Income Tax Appellate Tribunal - Vizag
Smt. Bommana Swarna Rekha vs Assistant Commissioner Of Income Tax on 2 March, 2005
Equivalent citations: (2005)94TTJ(VISAKHA)885
ORDER
P.K. Bansal, A.M.
1. This appeal has been filed by the assessee against the block assessment order for the block period ending 2nd Feb., 1996, passed under Section 143(3) r/w Section 158BD of the IT Act. The assessee is a dealer in textiles and carrying on business under the proprietrix in the name and style of M/s Bommana Silk House at Srikakulam. A survey was conducted under Section 133A of the IT Act in the business premises of the assessee. The search has taken place on 2nd Feb., 1996, at the residence of the husband of the assessee, Sri B. Aswini Kumar. Block assessment was completed in the case of the husband of the assessee, Sri B. Aswini Kumar, vide order dt. 10th Feb., 1997. In consequence of the search at the place of Sri B. Aswini Kumar, notice under Section 158BD was issued in the case of the assessee on 9th Jan., 1997, The block return was filed declaring nil income. The assessment was completed on a disclosed income of Rs. 29,03,366. The assessee being aggrieved, has come in appeal before us.
2. Ground No. 1 is general in nature, therefore, does not require any adjudication.
3. The 2nd ground relates to the addition of Rs. 3,76,062 on account of deficit stock found during the course of survey operation. The learned Authorised Representative submitted that this addition cannot be made in the block assessment under Chapter XIV-B since it is a special code of conduct for determining the undisclosed income on the basis of the material found during the course of search. Our attention was drawn towards the provision of Section 158BB and by referring to the amendment being made by the Finance Act, 2002, it was stated that the income has to be computed only on the basis of evidence found as a result of search or requisition of the books of account or other documents and such other material or information as are available with the AO and relatable to the material or evidence found as a result of search. The computation provision as laid down under Section 158BB(1) nowhere states that the material seized during the course of survey operation will be used against the assessee for making the additions even though no material during the course of search was found. In this regard reliance was placed on the following cases :
(a) Prakash Tulsidas v. Asstt. CIT (2000) 68 TTJ (Nag) 479 : (2000) 73 ITD 444 (Nag);
(b) Asstt. CIT v. Fertiliser Traders (2004) 83 TTJ (All) 473; and
(c) Smt Sivabala Devi v. Asstt. CIT (2004) 88 TTJ (Chennai) 955 : (2004) 88 ITD 333 (Chennai).
In the alternate, it was submitted that the AO has treated the whole of the value of deficit stock as the income of the assessee. In case any addition is to be made, that is to be made only in respect of GP and the GP which was earned at 5.78 per cent, and if the said percentage is applied, the addition of Rs. 3,72,062 will get reduced to Rs. 21,736. In this regard, reliance was placed in the cases of Janta Tiles v. CIT (2000) 66 TTJ (Pune) 695 and CIT v. President Industries (2002) 258 ITR 654 (Guj). Reliance was also placed on the decision of Tribunal, Hyderabad Bench, in IT(SS)A No. 95/Hyd/1997, dt. 12th July, 2000, The copies of the P&L a/c of the assessee for ascertaining the GP rate were also filed before us. The learned Departmental Representative, on the other hand, relied on the order of the AO and submitted that the addition has been made by the AO as the survey has taken place at the business premises of the assessee when the search operations were being carried on at the residence of the assessee's husband.
4. We have considered the rival submissions, perused the material on record. We find force in the submission of the learned Authorised Representative that no addition can be made on the basis of deficit stock found in the business premises during the course of survey action taken under Section 133A in the block assessment as it is outside the scope of Chapter XIV-B which deals with the assessment of undisclosed income as a result of search. Section 158BA reads as under :
"158BA. (1) Notwithstanding anything contained in any other provisions of this Act, where after the 30th day of June, 1995, a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A in the case of any person, then, the AO shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter."
