Income Tax Appellate Tribunal - Mumbai
Bipin Vimalchand Jain, Mumbai vs Assessee on 13 September, 2012
ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai
IN THE INCOME TAX APPELLATE TRIBUNAL
"F" Bench, Mumbai
Before Shri I.P. Bansal, Judicial Member and
Shri B. Ramakotaiah, Accountant Member
ITA No. 3944/Mum/2009
(Assessment year: 2007-08)
Bipin Vimalchand Jain, 3/4 Vs. ACIT, Central Circle-8, Room
Tamba Kanta Building, No.805, 8th Floor, Old CGO
Mahakali Chawl, Mumbadevi Building Annexe,
Mumbai 400003 Mumbai 400020
PAN: AACPJ 3087 C
(Appellant) (Respondent)
Assessee by: Shri S.N. Inamdar &
Shri Vipul B. Joshi
Department by: Shri Subachan Ram, DR
Date of Hearing: 13/09/2012
Date of Pronouncement: 31/10/2012
ORDER
Per B. Ramakotaiah, A.M.
This is an assessee's appeal against the orders of the CIT (A) Central-II, Mumbai, dated 1/5/2009. Assessee raised nine grounds which are as under:
"1. The learned Commissioner of Income Tax (Appeals) erred in confirming the order of the Learned Assessing Officer in assessing the total income of the appellant at `1,29,13,510/- as against returned income of `3,33,030/- and the assessment order is without jurisdiction and bad in law.
2. The learned Commissioner of Income Tax (Appeals) erred in confirming the addition of `1,20,15,064/- made by the learned Assessing Officer under section 69A on alleged ground of unexplained cash found during search.
3. The learned Commissioner of Income Tax (Appeals) erred in confirming the addition of `5,42,422/- made by the learned Assessing Officer under section 69A on alleged ground of unexplained gold found during search.Page 1 of 46
ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai
4. The learned Commissioner of Income Tax (Appeals) erred in confirming the view of the learned Assessing Officer in holding that cash and gold was found from appellant and relying on Section 292C that the same belongs to appellant.
5. Without prejudice to above, the learned Commissioner of Income Tax (Appeals) failed to appreciate that appellant had discharged the burden to explain that cash and gold found do not belong to the appellant and real owners accepted the ownership.
6. The learned Commissioner of Income Tax (Appeals) failed to appreciate that the cash `1,14,00,000/- sent to Vimalson Jewelers Prop. Bipin Vimalchand .Jain HUF were out of the sales proceeds of Vimalson Jewelers which has been accepted by the learned Assessing Officer by including the same in their turnover.
7. The learned Commissioner of Income Tax (Appeals) failed to appreciate that the stock of Vimalson Jewelers was reconciled and failed to give due weightage to it.
8. The learned Commissioner of Income Tax (Appeals) failed to rebuttable presumption which has been rejected only on the basis of surmises and conjectures and also failed to apply the presumption in totality.
9. The appellant prays that:
(i) the assessment order may be held to be invalid as being without jurisdiction and bad in law;
(ii) Addition of `.1,20,15,604/- may be deleted
(iii) Addition of `.5,42,422/- may be deleted
(iv) any other relief your honors may deem fit".
2. The two issues for consideration are a) addition of `.1,20,15,604/- made by AO as unaccounted income of assessee consequent to the cash found during the search and b) addition of `.5,42,422/- consequent to the gold found during the search.
3. Briefly stated assessee is an individual and was carrying on the business of gold bullion in the name of Bipinson Jewelers at 3/4 Tamba Kant Building, Mahakali Chawl, Mumbai. According to assessee the said business was closed w.e.f. 26.10.2006. There was initially a survey operation on the business premises of assessee on Page 2 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai 29th December 2006 and in the course of survey the survey team found out cash to the tune of `.1,28,34,090/-. Immediately the survey was converted to search by the DDIT. In the preliminary statement it was recorded that the cash of `.1,14,00,000/- pertain to M/s Vimalson Jewelers at 118/120 Zaveri Bazar, Mumbai which is a proprietary concern of assessee in HUF capacity. It was stated in the preliminary statement that the cash was received from the said concern and the person- in- charge of the business premises submitted that he does not know the source of the amount. Later on the search & seizure operation was carried out in assessee's concern in HUF capacity M/s Vimalson Jewelers. When the search party arrived, the said premises of M/s Vimalson Jewelers was not made accessible to the search team as admittedly there is only one employee Mr. Mahesh Hinduram Choudhary who was staying inside the premises after the closure of the business hours. Thereafter more than an hour later when the Manager arrived in the business premises, the premises was covered by the search team and statements of both Shri Mahesh Hinduram Choudhary and Shri Ladharam Ajram Choudhary, Manager were recorded. At the time of survey and also at the time of search assessee Mr. Bipin Vimalchand Jain was not available in Mumbai and was in Pune to attend his son's school celebrations. After arrival of Shri Bipin Vimalchand Jain, a statement under section 132(4) was recorded. It was the contention of assessee that the entire cash found in the business premises of Bipinson Jewelers does not belong to the concern as an amount of `.1.14 crores was transferred from Vimalson Jewelers out of their sale proceeds for the reason that the said premises of Bipinson jewelers is close to the Police Station and father of assessee was conducting his business on commission there and is available in the absence of assessee. The money was moved from M/s Vimalson Jewelers as banks did not accept cash deposit after 3 pm and there were both cash sales and cheque sales in M/s Vimalson Jewelers. The search party inventorised the books Page 3 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai of account available as well as sales made during the day/ month/year and verified RG-12 register for the primary gold transactions. Admittedly assessee is in the gold business and has large turnover over the years in the concern of M/s Vimalson Jewelers which is HUF concern of Shri Bipin Vimalchand Jain. After the preliminary inquiries and examination of stock available in both the concerns and after recording the statements, the search proceedings were concluded after seizure of cash.
4. Afterwards, as no order was passed by Revenue, assessee took up the matter before the Hon'ble Bombay High Court and consequent to the directions AO passed the order retaining the cash on the reason that inquiries were pending and money cannot be returned at that stage. This was again challenged before the Hon'ble Bombay High Court and the Hon'ble Bombay High Court after recording the findings that there is no evidence of any unaccounted income or money, directed the Revenue to return the amount with 6% interest. Special Leave preferred by the Revenue on the said direction is pending before the Hon'ble Supreme Court.
5. In the assessment proceedings of assessee, AO treated the amount as unaccounted cash on the reason that assessee did not substantially explain the source of cash and relied on the provisions of section 69A as well as section 292C. One of the reasons for the rejection of assessee's explanation was reliance on the statement of Shri Mahesh Hinduram Choudhary that there are no sales on the day. Further AO did not accept the transfer of cash on the reason that entries were made in the books of account when there was delay in opening the business premises of M/s Vimalson Jewelers and in support of the contention that entries were made after the closure of the business reliance on computer expert report was placed that the entries in the computer were made after 8.43 pm. For these reasons, AO was of the opinion that the so called cash transfer was only to explain the cash availability with assessee in Page 4 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai the premises of M/s Bipinsons Jewelers and the entries were made so as to explain the cash as the said premises was not covered initially. Therefore, AO did not accept the source of the cash and made the addition.
6. With reference to the second addition of `5,42,422/- i.e. value of gold in the premises, it was the explanation of assessee that the gold bullion belongs to his father who was doing his business on commission basis and it was declared in his return. AO disbelieved the same so as to make addition in the hands of assessee. AO referred to the statements of assessee and other persons and concluded that the cash and bullion in the premises belongs to assessee.
7. The learned CIT (A) after considering assessee's objections and distinguishing the Hon'ble Bombay High Court judgment, relied on various other case law to support the order of AO vide his detailed order running to 58 pages. Assessee is before us on the additions so made by AO and confirmed by Learned CIT(A).
8. The learned Counsel referring to the facts and the sequence of the events submitted as under:
"1. On 29th December, 2006 a survey action under section 133A of the I.T. Act 1961 was conducted at the shop premises of M/s Bipinson Jewelers ("BJ") (Proprietor: Bipin Vimalchand Jain) situated at 3/4 Tamba Kanta Bldg, Mahakali Chawl, Mumbadevi, Mumbai 400003 at around 07.30pm by the DDIT (Inv.) Unit III (1) Mumbai.
2. The survey action was subsequently converted into search under section 132 of the Income Tax Act, 1961 on finding of cash of around `.1.28 crores and gold bar valuing `.5.42 lakhs. The search was initiated at around 08.30pm on 29.12.2006. This search warrant was in the name of Bipin Vimalchand Jain at his address(Refer Pages 1 to 7 of Paper Book).
3. At the time of survey, assessee Shri Bipin Vimalchand Jain was not present at the shop premises, as he was at Pune. Assessee's father Shri Vimalchand Jain and an employee Shri Chetan Rathod were only present. The Page 5 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai father and the employee were not allowed to contact anybody.
4. At the time of search, a statement of the employee Shri Chetan Rathod, was recorded under section 132(4) of the Act. He categorically mentioned that out of the cash found `.8,19,026/- was of Shri Bipin Vimalchand Jain, which tallied as per the cash book found at the shop. The balance amount of around `.1.20 crores was received from M/s Vimalson Jewelers (Prop. Bipin Vimalchand Jain (HUF) which was brought to the shop of Bipin Vimalchand by the employees of Vimalchand Jain on that day. He also informed that Shri Bipinchand Jain maintained stock register and there was no stock as per the stock register of Shri Bipinchand Vimalchand Jain. As he was not an employee or concerned with Shri Vimalchand Jain, obviously, he expressed his inability to explain the source of the cash or the reason for transfer (Refer: Answer 5, 6, 7 & 10 at Page 26-27 of paper book).
5. In the meantime another search warrant was issued in the name of M/s. Vimalson Jewelers for its business premises at 118/120 Zaveri Bazar, Mumbai 400002. In pursuant thereto, another search team reached at said shop address at around 12.00 midnight (Refer: Page 28 to 36 of paper book).
