DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, AURANGABAD, AURANGBAD V. SHRI PANKAJ RATILAL MUGDIYA, AURANGABAD

ITA 958/PUN/2024

AI Insights

The case involves an appeal by the Revenue against the order of the Ld. CIT(A), which had deleted the additions made by the Assessing Officer on account of unexplained cash and gold bars found during a search operation at the residence of the assessee, Shri Pankaj Ratilal Mugdiya. The search was conducted by the Enforcement Directorate (ED) on 30.07.2020, and the Income Tax Department requisitioned the assets under section 132A of the Income Tax Act, 1961. The assessee had declared additional income in his returns for the assessment years 2015-16 to 2021-22, attributing the source of the unaccounted cash and gold to his business activities. The Assessing Officer rejected this explanation, leading to the Revenue's appeal. The Tribunal, after considering the circumstances, including the COVID-19 lockdown, accepted the assessee's explanation and upheld the deletion of the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32498 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Other Referred Cases: Sumati Dayal v. CIT, CIT v. Durga Prasad More, CIT v. S. Nelliappan, Kantilal & Bros. v. ACIT, Jayashri Shrikant Deshmukh vs. ACIT, DCIT vs. M/s. Madhu Developers, M/s. Overseas Leathers vs. DCIT, CIT vs. Golani Brothers, CIT vs. Tyaryamal Balchand, CIT vs. K.S.M. Guruswamy Nadar & Sons, PCIT vs. M/s. Tata Medical Centre Trust
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI; ADDL
• Assessee Lawyers: JAIPRAKASH BAIRAGRA
• Keywords: Set aside; Business income; Revised return; Unexplained investment; Salary income; Income from undisclosed sources; Search and seizure; Source of fund
• Section: 143(3); 143(2); 153A; 131; 69B; 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.958/PUN/2024 Assessment year : 2021-22 DCIT, Central Circle 1, Aurangabad Vs. Shri Pankaj Ratilal Mugdiya Plot No.97, Mugdiya House, N-3, CIDCO, Aurangabad – 431003 PAN: AFUPM5496F (Appellant) (Respondent) Assessee by : Shri Jaiprakash Bairagra Department by : Shri Arvind Desai, Addl CIT DR Date of hearing : 21-01-2025 Date of pronouncement : 24-02-2025 O R D E R PER R. K. PANDA, VP : This appeal filed by the Revenue is directed against the order dated 28.02.2024 of the Ld. CIT(A), Pune - 12 relating to assessment year 2014-15. 2. Facts of the case, in brief, are that the assessee is an individual. The Asst. Director of Enforcement Directorate (ED) carried out a search and seizure action at the residence of the assessee on 30.07.2020, during which cash of Rs.62,20,000/- and gold bars weighing 7 kg. were found. The ED informed about the same to the Income Tax Department and as per the provisions of section 132A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), the assets were requisitioned by the department. The statement of the assessee was recorded u/s 131 on 30.07.2020 by the DDIT (Inv), Aurangabad. The assessee filed his return of 2 ITA No.958/PUN/2024 income for the impugned assessment year on 31.12.2021 declaring total income of Rs.7,99,860/- which was revised on 25.02.2022 declaring total income at Rs.29,79,410/-. The Assessing Officer issued statutory notices u/s 143(2) and 142(1) of the Act which were duly served on the assessee. The assessee in response to the said notices, filed the requisite details from time to time as called for by the Assessing Officer. 3. During the course of assessment proceedings the Assessing Officer asked the assessee to furnish the source of cash of Rs.62,20,000/- and gold bars weighing 7 kg valued at Rs.3,72,40,000/-. He also asked the assessee to furnish Cash Book and purchase bills of gold to substantiate the same. The assessee in response to the same submitted that he does not maintain any Cash Book and does not have purchase bills of the gold. Since during the course of search proceedings the assessee had not furnished the required details and also income was not offered for taxation in any previous year, the Assessing Officer asked the assessee to explain as to why the unaccounted cash of Rs.62,20,000/- and unaccounted investment in gold of Rs.3,72,40,000/- should not be treated as unexplained income for the assessment year 2021-22 and added to the total income of the assessee. 4. The assessee in response to the same stated that the income is generated from business of selling bakery items and trading of fruits and vegetables, etc. which was being carried out since the past 6-7 years. However, the Assessing Officer noted that the assessee failed to prove his statement / reply that the income 3 ITA No.958/PUN/2024 is generated from business of selling bakery items and trading of fruits and vegetable. He further noted that in response to the notice issued by him asking the assessee as to the basis on which the assessee has revised his income from 7,99,860/- to 21,79,550/-, the assessee furnished the following reply: “In this regard, it is respectfully submitted that the additional income offered is from the business of bakery and trading in fruits and vegetable, which was carried out since the past 7 years by