From the reading of the said section, it is expressly clear that under this Chapter, AO shall proceed to assess the undisclosed income only if a search is initiated under Section 132 or the books of account, other documents or any assets are requisitioned under Section 132A in the case of any person. The deficit stock has not been detected either during the course of the search under Section 132 or on the basis of the books of account or other documents seized under Section 132A. Had there been any intention of the legislature to make the addition on the basis of the survey operations conducted under Section 133A, Section 133A would have been included in Section 158BA. The material gathered during the course of survey operations may be used for the purpose of the addition made in the regular assessment, but no addition under this Chapter XIV-B can be made until and unless it is proved that the materials or informations so gathered are relatable to the evidence found as a result of search or requisition of books of account or documents. Our aforesaid view is duly supported by the case law relied on by the learned Authorised Representative as given hereinabove. The learned Departmental Representative could not bring on record any other case law, which had taken a contrary view. The judgments of the co-ordinate Bench are binding on us to maintain judicial discipline. We, therefore, respectfully following the three judgments of Tribunal as has been relied by the learned Authorised Representative, delete the addition so made. The alternate plea of the assessee does not require any adjudication in view of the fact that we have allowed this ground of appeal of the assessee. In the result, the addition of Rs. 3,76,062 stands deleted.
5. Ground No. 3 relates to the additions of Rs. 10,89,370 and Rs. 6,28,831 as unexplained expenditure and unexplained investment. Brief facts relating to these additions are that during the course of the search at the residence of the assessee's husband, a piece of paper without any date or signature was found which was marked as p. 14 of the loose paper bundles, BAK/A-10. The total of the various transactions as per this page was of Rs. 42,72,081. Out of this, a sum of Rs. 25,53,880 represents three entries, i.e., Rs. 3,48,303, Rs. 3,51,548 and Rs. 18,54,029 (which) relate to the readymade purchase pertaining to M/s Bommana Exclusive, proprietary concern of Sri Bommana Aswini Kumar. Further, a sum of Rs. 4,50,000 (Rs. 3,00,000 + 1,50,000) is shown as paid to Sri B. Aswini Kumar and sum of Rs. 1,78,831 is shown as paid to N. Srinivasa Rao, manager. After these details, there is a mention "L.S. sales total Rs. 35,51,958." The statement under Section 132(4) was recorded from the husband of the assessee who has stated that notings at p. 14 represent total expenditure of Srikakulam unit in 1994-95. Subsequently, his statement on 22nd May, 1996, was recorded in reply to Q. No. 16, in which it was stated "Most of the expenditures under the head 'salaries, shop rents, postage and advertisement are reflected correctly in the return. Part of the expenditure under the head 'staff sadar, bulbs, gifts, etc., are not reflected. The total expenses on this page excluding payments for purchases come to Rs. 10 lakhs approximately. The total expenditure claimed in the return of Bommana Silk House, Srikakulam, is Rs. 10 lakhs approximately under the similar heads and it is about Rs. 1 lakh in the case of Bommana Exclusive. Therefore, the expenditure under the heads bulbs, gifts, etc., has been claimed under different heads in the return. However, the total unaccounted expenditure on these papers would be about Rs. 3 lakhs for which income has already been disclosed in the unaccounted turnover in my written submission dt. 16th May, 1996."