6. Search team insisted for opening of the shop door. Mr. Mahesh Chaudhary, a low paid and not much educated employee of the Vimalchand Jain (studied only upto 9th in Hindi) was staying there. As he was not sure about the identity of the team, he told the search team that as per the instruction of the proprietor and the manager, he was not to open the shop door at midnight or during non business hours. Such instruction is a customary practice in such line of the business, especially when substantial amount of stock of bullion and cash is kept in the shop.
In fact, in his immediate statement, he clearly put this fact on record in his answer. The door was opened without any delay after the manager, Mr. Ladharam Chaudhary, who stays at Borivali, arrived at around 1.10am of 30.12.2006. As such, the wait was only for around an hour. There is no other entry/exit point, except for the main door.
7. The stock of gold bullion found at the shop of VJ was 22,555.800gms. This was reconciled with the stock as per the books/stock register found at 22113.150gms of pure gold and 130.750 gms of old gold ornaments, which was as per detailed stock registered maintained Page 6 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai that was found. Cash found was of `.8,38,980/- which was after sending `.1,14,00,000/- at BJ, which also tallied with the cash as per the cash book found at `.1,22,41,740/-. Apart from this, sales and purchase bills, cheque books evidencing purchases by VJ, cheques received on account of cheque sales were also found.
8. Statements of the employee Shri Mahesh Chaudhary and the Manager, Shri Ladharam Chaudhary, were recorded. He categorically mentioned that "Cash of `.1,14,00,000/- was handed over by me to Shri Vimalbhai Jain on 29th December, 2006. Because of the safety reason he has sent the cash to Vimalbhai (Refer:
Pages 37 to 42 of paper book).
9. In the meanwhile assessee reached the office of BJ at late midnight. His statement was also recorded. He confirmed that cash of `.1.14 crore was brought from VJ to BJ for safe keeping.(Refer: Pages 16 to 19 of paper book).
10. The search at M/s Bipinson Jewelers was concluded at 6.00 pm on 30.12.2006 and `.1.20 crores and books of account and other records were seized. The search at M/s Vimalson Jewelers was concluded at 4.00 am on 31.12.2006 in which books of account and other records were seized. It should be noted that no other discrepancy was found at the either place".
The learned Counsel also referred to the submissions made before AO and the CIT (A) with reference to the statement of Shri Bipinchand Jain, Shri Ladharam Choudhary and also the facts available with reference to the jewellery purchase bills etc which are as under:
"1. Shri Bipin Jain, the Appellant, used to attend the business and shop of M/s. Vimalson Jewelers ["VJ"] and sparingly used to visit M/s Bipinson Jewelers (BJ). Father of Shri Bipin Jain, Shri Vimalchand Jain, used to attend the business of BJ and used to sit at that shop premises. Even the sales bills of M/s BJ used to be prepared and signed by its manger cum salesman, Shri Chetan Rathod. However, there were standing instruction that whenever Shri Bipin Jain was not in town, any cash in excess of Rs. 8 to 10 lacs of VJ should be shifted to the shop premises of BJ, to be kept under the custody of the father. The Page 7 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai shop premises of BJ is located at stone throw distance of Pydhonie Police Station.
2. As is customary and prevailing business practice, the bullion market starts around after 12 noon. As such, the sales are mainly in the second half of the day. Cash sales are not uncommon and are customary. The bank of VJ accepts cash till 2 to 3 p.m. Therefore, in most cases, cash is deposited in the next day and, consequently, remains with the dealer overnight.
3. In the case of VJ, more than 90% of the sales are by cheque. All purchases are by cheques. More than 90% of the purchases are from reputed banks, for which payments are required to be made in advance.
These purchases are mostly in the first half of the day, that is, during the banking hours. The balance purchases are strictly on 'on the spot payment' by cheque. As such, there can never be any case for recording purchase as' afterthought'. This is very significant as there can be no sale (disclosed or undisclosed) without corresponding purchase. In case of BJ, the business was closed two months before the survey/search, in October 2006. This was evident from the books of accounts of BJ, including cash book and stock book, found at the time of search itself. Significantly, even in the assessment order, this position is not disputed. As against that, VJ had requisite purchases affected on that date through cheques from reputed banks, affected much before the search. These purchases are accepted as genuine in the case of VJ. As such, such purchases could never have been' afterthought'
4. M/s. VJ had heavy sales, which included heavy cash sales also, from the beginning. The same method of trading, including heavy cash sales, existed in the earlier years also and accepted by the department, including in scrutiny assessments. In fact, even during the previous year, there were heavy cash sales through out the year.
5. Very significantly, even on 29.12.2006, there were cheque sales, including last two sales. Some of these cheques were even deposited during the day itself. As such, such sales and the corresponding bills could not have been 'afterthought'.
6. At the time of search at VJ, apart from others, the following were found:
Page 8 of 46ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai
(i) Purchase bills and Sales Bills [up to date]
(ii) Cash book and stock register [up to date] (ill) Cheque books, bank statements, cash book and cheques received from the customer for the sales affected during the day and remaining un-deposited,
(iii) Stock register and the cash book tallied with the cash and the stock found. No discrepancy in any of these books and records found.
(iv) A chit depicting transfer of cash.
7. Most importantly, the book results of VJ are accepted by the very same officer in scrutiny assessment framed by him on the very same day. In other words, opening and closing stock and purchases and sales [including the cash sales] stood accepted by the same officer. As such, once the very sales were accepted and taxed in the hands of VJ, there was no case for taxing the sale proceeds thereof, the cash of Rs. 1.14 crores found, in BJ's hands. It should be noted that the sales of VI for this period stood accepted in its V AT assessment also.
8. As against that, in case of BJ, it was found that there was no business from October 2006 and there was no stock. The cash book and the stock register tallied with the cash found.
9. The business of BJ and VJ are not comparable in magnitude. The total sales of BJ were around Rs. 2 to 3 crores per year, while total sales of VJ were around Rs. 400 to 500 crores per year.
10. As regards the heavy reliance placed on the statement of Shri Mahesh Chaudhary, the following points are noteworthy:
(i) Status He is a low paid employee who stays at shop only. His duty is to assist the manager, preparing manual cash book under his instruction (in Hindi) and to do other office work.
(ii) Education He has studied upto 9th standard in Hindi. He does not have much knowledge about English. This is evident from the fact that his statement was to translated to him in Hindi.
(iii) Location of his sitting place The area of the shop is around 670 sq. ft. in a Page 9 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai rectangular shape. He does not sit at the counter and, consequently, has no view for noticing incoming and outgoing persons. He is not involved in the main functioning of the shop. This is also proved from the fact that he has stated that he had not seen any customer/party on that day nor had seen any cash been taken out of the shop. Significantly, this includes even the purchases by cheques and the sales by cheque during the day, including the sales of which cheque were received and deposited during the day itself, much before search. Further, opening cash balance was around `18.00 lacs and the closing cash balance was around `8.00lacs [excluding the disputed amount of `1.14 crores]. As such, the movement of the balance cash of around `10 lacs, in any case, cannot be denied.
(iv) Importantly, he stated that he had prepared cash book after 8:30 p.m. Nothing turns out from this answer as everyday cash book is manually written only after the shop hours, that is, after 7/7:30 p.m. This is customary and is normal for any business. Significantly, this has been the practice followed by the VJ since inception. A bare perusal of the cash book maintained [which is also found at the time of search] clearly reveals that entries are made at one time at one go for each day.
(v) Further, he never admitted that bills were prepared after 8:30 p.m. In fact, admittedly, he had not prepared the bills. Obviously and admittedly, therefore, the bills were not, and could not have been, prepared after the office hours. This, in fact, supports the case of the assessee that the bills were prepared in the regular course of the business throughout the day; at least before the search.
11. As regards the reliance on so called computer expert, it is very important to note that the assessee had very strongly objected to such reliance, by placing on record the fact that the report was totally unreliable and the conclusion thereon were untenable. Very significantly, the A.O. is completely silent on this very vital aspect. In fact, he could not, Page 10 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai and did not, rebut the same, except by merely and cryptically saying that the argument is "nothing but afterthought and is not acceptable". He has not controverted the submissions of the assessee about non reliability of such report. In any case, even otherwise, such report does not prove the case of the Department that the cash found did not belong to VJ but belonged to BJ.
12. At the end, and ultimately, the core issue is required to be adjudicated is on the basis of the theory of preponderance of probability. In the context of the factual matrix that emerge out of the above, the issue to be decided is: What is more probable - the cash belonged to VJ or belonged to BJ. Except for the fact that the cash was physically found from the shop of BJ, all other evidences [direct as well as circumstantial evidences] unmistakably point towards the probability of the cash belonged to VJ".
9. He further submitted that the turnover in the case of assessee and other concern as under:
Bipinson Jewelers (Prop. Bipin Vimalchand Jain individual) Details of purchases and sales For the year ended (amount in Rs.crores) March 2005 March 2006 March 2007 Purchases 9.51 1.47 1.39 Sales 9.79 1.55 1.40 Bipinson Jewelers discontinued business from October, 2006 Vimalson Jewelers (Prop. Bipin Vimalchand Jain HUF) Date of commencement of business: 13th August, 2002 Details of purchases, sales and gross profit For the year ended (amount in crores) March 04 March 05 March 06 March 07 March 08 Purchases 459.16 452.94 506.66 671.05 760.30 Sales 458.68 454.67 509.08 671.53 761.91 Gross 1.15 1.13 1.16 1.83 2.27 Profit (in crores) Gross 0.251% 0.249% 0.23% 0.27% 0.30% Profit Ratio (%) Page 11 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai Referring to the above it was submitted that there was small turnover in the case of Shri Bipin Vimalchand Jain, proprietary concern in the individual capacity and in fact said business was discontinued from October, 2006. He however, submitted that the turnover in Vimalson Jewellers increased from `.458.68 crores for the year ending March, 2004 to `.761.91 crores as on March, 2008 and referred to various statements filed by the Sales Tax authorities regarding the turnover, Octroi etc. paid.
