kamal Jeet Singh Ahluwalia and Group. Notice u/s 153A / 153C r.w.s. 143(2) was issued to the assessee. During the course of search cash totalling to Rs 19,87,200/- was found which comprised of an amount of Rs. 14,13,100/- found from the residence of assessee and the amount of Rs.5,74,100/- found from a locker bearing no 10 maintained with SBBJ, Gopalbari, Jaipur maintained in the name of assessee. Out of this amount an amount of Rs. 19,00,000/- was seized. Further during the course of search jewellery belonging to assessee was also found. Subsequently, assessment was completed u/ss. 143(3) r.w.s. 153A/153C of the Act at a total income of 4 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT Rs. 30,97,310/- by making addition u/s 69 A (on protective basis) after treating the cash found at the residence of assessee cum office of M/s Rajasthan Mining Engineering P. Ltd. as unexplained money of assessee's husband and also treated the cash found in the abovementioned locker as unexplained money of assessee and made addition in the hands of assessee on substantive basis which was added in the hands of assessee's husband on protective basis. Ld. AO made further addition on substantive basis on account of difference in the weight of jewellery as found during the course of search and as declared by assessee in VDIS and same amount was added in the hands of assessee's husband on protective basis.
3. Regarding grounds No. 1 to 1.3 of the assessee's appeal, the ld AR of the assessee has submitted that during the course of search conducted at the residence of the assessee, cash amounting to Rs. 14,13,100/- was found. Statement of assessee was recorded during the course of search and following specific questions were raised by the search team with respect of cash found at the residence of assessee:
iz'u 29 vkt fnuakd 12-11-2009 dks vkidh ?kj dh ryk"kh ds nkSjku vkids fuokl 65 xksikyckM+h ls udn :i;s 14]13]100@& ik;s x;s d`i;k vki bldk L=ksr crk,sAa 5 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT mRrj ;g udnh tks esjs fuokl ls :i;s 14]13]100@& ik;s x;s os esjs }kjk fofHkUu rkjh[k dks cSd a ls jde fudkyh xbZA blh [kkrs ls cps gq, jkf"k gekjs fuokl ls ikbZ xbZA iz'u 30 d`i;k crk,sa fd ;g jkf"k dkSu&ls cSd a ls fudkyh xbZA mRrj ;g jkf'k LVsV cSd a vkWQ bankSj [kkrk la[;k 63024837646] cuhikdZ czkap] 'kkL=huxj ,oa ,pMhQlh] vfgalk lfdZy] lqHkk"k ekxZ ;g nksuksa [kkrk jktLFkku ekbZfuax ,.M Engg ds uke gS ls fudkyh xbZ gSA bUgh cSd a esa gekjk Ahluwalia Alloy, ,oa MJS Ahluwalia Loan A/c gSA ;g State Bank of Indore esa gSA iz'u 31 vkius mijksDr iz'u ds mRrj esa crk;k fd mDr jkf"k vkids fofHkUu cSd a ks ls fudkyh jkf"k dh "k's k jkf"k gSA d`i;k vki bl lEcU/k esa vkidh dEiuh M/s. Rajasthan Mining & Engg............. M/s. Ahluwalia Alloys dh cash book ,oa Bank Book documentary evidence ds lkFk esa izLrqr djsAa mRrj tSlk fd eSusa igys mijksDr crk;k fd ge day to day nksuksa dEiuh ,oa QeZ esa cash book ,oa Bank Book maintain ugha djrs gSa bl lEcu/k esa esjs ikl documentary evidence ugha gSA The ld AR has sought to explain the cash found during the course of search and it was submitted that cash belongs to the company of the assessee namely M/s Rajasthan Mining and Engineering Pvt. Ltd..
However, the ld Assessing Officer was not convinced with the explanation given by the assessee and has made addition of Rs. 14,75,980/- in the hands of the assessee and balance in the hands of Smt. Santosh Ahluwalia. Finding of the ld Assessing Officer is mentioned at paragraph No. 4.3 of the assessment order, which is as under:-
"4.3 Assessee's reply was considered but not found to be acceptable for the reasons mentioned in the show cause itself. No benefit in view of the wealth tax return filed by the 6 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT assessee can be given as no details of jewellery was attached thereto. Further, the difference of 471.3 gms has not been explained by the assessee satisfactorily. Also, there was a difference in valuation done by the assessee in its WT return and valuation as done by the Department Valuer which was not challenged by the assessee during the search as well as the assessment proceedings. In view of this, the difference in weight of gold (purity 89.28%), which, after conversion at the rate of Rs. 1500/- per gram, as valued by the Department Valuer on the date of search operation, comes to an amount of Rs. 7,06,950/- and is added back to the income of the assessee U/s 69A of the IT Act, 1961 on substantive basis as the VDIS surrender was done in assessee's name only also the jewellery items as per inventory prepared during the search consisted to women's jewellery items only and has been added in the hands of Sh. MJS Ahluwalia on protective basis. Penalty U/s 271AAA is initiated on this unexplained income (gold) found during the search operation."