Out of the sum of Rs. 42,72,081, the AO took the view that a sum of Rs. 17,18,202 remained to be explained and the AO out of this reduced a sum of Rs. 4,50,000 and Rs. 1,78,831 paid to B. Aswini Kumar and N. Srinivasa Rao, respectively, and made the addition of Rs. 10,89,370 as an unexplained and unaccounted expenditure for the financial year 1994-95 by observing that this expenditure was not recorded in the regular books of account as on the top of the loose paper, it was mentioned "On Kharchulu". When the opportunity was given to the assessee, the assessee simply stated that to keep the proceedings in abeyance as the matter is pending before the Settlement Commission regarding the slips found at the premises of the assessee's husband. The AO also made the additions for the payments of Rs. Rs. 4,50,000 and Rs. 1,78,831 written on the same slip shown as paid to Sri B. Aswini Kumar and N. Srinivasa Rao. The AO in the absence of any explanation from the assessee added the same as unexplained investment by the assessee under Section 69A of the IT Act. The learned Authorised Representative contended that the matter pertaining to these additions was born out of a piece of paper which does not contain date or signature. The husband of the assessee, Sri B. Aswini Kumar, at whose place this paper was found has admitted the purchase and sales reflected there and considered by the Settlement Commission. This paper was not found at the business premises of the assessee. Therefore, the assessee is not connected with this paper. The assessee's husband whose statement was recorded under Section 131 on 22nd May, 1996, has clearly stated that the expenditure mentioned in the paper was recorded in the regular books of account. The assessee when questioned by the AO has clearly stated that the slip was found at the premises of her husband and as the matter in the case of her husband was pending before the Settlement Commission, this issue may be kept in abeyance. The AO has completed the addition treating the paper as if it relates to the assessee. The statement of the assessee's husband is not binding on the assessee. The expenditure as stated in the slip was shown in the books of account of the assessee. The assessee was never put across with the figures in the piece of paper. The additions were made on surmises and conjectures. The statement of other party is not binding and for this, reliance was placed in the case of Ashok Kumar Soni v. Dy. CIT (2001) 72 TTJ (Jd) 323, the copy of which was filed before us as a printout from CTR Encyclopaedia. Our attention was drawn to pp. 23, 37, 38 of the paper book. No statement of the assessee regarding this loose paper was recorded. No question was asked from the assessee on this. In the alternative, it was submitted that the deficit stock sales of the assessee and her "husband be telescoped against the unexplained expenditure. Hon'ble Settlement Commission in the case of husband, B. Aswini Kumar, in its order at p. 6 while dealing with the excess stock has telescoped the same out of the sale proceeds of deficit stock pertaining to the business of assessee's minor son Master Prasad Sivani. When such is the case, it was requested to apply the same logic to the case of the assessee also. It is stated that the deficit stock of the assessee's minor son which is of Rs. 1,01,10,315, excess stock pertaining to the assessee's husband Rs. 50,79,624 were telescoped and, therefore, remains almost another sum of Rs. 50 lakhs which is to be telescoped for the subject unexplained expenditure. It was also submitted that the unexplained expenditure even if it is treated to be revenue expenditure, the assessee is also entitled for deduction, which will nullify the addition. For this proposition of law, our attention was drawn to the orders of the Settlement Commission in the case of B. Aswini Kumar, husband of the assessee, wherein the Hon'ble Settlement Commission, while dealing with the unexplained expenditure, has observed as under:
"It is submitted that the unaccounted expenditures incurred are revenue in nature and allowable as business expenditure. It is, therefore, argued that even if the addition has to be made under this Act, the same has to be allowed as a revenue expenditure and, therefore, this is merely an academic exercise. We have carefully considered this issue; the applicant offered GP of Rs. 10,68,260 on the unaccounted sales at M/s Bommana Exclusive, Visakhapatnam, and GP of Rs. 94,605 on the unaccounted sales of M/s Bommana Brothers, Visakhapatnam, as additional income. We agree with the contention that these monies would have been available to meet the unaccounted expenditure. Even otherwise, most of these expenses are revenue in nature and would be allowable deduction towards business expenses. We do not see any justification at all for making the impugned additions of Rs. 12,50,020 and Rs. 1,16,588.