10. Learned Counsel also rebutted the points raised by AO to submit as under:
a) With reference to the cash sales exceeding `.1.00 crore on a single day which AO considered as unusually high, it was submitted that AO has taken the turnover only for the month of December alone whereas there are cash sales of more than `.50.00 lakhs, `.75.00 lakhs and `.100.00 lakhs in a single day and referred to the table submitted in this regard in the paper book. According to assessee between 1.4.2006 to 21.12.2006, there was 22 days on which cash sales on a single day was between `.50.00 and `.75.00 lakhs. There are six days on which cash sales was between `.75.00 lakhs to `.100.00 lakhs and twelve days on which cash sales exceeded `100.00 lakhs. There are 5 days on which cash sales reached `.150.00 lakhs and the highest sales recorded on cash was `.194.03 lakhs on 20.09.2006. It was submitted that the cash sales recorded on 29.12.2006 was not unusual as considered by AO.
b) With reference to the objection of AO that complete address of parties were not stated, it was submitted that as far as cheque sales are concerned, most of the parties are known to assessee and are regular customers. Therefore, the bills contain full address and telephone Numbers and referred Page 12 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai to the copies of the sales bills placed on paper book. With reference to the cash sales it was submitted by very nature outstanding, outstation parties come and purchase from assessee. Therefore, he did not accept cheques from outstation parties and invariably cash sales are made. It may be difficult to assessee to produce all the parties but since their addresses are available in the sale bill, AO could have made inquiries with reference to the parties whether they are existing or non existing. Without any inquiry, no adverse inference can be drawn.
c) With reference to the third issue regarding Shri Mahesh Choudhary, employee of Vimalson Jewellers was unable to explain the unusual cash sales and also denied to accept cash or cheques from any one on the date of search, it was explained that he was only assisting the Manager and Accountant to do the office work and maintaining the cash book in his handwriting. The computerized cash book was not maintained by him as stated by him in Question No.3 of the statement. Since he is only an Assistant who stays in the shop for 24 hours, his status can be examined as he is no way responsible for either sales or for preparation of computerized accounts. Moreover, cash book was admitted to have been completed by 9.15pm when the shop was closed and the bills were issued in the course of the day as can be seen from various sales bills issued which was initialed by the Manager only. Therefore, relying on the statement of Shri Mahesh Choudhary is not correct.
d) Referring to the computer expert report, it was submitted that the computer expert reports does not prove anything that the entries were made after the search at the other premises. He referred to the statement placed in the paper book to submit that the package being used by Page 13 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai assessee only records the last time when the package was opened but cannot identify when the entries were made. It was further submitted that the bills were issued in the course of the day on the computer itself and at the end of the day only ledger accounts were prepared after completing the cash book. These works were completed before the shop was closed for the day and by the time the search party reached the premises, nobody was there except the Office Assistant who sleeps inside the premises. Therefore, the allegations that the entries were made in the books of account to explain the cash available with other firm is not correct.
e) With reference to the contention that Shri Mahesh Choudhary did not open the door it was submitted that having gold and diamond jewellery inside the shop, he was under instructions not to open the door when the shop was closed except to the owner or Manager. Since Shri Mahesh Choudhary was not conversant with the computer and further he does not even know English fully, his statement was recorded in Hindi as can be seen from the statement itself, it cannot be accepted that Shri Mahesh Choudhary made the entries in the computer. It was submitted that the fact of the matter is that assessee had made sales in the course of the day, purchases were also made in the course of the day from the Banks and the stock at the end of the day was 22.8 kgs has exactly tallied as per the books of account maintained for the purpose of Excise records. In view of this the reasons stated by AO and confirmed by the CIT (A) cannot be accepted. He also referred to the preliminary statement given by the Office Assistant in M/s Vimalson Jewellers that the money has been transferred from other concerns and also the fact that a chit was found in the seized material in Vimalson Jewellers about the transfer of money. It was Page 14 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai further submitted that both the premises are having only one entrance and the search party in the case of Bipin Chand Jain did not allow any communication with any outside person. So there is no question of communicating anything to any person. In view of the above facts the learned Counsel submitted that the order of AO on certain assumed opinion is not correct. He also referred to the findings of the Hon'ble Bombay High Court given in the context in Writ Petition filed by assessee for release of cash to submit that both AO and the CIT (A) are bound by the orders of the jurisdictional High Court but they distinguished on some frivolous reasons.
11. The learned DR referred to his submissions which are as under:
"As regards disposal of Writ Petition by Hon'ble Bombay High Court by order dated 03.11.2007, I may submit that observation of Hon'ble court was related to non-speaking order of AO. It may kindly be kept into notice that this order is related to release of cash as there was no narration of full facts about the belongingness of cash and there was also complete deficiency in revelation of facts in AO's order dated 03.09.2007 passed under section 132B( l)(i) of the I.T. Act. Therefore, it cannot be understood that subsequent finding of AO given after verification, scrutiny and investigation of accounts is covered by such order.
2. The brief background is that assessee has submitted a letter dated 29.1.2007 for release of cash which was not disposed off by the then AO, hence appellant has again written a letter dated 25.05.2007 because time limit for passing order under section 132B(1)(i) of the Act was expiring on 29.05.2007. Since application was not disposed off, Writ Petition was filed and was considered by Hon'ble High Court had given direction on 28.08.2007 for disposal of application of assessee. In compliance of the directions, the then AO had considered the application but had rejected the same by order dated 03.09.2007 without narrating full facts and only by mentioning that application was premature and such cash was to be adjusted in respect of discharge of liabilities to be arisen in future. These observations of AO was not found satisfactory by the Hon'ble Bombay High Page 15 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai Court, hence there was an order for release of cash to the assessee. According to the Court reasons given by AO for retention of money was cryptic, hence in the, circumstance cash was to be released.
3. The above facts reveal that there is no decision on merits and there is no rebuttal of subsequent findings and references of evidences revealing visible as well as implied facts. Therefore, Hon'ble Member may not be over influenced with such disposal of Writ Petition and it is requested, in the interest of justice, to kindly look into the full facts and circumstances of the case in its totality as argued by me on 06.09.2012
4. It is also to be reiterated that though legally there are two assesses namely Bipin V. Jain (Individual) & Bipin V.Jain (HUF) but for all practical purposes they are one because business affair has been managed, controlled and arranged by the assessee himself who has filed writ petition in the name of HUF. This fact is to be appreciated in the back proof of issue under appeal.
5. It is relevant to mention that the decision is an authority for what it actually decided and not for what follows from observation made by Court while deciding a particular case vide
1. Nariman P. Ltd. V /s.CIT 174 ITR 574 (MP)
2. CIT V / s. Sun Engg. Works (P) LTd. 198 ITR 297 (SC)
6. The Hon'ble Supreme Court in the case of Escorts Ltd. V. Commissioner of Central Excise (Delhi) civil appeal No.7320-7312 of 2003 order dated 25.10.14 has very categorically stated that judges interpreted statutes, they do not interpret judgments, they interpret words of statute, the words are not to be interpreted as statutes. As such the disposal of writ petition in the assessee's own case is having different context whereas assessment made subsequently reveals various evidences which were not brought to the notice of Hon'ble Bombay High Court. Therefore, the instruction of Hon'ble High Court cannot be mechanically applied for ignoring the evidences on record made the basis for assessment, subsequently.
7. In this case, I may reiterate that statement of Shri Mahesh H.Choudhary, office assistant of Bipin V. Jain (HUF) prop. of M/s. Bimalsons, Jeweller was recorded under section 132(4) on 30.12.06, who had very categorically disclosed the facts that door of shop/office was not opened because of instruction of Mr.Ladharam Choudhary and on his instruction, Mr. Mahesh H. Choudhary prepared handwritten cash book after Page 16 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai commencement of Survey/Search and completed the same by 9.15 p.m. on 29.12.2006. He has admitted all these facts in Ans. To Question Nos.4 & 5. He has also admitted that he had not prepared any sales/purchase bills on computer.
8. Mr. Mahesh H. Choudary has disclosed the facts and evidence to the searching party that on 29.12.2006 no customer or party came to purchase any such gold jewellery or paid any such cash on this day. The Q.No.9 &10 & Ans. thereof, revealing the evidence is as under.
Q.9. On 29.12.2006 in the evening who asked you to make the bills and write the cash book?
Ans. Cash book entry was made by me on the instruction of Shri L. Choudhary, but I was not told to prepare any bill.
Q.10.Please state whether you have seen the customers/parties who have purchased gold and paid in cash on 29.12.2006?
Ans. Throughout the day I have not seen any customers/ parties on 29.12.2006.
8. Further, it is to be noted that in reply to Q.No.15 Mr.Mahesh H.Choudry had given details of sales of the month of December, but in answer to Q.No.16, he was not able to explain as to how all of sudden on 29.12.2006 there was introduction of cash sales of Rs.102.93 lacs. The Q.No.16, 17 & 18 and their answers are reproduced for ready reference.
Q. 16. As submitted from the above details it is noticed that the sample daily sales for the last month i. e for the month of December 2006 shows very meager except for 29.12.2006. Please explain how is that the sale for 29.12.2006 is so high i.e Rs. 102.93lakhs?
Ans. I am not in a position to explain the above query. The manager Shri L.Choudary will be able to explain the entries of sales for 29.12.2006.
Q.17. How do you say that the Manager Shri .L. Choudhary, will be able to give explanation to Q.16? Ans: As per the instructions from Shri L. Choudhary, Manager, I started making entry in the cash register at around 8.30 p.m Q.18 Please specify whether you accepted cash or cheque on 29.12.2006 from the customers?