During the course of argument, the ld AR has also pointed out that the company namely M/s Rajasthan Mining and Engineering Pvt. Ltd., for which the assessee was the Director has filed its return of income and in the balance sheet of the company, cash amount, which was found during the course of search was shown in the balance sheet. It was submitted that the company being juristic person is assessed separately and once 7 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT the cash amount shown in the return of income was accepted by the department then the addition made by the Assessing Officer was bad in law in the hands of the assessee.
3. The assessee feeling aggrieved by the order passed by the ld Assessing Officer has taken up the matter in the appeal to the ld CIT(A). The ld CIT (A) vide order dated 26/11/2012 has confirmed the addition. We would like to reproduce the finding of the ld CIT(A) for the purpose of their reference:-
"I have carefully perused the order of the AO and the submissions of the AR and do not concur with the submission of the AR on the following grounds:
1. The first premise of the AR of the appellant is that the statements of Shri MJS Ahluwalia are not reliable evidence because he suffered from Diabetes end Parkinson's disease which results in memory loss. Moreover, he did not rave technical knowledge and so could not distinguish between the ledger and cash book in his statements.
I have carefully perused the statement of Shri MJS Ahluwalia and find that he was very much in command of his faculties and was able to furnish all the details and explanation as and when asked for by the Department during the search operations. Nowhere on perusal of his statement does it appear that his mental capacity was afflicted during the course of 8 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT recording of these statements. However, he is allowed a margin of doubt that he did not know the difference between ledger and cash book which was being maintained on computer of the company. On perusal of the Punchanama as well, it is seen that the hard disk copy of computer was seized during the course of search & seizure operations.
2. If the copy of cash book submitted on the basis of this hard disk is accepted as admissible evidence then on perusal of this cash book it is seen that the assessee had brought forwarded cash of Rs.50,88,408/- on 11/11/2009. The AR has failed to furnish any explanation either during the course of assessment or appellate proceedings as to where the balance amount of cash was kept. No reconciliation of the bank statements with the cash found, and as reflected in the cash book submitted has been furnished. If his explanation is accepted, that Rs. 19,00,000/- found at the premises of the assessee including the locker of his wife belonged to the company, then, he is required to furnish a cogent explanation regarding the balance cash of Rs.31,88,418/- which he had failed to.
3. Moreover, it is very unlikely for the cash of the company to be kept in the private bank locker of the assessee's wife even if she is a director.
Therefore, the addition of cash of Rs.14,13,100/- is confirmed in the hands of the assessee u/s 69A of the I.T. 9 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT Act and it is held that Rs.5,74,100/- added to the income of the assessee on protective basis is required to be added to the income of Smt. Santosh Ahluwalia and relief of this amount is given to the assessee."
