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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.

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. 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 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.

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 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.

"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 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.