the assessee. The net income earned by the assessee from the said business for A.Y. 2021-22 has been offered by the assessee in the returns filed u/s 153A of the Act.” 5. Since the assessee neither produced the bills for purchase of gold bars nor furnished any relevant document / books of account to prove the business as claimed by the assessee to substantiate his excess income offered for taxation in the year under consideration, the Assessing Officer again issued a show cause notice asking the assessee to explain as to why the additional income offered in the returns filed in response to the notice u/s 153A of the Act from assessment year 2015-16 to 2020-21 should not be rejected and the unexplained income on account of unaccounted cash of Rs.62,20,000/- and unexplained investment in gold of Rs.3,72,40,000/- be not added to the income of assessment year 2021-22. He also asked the assessee to explain as to why the additional income declared in the revised return be not taxed under the provisions of section 115BBE. Rejecting the various explanations given by the assessee and observing that the assessee had given contradictory statements during the course of search and was unable to explain the source of cash so found and gold so purchased, the Assessing Officer treated the investment in gold weighing 7kg valued at Rs.3,72,40,000/- and the 4 ITA No.958/PUN/2024 cash of Rs.62,20,000/- as unaccounted income u/s 69A of the Act for the impugned assessment year by recording as under: “Further, during the course of assessment proceedings, the assessee was given sufficient opportunities to produce the bills for the purchase of gold and source of cash. However, the assessee failed to produce the bills for the purchase of gold and explanation of sources of cash. In view of the above, there is no doubt that the cash and gold found in possession of Shri Pankaj Magdiya is earned out of the unaccounted Income which he himself has accepted in his statements recorded on oath from time to time. Therefore, the cash found at Ra.62.20 lakh and the gold weighing 7000 gms valued at Rs.3,72,40,000/- is treated as unaccounted income of Shri Pankaj Mugadiya for current financial year i.e. A.Y.2020-21 relevant to A.Y.2021-22. Further, it is pertinent to mention here that the excess income declared by the assesses in response to the notice issued u/s 153A of the I.T. Act, 1961 from A.Y 2015-16 to A.Y 2020-21 is also rejected. Accordingly, the additional income offered for taxation of Rs.21,79,550/- in the A.Y 2021-22 is hereby also rejected as the assessee has treated the undisclosed income as business income and the same is taxed as per provision of section 115BBE of the Act. 13. In view of the above facts & discussions, the investment in Gold weighing 7 kg value of which is at Rs.3,72,40,000/- is treated as unaccounted income u/s 69A of the Act and is hereby added to the total income of the assessee under consideration and further cash of Rs.62,20,000/- is also treated unaccounted income of the assessee and added to the total income of the assessee u/s 69A of the Act and tax is to be calculated as per the provision of section 115BBE of the Income Tax Act, 1961. Penalty proceedings u/s 271AAB(14) of the Income Tax Act, 1961 is initiated separately as there is undisclosed income for the specified previous year.” 6. Before the Ld. CIT(A), the assessee made elaborate submissions. It was argued that the assessee in his statement recorded u/s 131 of the Act on 31.07.2020 had stated that the source of generating cash and purchase of gold bars was from unaccounted cash generated from the business of catering carried out by M/s. Namrata Cateters, proprietor Shri Nitin Mugdiya, brother of the assessee and the business of sweets carried out by M/s. Namrata Sweets, proprietor Shri Ravindra Mugdiya, brother of the assessee. However, the assessee had stated that the entire business was his own business. It was further submitted that in response to the 5 ITA No.958/PUN/2024 notice issued u/s 153A of the Act, the assessee filed the returns of income for assessment years 2015-16 to 2021-22 and all the returns for assessment years 2015-16 to 2021-22 were assessed u/s 143(3) r.w.s. 153A of the Act accepting the returned income. It was submitted that the assessee was engaged in business of bakery products such as Pav, variety of breads, Pizza base, Khari, Pani Puri, etc. and whatever profit generated was invested in the gold bars from time to time. It was further submitted that it is impossible on the part of the assessee to purchase so much quantity of gold during the pandemic when the entire State was under lockdown due to Covid-19. Referring to the order dated 24.03.2020 issued by the Government of India, Ministry of Home Affairs imposing the nationwide lockdown w.e.f. 25.03.2020 for a period of 21 days, the letter issued by the Home Ministry extending such lockdown upto 03.05.2020 vide order dated 14.04.2020 and again vide order dated 01.05.2020 issued by the Govt. of India for extension of imposing nationwide lockdown for a period of two weeks from 04.05.2020 which was again extended for a period of two weeks w.e.f. 