The next argument of the learned counsel for the assessee is revenue in nature, and that if an addition is made under Section 69 of the Act, as undisclosed income, a corresponding deduction has to be given under Sections 28 to 37 of the Act, towards expenditure incurred in the course of carrying of the business. Revenue's contention is that there is a proviso introduced to Section 69C, which stipulates that unexplained expenditure deemed to be income, shall not be allowed as a deduction under the head "Income" and that though the proviso was introduced only w.e.f. 1st April, 1999, it is clarificatory in nature and hence applicable to the present proceedings as well, and accordingly, expenditure cannot be allowed. In our considered opinion, the contention of the assessee has to succeed. As and when an addition is made towards the cost of construction as deemed income, under Section 69C in the case of a builder-' contractor, the same has to be allowed to be set off as expenditure in the computation of business income of the assessee. This is the ratio laid down by the decision of the Patna Bench of the Tribunal in the case of Nishant Housing Development (P) Ltd. v. Asstt. CIT (1995) 52 ITD 103 (Pat); by the Allahabad Bench of the Tribunal in the case of Ruby Builders v. ITO (1999) 63 TTJ (Ahd) 202 as well as the case of CIT v. Western Estates (1994) 209 ITR 343 (Cal). As for the issue whether the proviso to Section 69C prohibiting such deduction is clarificatory in nature or not, we follow decision of the Bombay Bench of the Tribunal in the case of DGP Windsor (India) Ltd. v. Dy. CIT (2002) 74 TTJ (Mumbai) 291 : (2003) 84 ITD 641 (Mumbai) and hold that the amendment is prospective in nature. Thus, the expenditure, if at all, is to be added under Section 69C, has also to be allowed as revenue expenditure. In the result, no addition whatsoever would survive on account of unexplained investment."
In view of the aforesaid submissions, it was submitted that the additions of Rs. 10,89,370 and Rs. 6,28,831 must be deleted. The learned Departmental Representative, on the other hand, relied on the order of the AO. We have considered the rival submissions carefully, gone through the case law relied oh. We have gone through the page No. 23, which contains the copy of the loose paper seized. The loose paper does not have any date nor name nor name of the assessee or assessee's husband. The AO has treated this paper as belonging to the assessee ignoring the fact that presumption under Section 132, Sub-section (4A) is available only against the person from whose possession the document is found. There is no dispute that this paper was not found from the possession of the assessee but from the business premises of B. Aswini Kumar, the husband of the assessee. We have gone through the statement of the husband of the assessee recorded, copy of which is available at pp. 23, 26, 29 of the paper book. The total of the loose paper is Rs. 42,72,081, out of which, the 'AO has reduced a sum of Rs. 25,53,818 treating that these relate to the transactions for the purchases made by M/s Bommana Exclusive, proprietorship concern of B. Aswini Kumar, but, treated part of the transaction relating to the assessee. In our opinion, the loose paper found and seized has to be read in toto. It cannot be read as partly belonging to the husband of the assessee and partly belonging to the assessee. The AO, in our opinion, has not brought out any cogent evidence or material on record which may prove that the part of the items stated in the paper represent the transactions entered Into by the assessee during the period of the block assessment. The description except the sum of Rs. 6,28,831 represents the expenditure and in any case, a deduction was to be made towards the income from the business. The assessee will also be entitled for the deduction in respect of the expenses incurred by her during the course of the business. In our opinion, onus is on the AO to prove that the transactions as stated in the loose paper which is not found from the possession of the assessee relate to the assessee, is more. The AO in this case has not discharged the onus and no addition can be made merely on the basis of surmises and conjectures, specially when part of the transactions were considered in the case of the assessee's husband. This is a settled law that a paper has to be read in toto, not in part. We, therefore, delete the additions of Rs. 10,89,370 and Rs. 6,28,831. Thus, the ground No. 3 of the assessee is allowed.
6. Ground No. 4 relates to the addition of Rs. 1 lakh. The brief facts of this addition are that during the course of the search at the residence of the husband of the assessee, Sri Aswini Kumar, a loose paper bundle was seized vide BAK/14 which contains the evidence of unaccounted sales and purchases at Srikakulam at pp. 17 to 30. The AO was of the view that this represents the cash purchases and cash sales totalling to Rs. 1,25,266 and Rs. 1,40,796, respectively. The AO was of the view that as per p. 22, dt. 15th May, 1994, the assessee introduced a capital of Rs. 1 lakh. The assessee submitted before the AO that she got married in January, 1993, and the said sum was invested out of the marriage gifts, The AO did not agree with the same, but an affidavit to that extent was filed before us. The learned Authorised Representative submitted that there was no corroborative evidence available with the AO that this money was not out of the saving. No addition for the same should be made in the income of the assessee. The learned Departmental Representative, on the other hand, relied on the order of the AO and vehemently submitted that since the husband of the assessee has stated that this paper belongs to the assessee and the assessee has also by explaining the source of the investment accepted the investment in the business, therefore, the onus was on the assessee to prove the source of investment made.
We have considered the rival submissions carefully and have gone through the material evidence produced before us. We find that the assessee has also accepted that she has made an investment on 5th May, 1994, of Rs. 1 lakh. In view of the provision of Section 69 which lays down a rule of evidence, the onus is on the assessee to prove the source of such investment. The assessee no doubt has filed an affidavit before us without seeking permission to produce the additional evidence. The affidavit has been filed by the assessee during the course of the hearing. The affidavit simply stated that this money has been invested by the assessee out of the gifts received in small amounts from the friends and relatives on marriage and several other auspicious occasions. No iota of evidence was produced before us to support the affidavit. The affidavit cannot be taken by us as it is an additional evidence not before the authorities below. Under these facts and circumstances, we do not find any substance in the submission of the learned Authorised Representative. In our opinion, the onus was on the assessee to prove the source of the investment. The assessee failed to adduce the evidence. We, therefore, confirm the addition of Rs. 1 lakh made by the AO. Thus, the 4th ground of the appeal stands dismissed.
7. Coming to ground No. 5 of the assessee which relates to the addition of Rs. 14,080, we find this addition has been made by the AO by estimating 10 per cent profit on a sale of Rs. 1,40,796 as per pp. 17 to 30 recorded in the seized bundle BAK/14. Since the assessee did not press for the said ground, the same ground is dismissed as 'Not pressed'.
8. Ground No. 6 relates to the addition of Rs. 1,24,463. The AO has noted that the assessee has made the payment in cash in excess of Rs. 10,000 in contravention of Section 40A(3) of the IT Act, and, therefore, he made an addition by disallowing the cash paid expenses during the asst. yr. 1994-95. After carefully considering the rival submissions, in our opinion, no addition in the block assessment under Chapter XIV-B can be made on this account. Only undisclosed income can be assessed as may arise on the basis of the material or evidence collected and requisitioned during the course of the search under Section 132 and Section 132A. Making the disallowance under Section 40A(3) relates to the computation of the income under the regular assessment. The disallowance under Section 40A(3) has been made on the basis of the entries in the regular books of account. The entries recorded in the regular books of account cannot be said to have not been disclosed by the assessee. Such disallowance may be made by the AO while making regular assessment, but not under the block assessment. We, therefore, delete the disallowance of Rs. 1,24,463 by relying on the judgment of Tribunal in the case of Janta Tiles v. Asstt. CIT (supra). Thus, this ground of the appeal has been accepted.
9. Ground No. 7 relates to the addition of Rs. 5,45,560 being the value of 1,186 gms. gold to be the unexplained jewellery found at the time of search. The brief facts relating to this ground are that during the course of search operation at the residence of the father-in-law of the assessee at Rajahmundry, gold jewellery to the extent of 1,538 gms. was treated by the AO belonging to the assessee. The AO noted it further that 148 gms. gold jewellery was found during the course of search at the residence of the assessee. The assessee has not filed any WT return. The assessee on enquiry from the AO submitted as under :
"During the Section 132 operation in the residential premises of Sri B. Durga Prasada Rao, the IT Department took inventory of gold. Bommana Durga Prasada Rao on 2nd Feb., 1996, held up at Cuddapah. He allowed his unmarried daughter and eldest daughter-in-law to wear his jewellery. If that is taken into account, there will not be excess. The letter from Bommana Durga Prasada Rao is submitted herewith."
The assessee also relied on the statement of Sri Durga Prasada Rao given on 16th May, 1996 and 12th June, 1996. Sri B. Durga Prasada Rao states in his letter as under :
"The IT Department made Section 132 operation to the business premises as well as my residential premises on 2nd Feb., 1996. On 2nd Feb., 1996, I was held up at Cuddapah. There also the IT Department conducted similar raid. I am an income-tax and wealth-tax assessee and in my WT return, I declared a gold jewellery of 1,937 gms. The Inspecting Officer during the Section 132 operation, noted the jewellery of various members of the family and I allowed my unmarried daughter, Bommana Naga Vijayalaxmi, and my eldest daughter-in-law, Bommana Swarnarekha, to wear the jewellery which belongs to me. At the time of inventory, my eldest daughter-in-law, Swarnarekha, and unmarried daughter, Bommana Naga Vijayalaxmi, intimated to the Department the gold jewellery which they are wearing and the Department compared the jewellery with the WT return and treated the excess as that of the unexplained and seized the jewellery. In this connection, it may be submitted that they have not considered the jewellery of mine and if that is also taken account, there is some deficit. The said deficit gold is given to the goldsmith for repairs and polishing as my second son, Arvind Kumar's marriage, fixed on 11th Feb., 1996, and whereas the IT Department conducted the Section 132 operation on 2nd Feb., 1996, and as far as the Bommana Naga Vijalaxmi's gold is concerned, some jewellery she got by virtue of will left by late Buchayyamma and Tutika Parvathamma. In this connection, it may be submitted that there is no excess gold jewellery in the case of Bommana Swarnarekha and Bommana Naga Vijalaxmi as the excess gold belongs to me."
The assessee thus claimed that the jewellery which she was wearing belongs to Sri B. Durga Prasada Rao, her father-in-law, and was duly disclosed in his WT return, but no gold was inventorised in his name. The AO did not agree with the submission of the assessee but made the addition. The learned Authorised Representative before us submitted that there was no excess gold which was an undisclosed one. He has submitted the following chart of the family members who were staying with the assessee's father-in-law, Sri B. Durga Prasada Rao. There was a marriage occasion to be solemnised on 11th Feb., 1996. The total jewellery as was inventorised by the Revenue and as was shown in the WT return of the various members are given as under:
_________________________________________________________________________________ S. Names Gold weight as per Gold weight Difference No. return as physically found _________________________________________________________________________________
1. B. Naga Vijaya Laxmi 321 grams (93.94) 1,354 grams + 1,033 gms.
2. D/Gowri 400 grams (92.93) 331 grams - 69 gms.
3. B.D. Sasikala 1,987 grams 2,092 grams + 105 gms.
4. B. Swarna Rekha -- 1,538 grams + 1,538 gms.
5. B. Durga Prasada Rao 1,937 grams (91.92) -- - 1,937 gms.
_________________________________________________________________________________ Total 4,645 grams 5,315 grams 670 gms.
(excess) _________________________________________________________________________________ On the basis of the said table, it was submitted that the excess gold of 1,186 gms. as arrived at by the AO belongs to assessee's father-in-law, B. Durga Prasada Rao, which has declared 1,937 gms. jewellery in his WT return. Our attention was drawn towards pp. 53 and 54. Page 54 contains the computation of total wealth and shows 1,937 gms. jewellery valued @ Rs. 946 per 10 gms. while p. 53 consists of the wealth-tax assessment order passed under Section 16(3). Thus, the learned Authorised Representative submitted that if the jewellery of the whole family members as was shown in the WT return and as was physically found is considered, there will be only an excess of 670 gms., and if 500 gms. is allowed in the hands of the assessee, Smt. Swarna Rekha, not being wealth-tax assessee as has been allowed by the AO, the deficit would be only of 170 gms., and thus it was submitted in the alternate that at the most 170 gms. of jewellery can be added in the hands of the assessee.
The learned Departmental Representative, on the other hand, relied on the order of the AO. We have considered the rival submissions carefully and find from the assessment order that the AO did not accept the stand of the assessee that the jewellery belonging to the father-in-law of the assessee 1,937 gms. was also there. The AO has rejected this contention of the assessee by stating that at the time of inventorisation of the gold, Sri B. Durga Prasada Rao is not available and even in his absence, no family member would claim the jewellery as belonging to some other family member. At the time of inventorisation, due care has been taken to segregate the items belonging to different family members and only when a member claims an item as belonging to him/her, it is inventorised in such person's name. The AO was of the view that the fate of the jewellery as belonging to Sri B. Durga Prasada Rao is difficult to ascertain. We do not find any plausible reason in rejecting the submission of the assessee when the joint family is putting together and when there is a function, especially the functions relating to solemnisation of the marriage, it is customary that daughters-in-law in the house wear the jewellery and in case they do not have the jewellery, the jewellery belonging to the parents-in-law or the parents are worn at such times. We have gone through the chart and from the chart we noted that the Revenue has not found any jewellery in the possession of B. Durga Prasada Rao. Even there is no material or evidence found which may prove that B. Durga Prasada Rao has sold the jewellery and he was not having the jewellery. This is a fact that B. Durga Prasada Rao was having the jewellery measuring 1,937 gms. and the said jewellery was disclosed in his IT return. B. Durga Prasada Rao has also stated before the AO that he has given the jewellery to his daughter-in-law for wearing the same. But, the AO without bringing any evidence to the contrary rejected explanation of the father-in-law. When the joint families are putting together, this is quite natural that all the members of the family may take the jewellery from each other and wear the same. Under these facts and circumstances, we are of the view that for ascertaining the undisclosed jewellery of the family, the jewellery as disclosed by B. Durga Prasada Rao measuring 1,937 gms. should also be considered by the AO. The total jewellery found from the family was 5,315 gms., while the total jewellery disclosed by all the members of the family was 4,645 gms. Under these circumstances, the total excess jewellery found was 670 gms. By allowing credit for 500 gms. as has been allowed by the AO as the assessee was not a wealth-tax assessee in view of the instruction of the CBDT, we are of the firm opinion that the undisclosed jewellery remains only 170 gms., we, therefore, set aside the order of the AO and reduce the addition from Rs. 5,45,560 to Rs. 78,200 by valuing 170 gms. @ Rs. 460 per gm. as has been taken by the AO. Thus, this ground of appeal of the assessee is partly allowed and the addition to the extent of Rs. 78,200 is sustained.
10. The 8th ground relates to the addition of Rs. 25,000 towards deposit certificates at the time of search operation. Brief facts relating to the addition are that at the residence of B. Aswini Kumar, money multiplier deposit certificates, dt. 31st March, 1994, were found with face value of Rs. 25,000. When asked for the source for this investment, the assessee stated that the same were purchased out of the marriage gifts. The AO made the addition stating that since the assessee has not filed any evidence for the gifts received, therefore, the explanation of the assessee cannot be accepted. The learned Authorised Representative before us submitted that it is customary in Hindu society in which the assessee belongs that when a marriage is solemnised, the gifts in the form of cash are given by the relatives and friends. The explanation advanced by the assessee, in our opinion, was a reasonable explanation, especially when no investment from the marriage gifts has been accepted. Keeping the status of the family, a sum of Rs. 25,000 must have been received by the assessee by way of small gifts at the time of marriage and other occasional functions. Therefore, we delete the addition of Rs. 25,000.
11. Thus, in the result, the appeal of the assessee is partly allowed.