Page 17 of 46ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai Ans. No, I have not accepted any cash or cheque on 29.12.2006
9. I may reiterate that statement of such accountant, given on oath at the time of search is having full evidentiary value and undisclosed income of the assessee can be assessed taking into account the other facts, circumstances of the case. Hence the decision of Hon'ble Mumbai ITAT in the case of Hiralal Mafatlal & Co Vs. DCIT (2005) and 961 ITD 113(Mum.) is worth reference/ reliance. The money recovered during the course of S& S proceedings and if proper explanation is not there, such cash amount can be assessed as income of the assessee vide ClT Vs. Girdharilal Bassi (2012) & 239 ITR 14 (Punjab & Haryana) (2012) 20 Taxman 44 (Punjab & Haryana).
10. Even so called cash sales bills produced on 10.9.2012 reveals the falsity of claim. None of the bills bears full and correct address of any of the so called purchaser. Further, no such party can purchase huge gold without any bill, whereas all such bills were prepared in the night after 8.43 p.m, hence falsity of cash sales is again proved.
11. Most humbly I may further submit that if a baseless claim of assessee is accepted on the ground that cash was generated on the basis of sales bills prepared by the accountant without any customer came to the shop, it would be an incentive to such tax dodger to get escaped by adopting such route or device.
12. Further, if such arguments of the AR is accepted, that money was of other persons obtained for safe custody, it would frustrate the provision of law under section 269 SS of the Act and also the very intention of the Hon'ble Legislative as well. Only with a view to combat such situation provision of law of section 269SS came into existence w.e.f. 30.6.1984. Such alternative arguments cannot be ignored because as per the assessee own admission there are two independent assessee one is HUF and second is Individual of Bipin V.Jain.
13. If contention of Ld.AR is accepted, then in none of the cases where search is conducted and huge unaccounted cash is found, Revenue will succeed to assess because every such assessee will adopt such method, device and strategy and then explain that such cash belongs to other person. I sincerely request Hon'ble Members to kindly disapprove such Page 18 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai prevaricating stand of the assessee, so that such unaccounted cash recovered during the search/survey cannot get explained by such fabricated evidence like bogus cash sales.
14. As regards inclusion of sales, shown to the Sales Tax Department or to the turnover of the HUF, I may submit that when assessee prepares sales bills, he is duty bound to show it in his sales, but that does not explain the unproved sales shown only with a view to explain the huge cash recovered from the premises of the assessee. Therefore, such arguments cannot be tenable on any pretence".
12. We have considered the issue, rival contentions and examined the record placed before us in the form of paper book. As far as the sequence of search proceedings are concerned, there is no dispute. There is also no dispute with reference to the fact that when survey party entered the premises of Bipinson Jewellers, large amount of cash was found and the preliminary statement itself, it was stated that the major amount of cash belongs to M/s Vimalson Jewellers. Shri Chetan Rathore stated under section 132(4) that out of the cash found in the business premises cash amounting to `.8,19,026/- pertain to the concern itself which tallied as per the cash book found at the shop. It is also further stated that the balance amount of `.1.14 crores was received from M/s Vimalson Jewellers which was brought to the shop of Vimalchand Jain by the employees of Vimalson jewellers on that day. There is also no dispute that Shri Bipinchand Jain maintained stock register in his individual concern and there is no stock as per the stock register. It is also on record that the stock in Vimalson Jewellers exactly tallied with the stock as per the books. There is also no dispute with reference to the turnover in M/s Vimalson Jewellers and the same AO who completed the assessment of M/s Vimalson Jewellers also accepted the sales recorded on 29.06.2007, without any further examination. It indicates that the entries in the books of M/s. Vimalson jewellers were not at all doubted. Assessee was also able to demonstrate the purchase and sale on that day with reference to Page 19 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai the purchase from the Banks and sales through cheques and cash and stock at the end of the day has tallied exactly without any discrepancy. As far as M/s Vimalson Jewellers is concerned, there is no addition made on any issue either of sales outside the books or shortage of cash or shortage of stock and the cash sales on that day as recorded has been accepted by AO.
13. The only issue in dispute is whether the cash found in M/s Bipinson Jewellers do belong to assessee's unaccounted income or cash transfered from M/s Vimalson Jewellers. It was assessee's contention that (a) in the preliminary statement itself Shri Chetan Rathore admitted that the cash has been transferred from M/s Vimalson Jewellers (b) there is no business in the individual concern as the same was stopped w.e.f. October, 2006 and there is no stock as per the records and cash balance exactly tallied with the cash balance maintained in the concern and (c) there was large cash sales in the case of Vimalson Jewellers (HUF concern) and since assessee was away in Pune and the other shop was close to Pydhonie Police Station for safety purposes staff members deposited the cash with the father of assessee who is in M/s Bipinson Jewellers. In support of cash sales on that day assessee relied on the large number of cash sales undertaken throughout the year, the statement given by Shri Chetan Rathore, Ladharam Choudhary, and Mahesh Choudhary and also the fact that both the cash sales and cheque sales are in the course of routine business activity of assessee and the computerized record do indicate that the sales were genuinely made in the course of the day and in support submits that the cheque sales were already deposited with the Banks, whereas the cash could not be deposited as the Bank would not accept cash after 3 pm. It was also the contention that a search party even though seized cash had verified the cash book, sales book, stock register in M/s Vimalson Jewellers. Coming to the contentions that assessee made entries in the books of account as Page 20 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai there was a delay in opening the shop under section 132, it was submitted that the shop was closed after business hours and there was no communication from one concern to another concern once search party entered first concern and that in the absence of either Proprietor Shri Bipin Vimalchand Jain or the Manager, Shri Ladharam Choudhary, Office Asstt. could not have made entry of computerized transactions. It was further submitted that last two entries in the sales transactions are by way of cheques which were already deposited in the Banks. So there cannot be any manipulation of cash sales in the computerized entries. With reference to the arguments that entries were made after 8.43pm as per the computer expert report it was the contention that assessee's Manager could have closed the computer at that time before the closure of the shop after updating the entries and just because the last entry shown at 8.43pm, it cannot be alleged that these transactions were entered at that point of time as it is not possible to record or remove the stock also for which the Office Assistant either is not authorized or capable of as per the statement recorded from the person itself. Moreover there is only one entrance to the shop and the shop could not be opened as the Assistant who is residing inside was instructed not to open to anybody unless the authorized person was available. Therefore, till Shri Ladharam arrived from Borivili, he did not open the shop, as it contain more than 22kgs of gold and jewellery inside the shop premises. For these reasons it was assessee's contention that the amount of cash brought to tax was only cash sales on that day from M/s Vimalson Jewellers but available with other concerns for security purposes as the said Proprietor was away in Pune. The Revenue contention was that explanation by assessee can not be accepted as entries were made as cash sales so as to explain the cash found. It relied on part of statement of Mr.Mahesh,office assistant and the delay in opening the shop and the report of computer expert, supported by Sec.69A and 292C of the IT ACT.
Page 21 of 46ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai
14. After considering the rival contentions, we are of the opinion that assessee's arguments are valid and preponderance of probability is in favour of assessee. First of all in the preliminary statement itself Shri Chetan Rathore stated that the money was received from M/s Vimalson Jewellers on that day to an extent of `1.14 crores. The statement of Shri Chetan Rathore was nowhere referred to by AO as it is adverse to the Revenue. This statement taken before the search has commenced at the other premises itself indicate the fact that the money was received from the other concern. The source of the money is undisputedly the cash sales made on that day. Even though the Revenue has taken the sales of only December to come to a conclusion that unusual cash sales were recorded to explain the cash, this contention of the Revenue is not supported by any fact. As demonstrated by assessee before AO and the CIT (A) which were quietly ignored by the authorities, there were more than 22 instances of cash sales running from `.50 lakhs to `.193 lakhs in the nine months period and the turnover in assessee's business in M/s Vimalson Jewellers was more than `.600 crores and on an average it comes to about `.2 crores per day. Assessee is a dealer in bullion and is transacting large quantity of bullion every day for which he purchases from Banks as and when required and also sells them in large quantities. In fact on that day of search itself there was cash purchases to the tune of 22kgs of valued at `.2.079 crores and sales of bullion to the tune of 33.290kgs valued at `.3.0710 crores. A day before ie. on28th December, the purchases were to the tune of 25.920kgs and sales were to the tune of 35.441 kgs. This indicates that assessee is dealing large quantity of bullion every day and the cash sale in the business is not unusual. As already stated the same AO assessing M/s Vimalson Jewellers in HUF capacity did not make any addition and accepted the sales as such. There is also evidence on record that assessee has paid Octroi and other relevant taxes and there is no dispute with reference to those transactions.
Page 22 of 46ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai
15. One of the contentions of the Revenue in disbelieving assessee's version of the cash availability is the so called statement from Shri Mahesh Choudhary. Only one aspect of the statement was relied upon by AO in which Shri Choudhary says that he has not seen any customers or parties on 29.12.2006. If this statement alone is to be based for disbelieving the assessee submissions, one has to ignore completely the sales recorded on that day both in cash and cheques in M/s. Vimalson Jewellers. In fact there are substantial numbers of sales on that day and the bills vary from bill No.9796 to 9841, total number of forty-six bills. The cheque sales on that day are to the tune of `.2,03,19,054/- and the last two transactions in Bill Nos. 9840 and 9841 were by cheques itself. All cheques were deposited in the Banks as per assessee's business practice and were cleared mostly on the day and some on the subsequent day(s). Therefore, the statement of Mr. Mahesh that there are no sales on that day cannot be taken at its face value and as submitted by assessee, he is not even competent to do the sales and purchases as that work is assigned to the Manager who has stated the facts correctly. For the sake of record, the entire statements of Shri Mahesh Hinduram Choudhary is extracted as under:
"Statement of Shri Mahesh Hinduram Choudhary, Accounts Assistant of M/s Vimalson Jewellers, taken under section 132(4) of the Income Tax Act, 1961 on 30th December, 2006 during the course of search action under section 132(1) in the case of M/s. Vimalson Jewellers, 118/120 Sheikh Memon Street, Zaveri Bazar, Mumbai-02.