4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that the authorities below have failed to apply correct law and have wrongly made addition of the amount of Rs. 14,13,100/- in the hands of the assessee and had wrongly added the amount of Rs. 5,74,600/- in the hands of Smt. Santosh Ahluwalia, wife of the assessee and M/s Rajasthan Mining and Engineering Pvt. Ltd. The ld AR further submitted that after search assessee complete books of accounts which were subject to audit and were submitted before the Ld. AO during the course of assessment proceedings including the cash book which clearly reflected the availability in the hands of the said company. During the course of search and in the assessment proceeding it was explained that the cash found during the course of search belonged to the aforesaid company and not the assessee. However, the Ld. AO has rejected the explanation of assessee merely on the ground that in his statements recorded u/s 132(4) the assessee denied having maintained the books of account M/s Rajasthan Mining and Engineering Pvt. Ltd. and thus the Ld. AO alleged that the books of account including the cash book of the said 10 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT company submitted before him was after thought. It is submitted that it is a settled law where the books of accounts were incomplete at the time of search, the assessee should give an opportunity to complete the same. Accordingly the assessee after the search has completed the books of accounts of his company which are duly audited u/s 44 AB of the Income Tax Act, 1961 which includes the cash book as well and were submitted along with return of income filed by the said company and was a part of the record of the department. Thus, the allegation of the Ld. AO that the submission of the books of account including the cash book was an afterthought was completely misplaced and wrong. He placed reliance on the decision in the case of VM Thakkar Vs. ACIT reported in 107 Taxman 85. A perusal of the cash book of M/s Rajasthan Mining & Engineering P. Ltd. would show that there was a closing balance of Rs. 50,69,938/- as on the date of search, which was well above the cash found at the business premises as well as locker of the directors of the said company i.e. the assessee and his wife Smt. Santosh Ahluwalia. The allegation of Ld. AO that the assessee has not been able to establish the source of cash found during the course of search is completely misconceived and based on wrong appreciation of facts and circumstances of the case. Thus, it was established by the assessee during the course of 11 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT assessment, proceedings that the cash found during the course of search belonged to M/s Rajasthan Mining & Engineering P. Ltd. wherein, the assessee is the promoter director and whose office is the same as residential premises of the assessee. Copy of cash book of M/s RMEPL which formed part of its audited accounts was submitted before the lower authorities during the course of assessment / appellate proceedings and wherein, there was sufficient cash availability as on the date of search indicating that the cash so found Rs. 19,00.000/- as tabulated above and the cash of Rs. 19,00,000/- seized by the department has been owned by M/s RMEPL and has shown the same as 'other advances'. All these set of circumstances leave no doubt as to the fact that the cash so found during the course of search belonged to M/s RMEPL only and not to assessee. Therefore, he prayed to delete the addition of Rs. 14,13,100/-.
5. On the other hand, the ld CIT DR has submitted that the addition made by the Assessing Officer were in accordance with law. He further submitted that story cooked up by the assessee that the company namely M/s Rajasthan Mining and Engineering Pvt. Ltd. was having cash balance as on date of search is paid afterthought story as reflected from the statement recorded during the course of search. More particularly question No. 31 wherein the assessee had admitted that no cash book is 12 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT being maintained by the company. It was further submitted that since no cash book was maintained by the assessee, as admitted by the assessee in respect of the company, therefore, the explanation given by the assessee that the cash found in the premises of the assessee belongs to the company, is not plausible explanation and therefore, the Assessing Officer has rightly treated the amount of Rs. 14.13 lacs as unexplained income U/s 69A of the Act.
6. We have heard the rival contentions of both the parties and perused the material available on the record as well as gone through the orders passed by the authorities below. In our opinion, the authorities below have failed to apply their mind and appreciate the evidence available with it. Paragraph No. 2 of 4.3 of CIT(A)'s order clearly points out that there is a hard disk and hard disk was found during the course of search and on the basis of hard disk, the brought forward cash of Rs. 50,88,408/- was available on 11/11/2009. If the cash of Rs. 50,88,408/- was available on the date of search, than the wisdom of the assessee to keep the cash either at residence or in the locker cannot be doubted . The revenue authority cannot challenge the wisdom of keeping the cash either at residence or at the locker and therefore, the explanation given by the assessee during the course of search and further supported by the hard 13 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT disk on the basis of which the cash book was prepared, which is an admitted piece of evidence, completely negate the case of the revenue. We have no doubt that the addition made by the authorities below were without any jurisdiction and were not in accordance with law and the facts and circumstances of the case. Accordingly, the addition of Rs. 14,13,100/- in the hands of the assessee is deleted. Similarly in respect of ITA No. 06/JP/2013 where the addition of Rs. 5,74,100/- was made in the hands of assessee Smt. Santosh Ahluwalia being cash found in the locker, in our opinion is also required to be deleted and accordingly we delete by following reasons and the ratio laid down by us in ITA No. 08/JP/2013. In light of above, both the appeals of the assessees are allowed.
7. In the result, the both the appeals of the assessees are allowed. Order pronounced in the open court on 13/06/2016.
Sd/- Sd/-
¼Hkkxpan½ ¼yfyr dqekj½
(Bhagchand) (Laliet Kumar)
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur
fnukad@Dated:- 13th June, 2016
*Ranjan
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Smt. Santosh Ahluwalia/Shri MJS Ahluwalia, Jaipur.
2. izR;FkhZ@ The Respondent- The A.C.I.T., Circle-2, Jaipur.
3. vk;dj vk;qDr@ CIT 14 ITA 06 & 08/JP/2014_ Santosh Ahluwalia Vs ACIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 06 and 08/JP/2013) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar