Income Tax Appellate Tribunal - Indore
M/S. Rajmohan Agarwal, Bhopal vs The Acit-2(1), Bhopal on 3 March, 2017
Shri Rajmohan Agarwal/ I.T.A. No. (S.S.)01/Ind/2016/A.Y.:08-09 Page 1 of 8
आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
ी सी.एम.गग , या यक सद य
तथा
ी ओ.पी.मीना, लेखा सद य के सम%
BEFORE SHRI C.M.GARG, JUDICIAL MEMBER
AND
SHRI O.P.MEENA, ACCOUNTANT MEMBER
आ.अ.सं /.I.T.A. No.(S.S.)01/Ind/2016
नधा रण वष / Assessment Year: 2008-09
Shri Rajmohan Agarwal, vs. ACIT 2(1), Bhopal
C/o M/s. Agarwal Jewellers,
Jawahar Bhawan, T. T. Nagar
Bhopal
अपीलाथ)/Appellant *+यथ)/Respondent
था.ले.सं./PAN: AAXPA 4984 A
अपीलाथ) क, ओर से/Appellant by Shri Girish Agarwal, CA
*+यथ) क, ओर से/Respondent by Shri Lal Chand, CIT(DR)
सुनवाई क, तार ख/Date of hearing 28.02.2017
उ0घोषणा क, तार ख/ 03.03.2017
Date of pronouncement
आदे श /O R D E R
PER O.P.MEENA, ACCOUNTANT MEMBER
This appeal by the assessee is, directed against the order of the learned Commissioner of Income Tax (Appeals)-31, Camp- Bhopal [in short CIT (A)] dated 23.11.2015 for the Assessment Year 2008-09 on following grounds:
(1) That on the facts and in the circumstances of the case and in law, the learned CIT (A) erred and not justified in Shri Rajmohan Agarwal/ I.T.A. No. (S.S.)01/Ind/2016/A.Y.:08-09 Page 2 of 8 sustaining addition of Rs.2 lacs made by the A.O. for the cash found in search. The assessee submits that having regard to explanation furnished, it may be held may be that cash found at residence is not an unexplained cash hence, the addition be deleted.
(2) That on the facts and in the circumstances of the case and in law, that the learned CIT(A) erred and not justified in sustaining addition of Rs.2 lacs because a provision of section 69A are not applicable. Kindly delete the said addition.
(3) That on the facts and in the circumstances of the case and in law, the levy of interest u/s. 234A, u/s. 234B, u/s. 234C and u/s. 234D are unlawful and hence, be cancelled.
1.0. Ground no. 1 &2 relates to sustaining of addition of Rs.2 Lacs made by the AO on account of cash found and seized during the course of search, treating as unexplained cash.
1.1. Succinctly, facts as culled out from the orders of lower authorities are that the assessee is individual, is partner in M/s. Agarwal Jewellers, which is engaged in trading in gold and diamond jewellery and belonging to Agarwal group. A search and seizure operation has been carried out on 13.11.2007 at the residential premises of the assessee. Consequently, proceedings u/s. 153A were, initiated against the assessee. The return of income is filed on 31.03.2009, declaring total income of Rs.17,90,890/-. During the course of assessment proceedings, the assessee was asked to explain the source of cash of Rs. 2 seized from his residence during search. It was explained that the cash was mainly available out of Shri Rajmohan Agarwal/ I.T.A. No. (S.S.)01/Ind/2016/A.Y.:08-09 Page 3 of 8 agricultural income of Smt. Bela Agarwal (wife of the assessee). However, this explanation was not found acceptable in absence of any documentary evidence.
1.2. The assessee carried the matter in appeal before the CIT (A). It was explained that during the course of search and seizure operation at the residential premises of the assessee, agricultural income and expenditure statement was found in which agricultural income of Rs. 3,34,576/- was reflected (copy was attached) is pertaining to M/s. Agarwal Nursery a proprietary concern of Smt. Bela Agrawal. It was out of above mentioned income of his wife the cash of Rs. 2 lacs was available at the time of search and accordingly found. The copy of seized income and expenditure statement of also furnished vide letter dtd. 30.11.2009 as per Page nos. 225 to 227 before the AO. However, the Ld. CIT (A) opinioned that cash of Rs. 2 lacs was out of agricultural income of his wife appears to be an afterthought as no such explanation was given by his wife at the time of search when a question to this effect was put to her. Moreover, no documentary evidence has been submitted to link to source of agricultural income now claimed. Accordingly, addition was confirmed.
1.3. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned Counsel for the assessee, submitted that Shri Rajmohan Agarwal/ I.T.A. No. (S.S.)01/Ind/2016/A.Y.:08-09 Page 4 of 8 a diary was seized vide annexure LPS-1 containing 20 pages wherein year wise details of receipts and expenses of agricultural activity were noted (PB-20-29). One such page of the seized diary at PB-28 relates to impugned year on which right side, receipts/ income from agricultural produce at Rs. 3,89,194/- up to September 2007 and left side payments/expenses of Rs. 2,64,231/- are noted up to September 2007. However, certain entries up to date of search i.e. 13.11.2007 were pending to be recorded. The same were completed by making a statement for the full year from which total receipts comes to Rs.4,40,016/- and expenses comes to Rs. 3, 11, 825/-. Further, net agricultural income of Rs. 3,34,576 (rounded Rs. 3,35,000) was offered in the return of income duly supported by seized papers and it was accepted by the AO in the assessment of Smt. Bela Agarwal. All these records were before the AO, but he failed to consider the same in proper perspective. Therefore, it was contended that said cash found during search is out of agricultural income of Smt. Bela Agarwal (wife of assessee). During the course of search, the assessee was out station, and only statement of Smt. Bela Agarwal, was recorded under section 132(4) which is placed at PB 31-37, wherein, in answer to question no. 7, the officer noted the existence of agriculture land in the preliminary Shri Rajmohan Agarwal/ I.T.A. No. (S.S.)01/Ind/2016/A.Y.:08-09 Page 5 of 8 statement of Smt. Bela Agarwal, and, sought further clarification (PB-34) and in question no. 8, explanation on loose paper LPS-1 was asked for which it was stated that same will be clarified by her husband. At question 5, details of cash found for Rs.2,11,018/- was sought for which it was stated that there is no documentary evidence available. In view of above facts, it was contended that adverse view taken by the CIT (A) that explanation is afterthought and no evidence has been linked to impugned cash is not correct and was without appreciating facts and evidence on record. The agricultural income and expenditure statement found during search along with return of income and computation of total income statement filed by the wife of assessee stands documentary evidence linking the source of cash. Hence, it was urged us to allow the appeal by considering the submissions and circumstances and document on record.
1.4. Per contra, the Ld. CIT (DR) submitted that CIT (A) never held that there was no agricultural income, but emphasis was given that the assessee could not link the cash found during search with reference to agricultural income. The Ld. CIT (DR) submitted that the wife of the assessee has shown agricultural income of Rs. 89,000/- in assessment year 2007-08 and there was no claim that any agriculture land was acquired after that Shri Rajmohan Agarwal/ I.T.A. No. (S.S.)01/Ind/2016/A.Y.:08-09 Page 6 of 8 year and up to date of search. Therefore, agricultural income shown at Rs. 3,35,000/- on the basis of loose paper LPS-1 is not reliable. As per claim of the assessee, the agricultural income comes to Rs. 4,40,016/- and expenses comes to Rs. 3,11,825/-, hence, the availability of cash comes to Rs. 1,28,191/- as against the cash Rs. 2,11,108/- found during the course of search. Further, in reply to Question no. 8 of her statement, she could not explain the source of cash. In view of these facts, the Ld. CIT (DR) supported the orders of lower authorities.
1.5. We have heard the rival submissions of both the parties and have perused the material available on record. We find that during the course of search, loose paper in the form of a diary were found and seized and inventoried as LPS-1. This diary contained the entries of receipts/income of agricultural produce and agricultural expenses up to the month of September 2007. We find that loose paper of said diary appearing at page No 28, contained the receipts of agricultural produce of Rs. 3,89,194/- as against agricultural expenses of Rs.2,64,231/- up to September 2007 falling under the assessment year under consideration. Thus, net agricultural income can be computed at Rs. 1, 24,963/- [3, 89,194-2, 64,231] on the basis of seized papers as on the date of search. Shri Rajmohan Agarwal/ I.T.A. No. (S.S.)01/Ind/2016/A.Y.:08-09 Page 7 of 8 There is presumption u/s. 132(4A) of the Act the document found during search are belongs to a person from whose possession it was found during search. Therefore, it is a credible evidences found from the possession of the assessee during search, hence, there cannot be any doubt on reliability. Further, we find that the wife of assessee has shown her agricultural income of Rs. 89,000/- during A.Y. 2007-09 and Rs. 3,35,000/- for the assessment year under consideration, which has been accepted by the Revenue. In the backdrop of these facts and circumstances, the cash of Rs. 1,24,963/- rounded to Rs. 1,25,000/- on account of agricultural income can be considered as available on the date of search as it is discernible from the seized loose papers LPS-1. Therefore, in our considered view, the assessee, to this extent has able to link the availability of cash with documentary evidence. We find that the assessee submitted a statement of availability of agricultural income at Rs. 1,28,191/- ( 4,40,016- 3,11,825) prepared after date of search i.e. 13.11.2007, by recording certain entries remained to be recorded after September 2007. However, this cannot be relied as no evidence of un-recorded entries was found during search. In view of this matter, were are of the considered view that cash of Rs. 1,25,000/- can be treated as explained out of seized cash of Rs. 2 lacs. Shri Rajmohan Agarwal/ I.T.A. No. (S.S.)01/Ind/2016/A.Y.:08-09 Page 8 of 8 Accordingly, the addition to that extent of Rs. 1,25,000/- is deleted and balance addition of Rs. 75,000/- is confirmed. Thus, the ground No. 1 and 2 of appeal is partly allowed in favour of the assessee.
2. So far Ground No. 3 relating to charging of interest under section 234A, 234B 234C and 234D is concerned, we are of the view that charging of interest is mandatory as held in the case of Anjum M. H. Ghaswala 252 ITR 1 (SC), Therefore, it is upheld. However, the assessee will be entitled of consequential relief if any after giving effect of this order. This ground of appeal is therefore, disposed-of accordingly.
3. In the result, the appeal of the assessee is partly allowed.
4. The order pronounced in the open Court on 03.03. 2017 Sd/- Sd/-
(सी.एम.गग ) (ओ.पी.मीना)
याियक सद य लेखा सद य
(C.M. GARG) (O.P.MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
4दनांक/Dated : 03 March,2017/opm