Sd/- Sd/-
Income Tax Officer (Inv.) Deponent
U-VIII Mumbai
"Q-1 Please identify yourself?
Ans. I am Mahesh Hinduram Choudhary, aged 24 years, s/o Hinduram Choudhary resident of Post Ratanpur, Tehsil Raniwada, Distt. Jalor, Rajasthan.Page 23 of 46
ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai Q-2 What is your residential address in Mumbai? Ans. I do not have my own/rented house here in Mumbai. I stay at the premises of M/s Vimalson Jewellers at 118/120 Zaveri Bazar, Mumbai-02.
Q-3 Since how long you have been working for this organization?
Ans. I am working with M/s Vimalson Jewellers since May, 2001 Q-3 What is your nature of job with M/s Vimalson Jewellers?
Ans. I am assisting the Manager & Accountant Shri Ladharam A. Choudhary and also dong other office works. I am maintaining the cash book which is written in my handwriting. However, computerized cash book is not maintained by me. I only make purchase & sales bill on the computer.
Q-4 When we reached the premises you were inside the shop/office, but you did not open the door for more than an hour even after repeated knocks on the door and revealing our identity. Why did you do so? Ans. I called up Shri Ladharam Choudhary, the Manager. He instructed me not to open the door till he comes. Q-5 As you are the one who prepares the handwritten cash book and sales & purchase bills on computer, please state when was this prepared by you on 29.12.20006?. Ans. I completed handwritten cash book by 9.15 on 29.12.2006. However, I have not made any sales/purchase bills on computer.
Q-6 You have furnished the cash book and sales & purchase bills. Please tell us who has prepared it? Ans. Cash book is prepared by me in my own handwriting. But the sales & purchase bills are not prepared by me and I am not aware who has prepared the same.
Q-7 Please state from what time you were present in the shop?
Ans. I was in the shop whole day, except for half an hour when I was out in the Kalbadevi area for lunch. Q-8 Who ask you to prepare the bills?
Ans. I prepare the bills as per instruction of Shri L. Choudhary, manager.Page 24 of 46
ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai Q-9 On 29.12.2006 in the evening who asked you to make the bills and write the cash book? Ans. Cash book entry was made by me on the instructions of Shri L. Choudhary, but I was not told to prepare any bill.
Q-10 Please state whether you have seen the customers/parties who have purchased gold and paid in cash on 29.12.2006?
Ans. Throughout the day I have not seen any customers/parties on 29.12.2006.
Q-11 Please state what is the cash available in the premises?
Ans. I do not know how much cash in available in the premises.
Q-12 Please state where is the safe vault of this premises where all the cash is kept. Also state whether there is any other place/safe vault where cash is kept? Ans. There is one safe vault in this premises in which the cash is kept. Besides this I do not know any other place where cash is kept.
Q-13 You have stated that you sit near the safe vault of the shop in which all the cash is kept. Also you have stated that you do not know any other place where cash is kept. Please state that on 29.12.2006 whether any cash from the safe vault is taken outside the premises?. Ans. Whatever stated above is true. As per my knowledge I have not seen any cash being taken out of this premise.
Q-14 Your cash book as shown by you in your handwriting shows `.1,22,41,740/- as your cash balance, whereas on physical verification of the premises only `.8,38,000/- has been found. Place show us the balance cash?
Ans. I am not aware where the balance cash is. Shri L. Choudhary will be in a position to explain the same.
Q-15 Please state what is the cash sales and cheque sales from 01.12.2006?Page 25 of 46
ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai Ans. The cash sales (in lakhs) for the month of December 2006 is as under:
01.12.2006 0.50 16.12.2006 0.45 02.12.2006 0.30 17.12.2006 03.12.2006 18.12.2006 0.85 04.12.2006 1.70 19.12.2006 10.20 05.12.2006 20.12.2006 0.50 06.12.2006 0.46 21.12.2006 0 07.12.2006 2.80 22.12.2006 2.86 08.12.2006 1.53 23.12.2006 0.58 09.12.2006 3.07 24.12.2006 0 10.12.2006 25.12.2006 0 11.12.2006 4.82 26.12.2006 0.02 12.12.2006 0.14 27.12.2006 20.90 13.12.2006 0.18 28.12.2006 2.73 14.12.2006 1.03 29.12.2006 102.93 15.12.2006 Q-16 As submitted from the above details it is noticed that the sample daily sales for the last month i.e. for the month of December 2006 shows very meager except for 29.12.2006. Please explain how is that the sale for 29.12.2006 is so high i.e. `.102.93 lakhs?
Ans. I am not in a position to explain the above query. The Manager Shri L. Choudhary will be able to explain the entries of sales for 29.12.2006.
Q-17 How do you say that Manager Shri L. Choudhary will be able to give explanation to Q-16?
Ans. As per the instructions from Shri L. Choudhary, manager, I started making entry in the cash register at around 8.30pm.
Q-18 Please specify whether you accepted cash or cheque on 29.12.2006 from the customers?
Ans. No I have not accepted any cash or cheques on 29.12.2006.
The above statement has been read out and explained to me by Shri Suresh Jugraj Jain. I completely understood whatever has been explained to me by Shri Suresh J. Jain in Hindi. Whatever stated above is true & correct to the best of my knowledge, information & belief. This statement has been given by me voluntarily an d without any threat coercion or undue influence and the same is found to be recorded correctly.
Before me.
Sd/- Sd/-
Income Tax Officer (Inv.) Deponent
U-VIII Mumbai"
Page 26 of 46
ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai
16. As seen from the above Question Nos.5 & 6 above, he has written the cash book by 9.15 pm and he has not made any entries in the computer. Further Question No.10 indicates that he has not seen any customers or parties on 29.12.2006. He also stated that he does not know anything about the cash which Shri Ladharam would be in a position to explain. With reference to the cash sales in the month of December, he also denied having any knowledge about the accounts or entries. This indicates that Shri Mahesh Choudhary does not know much of the business transactions except that he made entries in the cash book as directed by the Manager, as it was his duty as assistant to the manager. Moreover he is not conversant with English as his statement was explained to him in Hindi by Mr. Suresh Jain. Therefore, much credence cannot be given to his statement that he has not seen any parties on that day when the recorded entries in the books of account do indicate that there are large amount of sales both in cash and by way of cheques and the stock at the end of the day tallies exactly. The purchases to an extent of 22kg from the Banks were also recorded. Shri Ladharam Choudhary who is the Manager and Accountant of the firm is in his statement clearly indicated that the cash was handed over to Shri Vimalbhai because of safety. For the sake of record his statement is extracted below:
"Statement of Shri Ladharam Ajaram Choudhary, Manager & Accountant of M/s Vimalson Jewellers taken under section 132(4)of the Income Tax Act, 1961 on 30th December, 2006 during the course of search action under section 132(1) in the case of M/s. Vimalson Jewellers, 118/120 Sheikh Memon Street, Zaveri Bazar, Mumbai-02.
Sd/- Sd/-
Income Tax Officer (Inv.) Deponent
U-VIII Mumbai
Q-1 Please identify yourself?
Page 27 of 46
ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai Ans. I am Ladharam Ajaram Choudhary, aged 48 years s/o Ajaram Choudhary, resident of A-1/7 Premji nagar, Daulat nagar Road No.10 Borivili (E) Mumbai-66.
Q-2 Since how long you have been working for M/s Vimalson Jewellers?
Ans. I am working with M/s Vimalson Jewellers since August, 2002.
Q-3 What is your nature of job with M/s Vimalson Jewellers?
Ans. I am working as Manager/Accountant. I look after the more or less all the activities of the concern which includes sales & purchase, maintaining the accounts. I also receive sale consideration of the gold sold that may be either in cash or through cheques.
Q-4 As stated by you in Answer to Q-3 about the nature of duties assigned to you, it appears that in fact you are controlling the whole business. Please state how many times Shri Bipin Jain visits this premise during a day and who takes the responsible decisions in his absence?
Ans. Normally Shri Bipin Jain visits this office daily at 11.00am and I also generally come at the same time. Apart from me there are four other members in the staff who stay at this shop only even after office hours. The key of the chest lies always with Shri Bipin Jain or his father Shri Vimalchand Jain at the time of opening and closing the business. During the business hours they give the key to me even if he is not at the shop and in his absence I handle the cash and stock. Normally we do not remove the cash and the stock from this business premise.
Q-5 How many concerns are operating from this premise?
Ans. Only one concern i.e. M/s. Vimalson Jewellers is operating from this premise whose proprietor is Bipin V. Jain (HUF). Shri Bipin Jain resides at Shreepati Arcade, 25th Floor, nana Chowk, Gowalia Tank, Mumbai.
Q-6 Give all the details of business of Bipin V. Jain and his family members?Page 28 of 46
ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai Ans. Shri Bipin Jain is proprietor in one more concern M/s Bipinson Jewelers at 3/4 Tambakanta Bldg, Mahakali Chawl, Mumbadevi, Mumbai 03. None of his family members are involved in any business.
Q-7 Please give the office address of M/s Vimalson Jewelers and also explain whether it is having any other branch in Mumbai or outside Mumbai and where the books of account of M/s Vimason Jewelers are maintained?
Ans. The office address of M/s Vimalson Jewelers is 118/120 Zaveri Bazar, Sheikh Memon Street, Mumbai-
02. I specifically make it clear that there is no other branch of M/s Vimalson Jewelers in or outside Mumbai, except the premises i.e. 118/120 Zaveri Bazaar, Sheikh Memon Street Mumbai 02 and I confirm that all the business activities of the concern are being run from here & here only.
Q-8 Please state that whether your books of account are computerized or manually maintained?
Ans. We are maintaining the cash books, bank books, sale & purchase register and stock register both computerized and manually.
Q-9 Please state upto which date the books of account are updated?
Ans. I wish to state that the books of account maintained manually are updated upto the date and time of search i.e. 30.12.2006 at 1.30am. However, the books of account in the computer are maintained upto 29.12.2006.
Q-10 Please give details of the items in which are dealing.
Ans. We are trading In pure gold and we also receive old gold ornaments for making the pure gold from them. We are selling only pure gold.
Q-11 Please state whether the stock belonging to any other concern or person is lying at this premises or whether your stock is lying outside this premise?
Ans. No I want to state that we are having only our stock at this premise. I further affirm that our entire Page 29 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai stock is lying in the premise of M/s Vimalson Jewelers only and there is no stock lying at any other premise or in transit.
Q-12. Please consult your books of account and give the details of stock as per the books of account as on 29.12.2006?
Ans. I have consulted my books of account and the stock as per books of account the closing stock of pure gold comes to 22113.150gms and the stock of old gold ornaments is 130.750gms.
Q-13 Please consult your books of account and state the cash balance as per books of account?
Ans. I have consulted my books of account which is updated to date and as per the books of account cash balance is `.1,22,41,740/- in case of M/s Vimalson Jewelers.
Q-14 During the course of search action under section 132(1) of the I.T. Act 1961 the cash found from this premise in case of M/s Vimalson Jewelers is `.8,38,980/-. Please explain the discrepancy between the cash found and as per books of account?
Ans. Cash of `.1,14,00,000/- was handed over by me to Shri Vimalbhai Jain on 29th of December, 2006. Because of that safety reason I have send the cash to Vimalbhai.
Q-15 Please state whether the entry of the above cash was passed in the cash book.
Ans. I have not given any loan to Shri Vimalbhai Jain and this amount was kept for safety reason only. Q-16 Whether in the past you have given the cash to Shri Vimalbhai Jain without passing the entry in cash book?.
Ans. In very few instances.
Q-17 Whether you are having any acknowledgement of the cash given to Shri Vimalbhai Jain on 29th December, 2006?.
Ans. No. Q-18 Do you want to say anything else?Page 30 of 46
ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai Ans. No. The above statement has been read out and explained to me by Shri Suresh Jugraj Jain. I completely understood whatever has been explained to me by Shri Suresh J. Jain in Hindi. Whatever stated above is true & correct to the best of my knowledge, information & belief. This statement has been given by me voluntarily and without any threat coercion or undue influence and the same is found to be recorded correctly.
Before me
Sd/- Sd/-
Income Tax Officer (Inv.) Deponent
U-VIII Mumbai"
The above statement clearly states the fact that cash was delivered to Vimalbhai Jain, father of assessee for safe custody in the absence of assessee, and arises out of cash book of that day.
17. Following are the sales made on 29/12/2006 both by cash and cheques by Vimalson Jewellers:
Vimalson Jewellers Details of sales made on 29/12/2006 Bill No Name & Address of Party Amount Mode of Date of Payment payment received 9796 VM Muslunkar & Sons Jewellers 9,14,050 Cheque 29/12/2006 Pvt Ltd, MG Road, Ram Mandir Compound, Vileparle(E) Mumbai 400057 9797 RV Jewellers, 144, Zaveri Bazar, 47,542 Cheque 29/12/2006 Mumbai 4000002 9798 Zaveri Kapoorchand Dalichand & 97,391 Cheque 15/01/2007 Sons, Apsara Shop No.3/4, 7 SV Road, Santacruz (W) Mumbai 400054 9799 Ronak Gems Pvt. Ltd, 311 mehta 46,03,075 Cheque 29/12/2006 Bhavan, Opp: Charni road, Mumbai 400004 9800 Sanket Jewellers (LK Market) Shop 2,73,458 Cheque 29/12/2006 No.27, 1st Lane, LK Market, Zaveri Bazar Mumbai 400002 9801 Akta Trading Co. 109, Sheikh 9,20,918 Cheque 29/12/2006 Memon Street, Zaveri Bazar, Page 31 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai Mumbai 400002 9802 Tribhovandas Bhimji Zaveri, 9,22,130 Cheque 29/12/2006 241/243 Sheikh Memon Street, Zaveri Bazar, Mumbai 400002 9803 Vijayraj & Sons, 126/128 Trimurti 3,65,130 Cheque 29/12/2006 Market, 1st Floor, Shop No.16 Zaveri Bazar, Mumbai 400002 9804 TS Jewellers, 94, Kanchara Chawl, 18,42,644 Cheque 29/12/2006 kalbadevi Road, Mumbai 400002 9805 Mahavir Jewellers, 108/112 ustad 3,69,276 Cheque 29/12/2006 Building, 2nd Floor, Off No.19, Zaveri bazaar, Mumbai 400002 9806 Ratan Jewellers, 15, Bhandur 92,729 Cheque 29/12/2006 Court, 1st Pasta Lane, Colaba Mumbai 400005 9807 Vinod Jewellers, 12 B Sindhi 98,207 Cheque 29/12/2006 Niwas, ST Road, Mahim Mumbai 400 016 9808 Krit Gold, Ghanpat Bhavan Office 1,33,063 Cheque 29/12/2006 No.10 Dhanji Street, Mumbai 40003 9809 Chokshi Vasantrai Mathuradas & 1,87,997 Cheque 29/12/2006 Co. 112, Sheikh Memon Street, Zaveri Bazar, Mumbai 400002 9810 HMT Ornaments, Jewel Societt, 1,40,871 Cheque 29/12/2006 44/46 Dhanji Street, 2nd Floor, Room No.3 Mumbai 400003 9811 Chain palace, 63, kanchwala Bldg, 5,95,373 Cheque 29/12/2006 2nd floor, Dhanji Street, Mumbai 400003 9812 Shubham Jewels, Cutch Castle, 92,920 Cheque 29/12/2006 JSS Road, Opera House, Mumbai 400004 9813 Jyotichand Bhaichand Saraf & 9,23,140 Cheque 29/12/2006 Sons Pvt. Ltd Baramati, Distt:
Pune 9814 PA Shah Jewellers, 110, Heera 2,78,751 Cheque 29/12/2006 Panna, Haji Ali, Mumbai 400026 9815 Vaman Shankar Marathe jewelers, 92,461 Cheque 29/12/2006 Neelkant Apartment, Ram Maruti Road Thane 9816 Jayantilal M. Thadeshwar, 298 2,35,057 Cheque 29/12/2006 Zaveri bazaar, Mumbai 9817 Ronak Gems Pvt. Ltd, 311 mehta 18,47,290 Cheque 29/12/2006 Bhavan, Opp: Charni road, Mumbai 400004 9818 Archana S. Sinha, 201 Excelancy- 4,11,777 Cheque 29/12/2006 A, Section-C Old Rabiraj Complex, Jesal Park, Bhyander(E) Thane 401105 9819 A Samir Jewellers, 109 Shahi Gali, 7,45,380 Cheque 29/12/2006 1st Floor, Sheikh memon Street, Zaveri Bazar, Mumbai 400002 9820 Rajul Jewellers, 89/95, 1st Floor, 3,61,666 Cheque 29/12/2006 Zaveri Bazar, Mumbai 400002 9821 Rajumani Jewellers, 81 Dhanji 1,77,206 Cheque 29/12/2006 Page 32 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai Street, 1st Floor, Mumbai 400002 9822 Om Jewellers West End, Opp: 13,86,918 Cheque 01/01/2007 Hongkong Bank, Megh Appt, LT Road, Junction Signal, NEARB, Factory Lane, Borivali (W)Mumbai 9823 Prakash Jewellers, Shiv Market, 80,679 Cheque 29/12/2006 Manpada Road, Dombivali (E) Thane 421001 9824 Mahila Jewellers, Mumbai-28 23,001 Cash 29/12/2006 9825 Chain N Chains, 167/171 1st 9,23,645 Cheque 29/12/2006 Floor, Near Bank of India, Zaveri Bazar Mumbai 400002 9826 HP Vyas, Bazar Peth, Akola 6,46,905 Cash 29/12/2006 9827 Rajkumar B. Mehta, Jail Road, 9,23,140 Cash 29/12/2006 nand Bhavan, Nashik 9828 Nilesh H. Pandya, Laxmi Road, 7,85,098 Cash 29/12/2006 Pune 9829 Solar Gold Gems, Rajarampuri 7,37,704 Cash 29/12/2006 Lane, Kolhapur 9830 Jodhawat Jewellery, Main Road, 8,30,372 Cash 29/12/2006 Nashik 9831 Pravin Rupchand Doshi, SV Road, 9,24,150 Cash 29/12/2006 Andheri (W) Mumbai 9832 Kangna Gems Jewllery, Nandani 6,91,598 Cash 29/12/2006 Complex, Solapur 9833 Ummedchand R Joshi, LT Road, 9,22,635 Cash 29/12/2006 Borivali (W), Mumbai 400092 9834 Sohanlal Pukhraj Shah, Itwari 8,31,281 Cash 29/12/2006 Peth Nagpur 9835 Rajmal Mohanlal Trivedi, Mahavir 6,46,198 Cash 29/12/2006 Peth, Baramati 9836 Hari Karan M Agarwal, Bhandari 7,38,916 Cash 29/12/2006 Bhavan, Vinayak Nagar, Bhayandar (W) 9837 Magraj Jagwat Solanki, JB nagar, 6,91,598 Cash 29/12/2006 Andheri (W) Mumbai 9838 Kaluram Chamanaji Kothari, 5,08,005 Cash 29/12/2006 Mahavir Marg, Bazar Peth, Pen, Raigadh Distt.
9839 New Pratiksha Jewellers, 45, new 4,20,488 Cash 29/12/2006 Itwari Peth, Nagpur 9840 Mithali Gold, 130/132 Chandra 2,33,117 Cheque 29/12/2006 mahal, 1st Floor Zavari Bazar, Mumbai 400002 9841 Agni Jewels Pvt Ltd B 28/29 Nand 9,25,160 Cheque 02/01/2007 Bhawan Industries, Mahakali road, Andheri (E) Mumbai 400093
18. As can be seen from the above details most of the parties names and addresses were available in the bills itself and even copies of the bills placed on record do indicate that these are issued in the course of day and most of the bills are signed by the parties also and wherever cheques were received, cheque details were also Page 33 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai stated in the bills and almost all the sales bills were initialed by the Manager which indicate that these are issued in the course of day as a regular business transactions and there is no scope for extrapolating cash sales alone as alleged by the Revenue as there were both cash and cheque sales. There is already evidence that the cheques were deposited in the Banks on the same day including the cheques received from the last two transactions. Both cash and cheque sales are having complete details of the parties, address and telephone numbers even and VAT collected at 1% on the bill amount. Most of cash sales are to outstation parties but some of the cash sales are also local sales. For example Invoice No.9824 is sold to M/s Mahila Jewellers, Mumbai having telephone No.24306128. Had the Investigation Team had any doubt about the cash sales, they could have immediately inquired locally whether the sale was genuine or not. No exercise was undertaken but the onus of bringing those parties was put on assessee when in fact assessee is stating that these were cash sales made in the normal course of business activity. Onus is on the Revenue to disprove that cash sales are bogus. Except relying on statement of Mr. Mahesh there is no evidence to support revenue contention. Therefore, the Revenue contention that the cash sales were incorporated only to explain the cash cannot be accepted as such in the absence of any evidence to support the same.
19. Coming to the so called computer expert statement, the statement is as under:
"Sky Net Systems"
2/23 Old Ganjawala Terrace, Belasis Road Tardeo, Mumbai 400034 (India) Sequence of created invoice list Invoice Date Invoice No. Total Invoice Amount 29/12/2006 001296 -1836180.00 29/12/2006 009799 4603075.00 Page 34 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai 29/12/2006 009800 273458.00 29/12/2006 009801 920918.00 29/12/2006 009802 922130.00 29/12/2006 009803 365163.00 29/12/2006 009804 1842644.00 29/12/2006 009805 369276.00 29/12/2006 009806 92729.00 29/12/2006 009807 98207.00 29/12/2006 009808 133063.00 29/12/2006 009809 187997.00 29/12/2006 009810 140871.00 29/12/2006 009811 595373.00 29/12/2006 009812 92920.00 29/12/2006 009813 923140.00 29/12/2006 009814 278751.00 29/12/2006 009815 92461.00 29/12/2006 009816 235057.00 29/12/2006 009817 1847290.00 29/12/2006 009818 411777.00 29/12/2006 009819 745380.00 29/12/2006 009820 361666.00 29/12/2006 009821 177206.00 29/12/2006 009822 1386918.00 29/12/2006 009823 80679.00 29/12/2006 001297 -4563245.00 29/12/2006 001298 -4559867.00 29/12/2006 001299 -4560171.00 29/12/2006 001300 4559661.00 29/12/2006 009824 93001.00 29/12/2006 009825 923645.00 29/12/2006 009826 646905.00 29/12/2006 009827 923140.00 The following entry's were done after 29/12/2006 8.43pm Page 35 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai 29/12/2006 009840 233117.00 was deleted 29/12/2006 009841 925160.00 29/12/2006 009840 233117.00 29/12/2006 009828 785098.00 29/12/2006 009829 737704.00 29/12/2006 009830 830372.00 29/12/2006 009831 924150.00 29/12/2006 009832 691598.00 29/12/2006 009833 922635.00 29/12/2006 009834 831281.00 29/12/2006 009835 616198.00 29/12/2006 009836 738916.00 29/12/2006 009837 691598.00 29/12/2006 009838 508005.00 29/12/2006 009839 420488.00 9.34pm For Skynet Systems Sd/-
Proprietor"
20. As can be seen from the above only few entries were made after 8.43pm. In fact the entry No.9824 which is a cash sale was not a later entry even as per the computer statement. Likewise invoice No.9826 and 9827 are also cash sales which was supposed to have been made before 8.43pm and Invoice No.9840 was entered twice and one entry was deleted as per the statement itself. Naturally the said entry will be deleted since it was entered twice. Invoice No.9841 stated to have entered later was a cheque sale. So this statement by the expert does not confirm or deny that the so called entries were made only to explain the cash sales on that day. More probably the invoices were issued in the course of the day and entries were consolidated at the end of the day before closure of the shop as per the cash book. The figure with (-) sign are purchases made on the day. The fact that the cash book was already available in the business premises and cash was transferred to the other shop Page 36 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai cannot be denied on this statement by the computer expert. Moreover, as submitted by assessee, he was using Fox-pro package which does not indicate the time of each entry but only the last operated time. It could be that before the closure of the shop they could have updated the computer so the transactions would have shown the time of that. This does not establish anything as alleged by the Revenue that the entries are made so as to explain the cash.
21. As per record the shop was closed after cash was handed over to Shri Vimalchand Jain concern at Pydhonie shop and only Shri Mahesh Choudhary was left in the shop with the stock. It is also on record that the shop was not opened till the Manager came and there was only one entry to the shop. This indicates that the removal of stock from the business premises is quite impossible once the search party reached the premises. Even if one were to consider that the entries of cash sales could have been made, it was not possible to remove the stock from the business premises in the absence of either Manager or Proprietor or any authorized person. Moreover the original sale bills could have been available there itself as shop was closed. As seen from the bills/ invoices it is not possible to prepare so may bills indicating the quantity and price with Vat details and many of them counter signed more probably by the representative of party. So this indicate that assessee had cash sales on the day in the course of day and the cash was moved from M/s Vimalchand Jain to Shri Bipinchand Jain's shop( Bipinson jewelers) for safety purposes before the closure of the shop and the preliminary statement given by Shri Chetan Rathore and subsequent statements by the Manager and Shri Bipinchand Jain, Proprietor are indicating the same facts that the money was sale proceeds of M/s Vimalson Jewelers.
22. One more reason for not accepting the assessee contention of cash sales on that day was the argument by Revenue that there are no cash sales in that month to that extent. The assessee furnished Page 37 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai statement to support his contention that cash sales are a regular feature of business. The details of high cash sales are as under:
Details of cash sales of more than `.50 lakhs, `.75 lakhs and `.100 lakhs on each day and cash balance on that day from 01.04.2006 to 29.12.2006:
Daily If>50 lacs If >75 lacs If >1 Cr Cash
summary balance as
per cash
book in
rupees
19/4/2006 8,59,808 8,59,808 - 67,86,470
20/4/2006 1,08,65,144 1,08,65,144 1,08,65,144 97,47,170
21/4/2006 55,10,560 - - 63,57,360
22/4/2006 64,15,295 - - 71,72,240
24/04/2006 59,38,629 - - 63,10,510
4/5/2006 60,46,143 - - 70,48,030
9/5/2006 67,24,817 - - 72,82,180
17/5/2006 52,77,604 - - 42,98,110
18/5/2006 62,44,432 - - 55,42,200
2/6/2006 69,38,599 - - 83,39,810
10/7/2006 52,10,641 - - 61,56,960
19/8/2006 64,92,389 - - 68,66,840
21/8/2006 58,64,838 - - 64,31,340
22/8/2006 55,98,899 - - 53,29,830
26/8/2006 52,43,774 - - 28,69,170
29/8/2006 1,01,76,381 1,01,76,381 1,01,76,381 98,91,910
8/9/2006 71,99,854 - - 77,97,560
11/9/2006 93,78,045 93,78,045 - 89,77,120
12/9/2006 1,20,56,610 1,20,56,610 1,20,56,610 1,20,33,320
13/9/2006 1,50,31,710 1,50,31,710 1,50,31,710 1,21,64,640
14/9/2006 1,44,51,787 1,44,51,787 1,44,51,787 1,15,77,220
15/9/2006 1,50,87,377 1,50,87,377 1,50,87,377 1,32,64,210
16/9/2006 1,76,58,544 1,76,58,544 1,76,58,544 1,84,22,330
18/9/2006 1,31,15,371 1,31,15,371 1,31,15,371 1,02,37,330
19/9/2006 77,83,734 77,83,734 - 52,70,720
20/9/2006 1,94,03,756 1,94,03,756 1,94,03,756 1,50,74,140
22/9/2006 65,21,860 - - 59,66,530
26/9/2006 82,94,413 82,94,413 - 87,33,360
4/10/2006 59,24,400 - - 60,48,390
Page 38 of 46
ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai 5/10/2006 73,23,537 - - 48,21,620 7/10/2006 97,54,978 97,54,978 - 80,76,960 9/10/2006 1,15,04,016 1,15,04,016 1,15,04,016 1,07,80,570 10/10/2006 72,27,446 - - 58,07,640 11/10/2006 1,47,18,140 1,47,18,140 1,47,18,140 1,40,25,370 13/10/2006 66,86,292 - - 53,20,710 16/10/2006 85,62,235 85,62,235 - 86,79,440 17/10/2006 59,43,389 - - 79,72,460 28/10/2006 56,32,894 - - 57,15,550 22/11/2006 72,16,063 - - 66,22,050 29/12/2006 1,09,31,089 1,09,31,089 1,09,31,089 1,22,41,740 35,40,07,493 21,68,25,138 16,44,59,925 40 18 12 There were cash sales of more than `.50.00 lakhs, `.75.00 lakhs and `.100.00 lakhs on a single day. Apart from cash sales of less than one crore, there are twelve days in the nine month period on which cash sales exceeded `100.00 lakhs. There are 5 days on which cash sales reached `.150.00 lakhs and the highest cash sales recorded was `.194.03 lakhs on 20.09.2006. Therefore, cash sales recorded on 29.12.2006 was not unusual as considered by AO relying on December 2006 sales alone.
23. AO relied on the provisions of section 69A and also section 292C. Section 69A is a presumption that where in financial year assessee is found to be the owner of money/bullion/jewellery or other valuable article and such money/bullion/jewellery or valuable article is not recorded in the books of account, if any, maintained by him from any source of income and assessee offers no explanation about the nature and source of acquisition of the money/bullion/jewellery or other valuable article, or the explanation offered by him is not, in the opinion of AO satisfactory, the money or the value of the bullion/jewellery or other valuable article may be deemed to be the income of assessee for such financial year. Invoking the above provision, AO rejected the explanation given by assessee that the money was sales recorded in Page 39 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai the books of account of M/s Vimalson Jewellers and the money was transferred to assessee's other premises for safe custody. This explanation was rejected by AO as unsatisfactory without any corresponding evidence to prove that assessee has earned unaccounted income to that extent. A presumption raised under section 69A by the Act is a rebuttable presumption and assessee has discharged its onus based on the sales on the day, entries in the cash book and the preliminary statement recorded at the time of search itself indicating the fact that the money was transferred from concern to other business concern. In view of this we are of the opinion that provisions of section 69A are not applicable to the facts of the case. Likewise, provision of section 292C also is a presumption as to assets, books of account, etc. The learned CIT (A) elaborately discussed the legal principles on the provisions of section 69A and 292C, whereas the facts indicate that the presumptions under these sections are rebutted satisfactorily by assessee. In view of this, we are of the opinion that the reliance on these two provisions without considering the facts is not correct.
24. As briefly mentioned earlier, assessee has filed writ petition when cash seized was not released for a considerable time and as per the directions of the Hon'ble Bombay High Court, AO passed an order under section 132(5) retaining the cash. When this action was challenged, the Hon'ble Bombay High Court has considered the issue and decided as under directing to release cash with interest:
"7. We have carefully considered the rival submissions.
8. Sec. 132B(1)(i) of the Act reads as under : "
"Application of seized or requisitioned assets".
132B (1) The assets seized under s. 132 or requisitioned under section 132A may be dealt with in the following manner, namely:-
(i) the amount of any existing liability under this Act, the WT Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the GT Act, 1958 (18 of Page 40 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai 1958) and the Interest-tax Act, 1974 (45 of 1974), and the amount of the liability determined on completion of the assessment under s. 153A and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is deemed to be in default, may be recovered out of such assets :
(Provided that where the person concerned makes an application to the AO within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained to the satisfaction of the AO, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the Chief CIT or CIT, to the person from whose custody the assets were seized :
Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorizations for search under s. 132 or for requisition under s. 132A, as the case may be, was executed;"
Thus, under the first proviso to s. 132B(1)(i) of the Act on an application made for release of the seized asset, within thirty days from the end of the month in which the asset was seized, the AO on being satisfied regarding the nature and source of acquisition of such asset is empowered to recover the existing liability out of such asset and release the remaining portion of the asset.
9. In the present case, it is not in dispute that the application seeking release of the seized cash to the extent of Rs. 1.14 crores is made within 30 Page 41 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai days of the seizure. In the impugned order the explanation given by the petitioner regarding the nature and source of acquisition of the sum of Rs. 1.14 crores has not been doubted or found to be unsatisfactory. Even in the affidavit filed in reply to the petition, the Revenue has not disputed the averment made in the petition to the effect that the search party had verified the books of M/s Vimalson Jewellers and found that the explanation given by the petitioner was correct. Once the explanation given by the petitioner regarding the nature and source of acquisition of the seized cash on verification found to be correct, then the amount of Rs. 1.14 crores which belongs to M/s Vimalson Jewellers, could not be retained by the respondent No. 2 by rejecting the application filed by the petitioner.
10. Only reason given in the impugned order for rejecting the application is that the assessment under s. 153A of the Act is yet to be finalized. In the absence of any material on record to suggest that the seized cash represents the undisclosed income of the assessee, the respondent No. 2 could not have rejected the application made under s. 132B(1)(i) of the Act merely on the ground that the assessment under s. 153A of the Act was pending. In other words, application under s. 132B(1)(i) could be rejected only if the respondent No. 2 had reason to believe that the seized cash represented the undisclosed income of the assessee liable to be assessed in the year in which the search took place. In the impugned order, it is not even remotely suggested that the seized cash represents the undisclosed income of the assessee.
11. In these circumstances, we have no option but to quash and set aside the impugned order dt. 3rd Sept., 2007 and direct the respondent No. 2 to release the seized cash amounting to Rs. 1.14 crores to the petitioner along with interest at the rate of 6 per cent per annum from the date of seizure till payment".
( emphasis supplied)
25. This issue was already examined by the Hon'ble Bombay High Court with a finding that the nature and source of acquisition of a sum of `1.14 crores have not been doubted or found to be unsatisfactory. Even in the affidavit to the Writ Petition the Revenue Page 42 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai has not disputed the averments in the W.P to the fact that the search party has verified M/s Vimalson Jewellers and found the explanation given by the petitioner was correct. The Hon'ble Bombay High Court on the facts held that once explanation was given by the Petitioner, the nature and source of the seized cash as verification found to be correct, then the amount of `.1.14 crores did belongs to M/s Vimalson Jewellers could not be retained. Since this is a finding of fact based on the averments and record, the said finding is binding on both AO and the CIT (A) as well. In our view, for frivolous reasons without any support either on the facts or on the circumstantial evidence, the Revenue is treating the explained cash of `.1.14 crores as unaccounted cash of assessee in individual capacity. This has no basis and therefore, we allow the grounds raised by assessee on this issue and direct AO to delete the addition so made.
26. In addition to the above amount other amount considered as unaccounted was an amount of `.6,15,064/- explained as belonging to Sri Vimalchand Jain, father of assessee. Further issue in Ground Nos. 3 pertain to the addition of `.5,42,422/- on the gold found during the search. As briefly stated earlier, in the premises of Bipinsons Jewellers, bullion gold bar weighing 588.95 gms valued at `.5,42,422/- was found along with cash. In the preliminary statement of Shri Chetan Rathore vide question No.8 the source of gold bullion bar of 588.95gms was asked for which Shri Chetan Rathore replied that 'these gold bullion bar of 588.95gms was brought by Shri Vimal Jain, father of Shri Bipin Jain.I do not know why it was brought. The same was kept with him'. However, in the course of statement by Shri Bipin Jain, vie Question No.21, source of gold bar was asked as assessee's own stock register is shown as Nil since 17.10.2006. Assessee answered as under:
"This gold bar is the stock of my father Shri Vimal Jain who is engaged in small trade of bullion. The same is unaccounted, but on behalf of my father I assure that the Page 43 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai same shall be offered for taxation during the current financial year".
Assessee however, contested before AO in the course of the assessment proceedings that the gold bar and cash belongs to his father and could not be brought to tax. It was further stated that Shri Vimal Jain has filed his return of income admitting commission income, as source of cash and showing the gold bullion in the balance sheet. However, AO did not agree and invoked the provisions of section 69A and section 292C to treat it as income of assessee. Before the CIT (A) assessee submitted that his father Shri Vimal Chand Jain is carrying on the activity of commission from his shop premises and the cash of `.6,15,064/- were belonging to his father and were lying in the safe with the shop premises. It was further submitted that his father was assessed to tax and the commission income earned by Shri Vimal Chand Jain was duly reflected in the return of income for the assessment year 2007-08 filed by him. In support an affidavit from his father was also filed before the CIT (A). However, the CIT (A) did not agree with assessee's contentions and confirmed the action of AO in taking gold as well as cash as undisclosed income of assessee.
27. Similar arguments were reiterated by assessee's Counsel and the learned DR relied on the orders of AO.
28. We have perused the rival contentions and records placed before us. There is no dispute with reference to the fact that the gold bullion and cash was found and as per the preliminary statement itself, it was stated that the same was brought by/ belonging to the father of assessee. While explaining the cash available of `.1,28,34,090/-, cash belonging to the father to an extent of `.6,15,064/- was taken credit. AO did not agree. Same reason for assessing in the hands of assessee of other cash was attributed to this amount also. After considering the record and the submissions we are of the opinion that availability of cash with the Page 44 of 46 ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai father can be accepted as he has commission business and in fact he was in the premises with the cash. However the availability of gold with the father can not be accepted. As stated, the father Shri Vimal Chand Jain was only doing business on commission and he does not have any license to conduct trade in bullion. With reference to the gold as seen from the available record, there is no evidence of purchase of gold by Shri Vimal Chand Jain, nor any voucher in support of it was placed on record. Even though the balance sheet as on 31.3.2007 was filed in support, the return of income and balance sheet showing gold were filed after the search and seizure proceedings, invariably to account for the assets seized. As seen from the income statement also assessee has brokerage income of `.12,50,000/- which may explain the availability of cash, but the advanced tax on the Income earned was paid only in March, 2007. In the statement by assessee under Sec 132(4) he admitted that the gold bar was unaccounted. Considering these facts, we are of the opinion that assessee's explanation regarding the ownership of the gold as that of his father cannot be accepted on the available evidence. Therefore, in the absence of evidence for purchase of gold, nor any license to deal in gold bullion, availability of gold bar of 588.95 gms with the father of assessee cannot be accepted as genuine explanation. Since assessee is in the business of bullion, the presumption that it belongs to assessee under section 69A can be invoked on the facts of the case and therefore, we are of the opinion that AO action in bringing the amount of gold bullion to tax in the hands of assessee is to be upheld. In view of this, grounds raised by assessee on these issues are partly allowed.
29. The AO is directed to delete the addition made of Cash to an extent of `1,20,15,064 as it represent the sale proceeds to an extent of Rs 1.14 crores and balance `.6,15,064 as belonging to Sri Vimalchand Jain. The addition of value of Gold of `.5,42,422 was however, confirmed.
Page 45 of 46ITA No.3944 of 2009 Bipin Vimal Chand Jain Mumbai
30. In the result, appeal filed by assessee is partly allowed.
Order pronounced in the open court on 31st October, 2012.
Sd/- Sd/-
(I.P. Bansal) (B. Ramakotaiah)
Judicial Member Accountant Member
Mumbai, dated 31st October, 2012.
Vnodan/sps
Copy to:
1. The Appellant
2. The Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. The DR, "F" Bench, ITAT, Mumbai
By Order
Assistant Registrar
Income Tax Appellate Tribunal,
Mumbai Benches, MUMBAI
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