17.05.2020 vide order dated 01.05.2020, it was submitted that the assessee was not in a position to go anywhere to purchase the gold bars especially when all the shops and other establishments except for essential commodities were closed. He submitted that after easing of restrictions and phase-wise opening of lockdown wherein shops were allowed to operate with restriction of timing from 9.00 am to 5.00 pm, the Municipal Commissioner, Aurangabad again imposed lockdown from 10.07.2020 to 18.07.2020. Therefore, neither the entire unaccounted business income is earned in assessment year 2021-22 nor the assets found in the form of gold is purchased in 6 ITA No.958/PUN/2024 assessment year 2021-22 since there was lockdown and it was not possible to make such huge purchases by earning such huge income. It was further submitted that considering the human probability as well as human psychology, once unaccounted income is earned, the same is always invested in some asset to gain appreciation rather than keeping the same idle. The assessee in the instant case has been earning the unaccounted income from assessment year 2015-16 and as and when the unaccounted income is earned, the same is invested in gold bars. Therefore, bringing the entire amount to tax in assessment year 2021-22 is not justified. Relying on various decisions it was argued that the Assessing Officer is not justified in bringing to tax the entire amount of cash and gold bars so found to tax in assessment year 2021-22 instead of spreading over the same from assessment year 2015-16 to 2020-21 when the income returned was accepted by the Assessing Officer in the orders passed u/s 143(3) r.w.s. 153A of the Act. The gist of the arguments which have been summarized by the CIT(A) in his order reads as under: “14. The Appellant has filed a detailed submission against the order passed by the AO whereby the Appellant has contended that the action of the AO in rejecting the additional income offered to tax and taxing the unaccounted assets u/s 69A r.w.s. 115BBE of the Act in the year of search is contrary to the facts of the case. The Appellant in the submission filed has reiterated the contentions put forth before the AO and apart from the same, the Appellant has highlighted certain aspects in the submission filed, which in brief are as under. 1. Ld. AO in the assessment order in para 3 has accepted Appellant being engaged in the business of bakery products and trading in vegetables and fruits: 2. Assets found during the search by ED is application of funds and not source of funds, 3. Once source of funds is explained and accepted in the statement recorded, the assessment ought to be based upon taxing source of income and not application of income: 4. Appellant has explained the nature and source of income; 7 ITA No.958/PUN/2024 5. It is human psychology and preponderance of human probability that the unaccounted income earned year on year is invested in some asset and not kept idle since there is no growth when unaccounted income earned is kept idle in form of cash; 6. Explanation given in respect of source of unaccounted income being plausible explanation, considering the fact of Covid-19 pandemic and lockdown, the same needs to be accepted and therefore provisions of sec 69A of the Act do not apply to the facts of the case; 7. Once undisclosed income is taxed, telescoping benefit to be given by presuming that the unaccounted asset is acquired out of the unaccounted income, thereby avoiding tax on both unaccounted income and unaccounted assets found; 8. AO ought to have accepted the fact that there could not be any bill for acquiring unaccounted asset ie. gold bar in cash, and thus, question of producing any bill for cash purchase does not arise; 9. In respect of bakery business, the same could have been verified by sending inspector to the business premises and moreover, the same bakery business was shifted in partnership firm M/s. Jain Industries and is carried out even as on date, which can be verified by the income-tax department and income thereof is offered in the return of income filed of the said partnership firm.” 7. Based on the arguments advanced by the assessee, the Ld. CIT(A) deleted the addition made by the Assessing Officer by observing as under: “15. The AR also relied upon various decisions and has also filed copies of the same. The AR during the course of hearing has stressed upon the fact that the AO has not disputed anywhere in the entire assessment order, the factual contention that due to Covid-19 pandemic, it is not possible to either earn such huge undisclosed income in span of 4 months i.e. April 2020 to July 2020 (search by ED on 31.07.2020) nor acquire assets found in search by ED and this valid factual contention in not negated by the AO by giving any cogent reasons and therefore, the AR contended that it is tacit acceptance by the AO of the explanation given in the submission filed before him. Thus, the AR pleaded that provisions of sec.69A r.w.s. 115BBE of the Act could not be invoked in the facts of the present case and thereby assessment be made on the basis of source of income and not application of income and thus, accept the additional income offered to tax in the revised return of income filed. 16. I have gone through the facts of the case, the reasoning of the AO as per the assessment order as also the detailed submission filed along with various case laws. It is an undisputed fact that during the period from last week of March 2020 there was complete lockdown in India as declared from time to time by various States as also Government of India and this continued until 30th June 2020 whereby relaxation was given only for essential commodities and all other shops and establishments were closed. As per the various circulars issued by State of Maharashtra and especially in Aurangabad, due to surge in cases, even after June 8 ITA No.958/PUN/2024 2020, again there was complete lockdown in July 2020 i.e. from 10th July 2020 to 18th July 2020 as per order no.2020/256 issued by Municipal Commissioner, Aurangabad. This important aspect of the matter is totally ignored and brushed aside by the AO in the assessment order passed. Considering this factual aspect, it was not possible for earning huge unaccounted income during this period and to further acquire unaccounted asset in the form of gold bars when all the shops and establishments were ordered to be closed except for essential commodities and gold bars does not figure in items of essential commodities as per various orders issued by the Government from time to time. The situation then was life threatening and for this very reason no one was allowed to step out of their homes except for purchase of Commodities. Therefore, it is beyond any human probability to imagine under such drastic situation to go out and purchase gold bars when in fact, all shops were closed. Not only this, there was strict and tight security of police personnel and checking cars and persons roaming out without any necessity and in such a situation, it is beyond human probability that any prudent person would take risk of carrying huge cash and / or assets in the form of gold. Reliance is placed on the decision of the Supreme Court in Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) wherein it is held that - \"This, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human probabilities,\" Similarly the observation of the Supreme Court in the same decision that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available. Reliance is also placed on the decision of Supreme Court in the case of CIT v. Durga Prasad More [(1971) 82 ITR 540 (SC), to the effect that \"Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities\" Thus, considering the factual position and the circumstance existing then, the contention of the Appellant that unaccounted assets found could not have been acquired during the period from1st April 2020 till the date of search by ED on 31.07.2020, is found to be acceptable. 17. The next issue for adjudication is regarding the explanation of the Appellant regarding the nature and source of unaccounted income earned for application of the same against the assets found i.e. gold bars and cash. In the initial statement recorded, the Appellant tried his level best to hide his unaccounted business activity of bakery business as also trading in vegetables and fruits by explaining that the unaccounted income was earned and generated from the business activities carried out by his two brothers in their proprietary concerns namely M/s. Namrata Caterers and M/s. Namrata Sweets and he was looking after the financial affairs of these concerns. It appears that the Appellant thought that his own brothers would help him and accept his claim made, however, in their statements recorded, both the brothers categorically denied indulgence of the Appellant in their financial matters and categorically stated that they have not earned / generated any unaccounted income in their proprietary business. The Appellant was only employed by his brother Shri Nitin Mugdiya, in his proprietary concern M/s. Namarata Caterers and thereby earning salary income and the 9 ITA No.958/PUN/2024 Appellant was not employed in other business of M/s. Namrata Sweets, proprietor Shri Ravindra Mugdiya. The Appellant having no other alternative left, in the statement recorded on 08.10.2020 before the DDIT (Inv.). Aurangabad, revealed the true nature and source of earning unaccounted income i.e. carrying on the bakery business and trading in vegetables and fruits and thus, accepted the unaccounted income earned therefrom for the preceding 6 to 7 years. In the statement recorded, the Appellant admitted to offer income earned therefrom and pay necessary taxes on the same and consequently, the Appellant offered additional income in the returns of income filed for all the AYs from AY 2015-16 till AY 2020-21 u/s 153A of the Act and for the AY 2021-22 by filing a revised return of income. 18. The AO has rejected the additional income offered to tax in the return of income filed for all the years only on the ground that the Appellant has not substantiated by any evidence to show business of bakery and trading in vegetables and fruits carried on by the Appellant. It is not in dispute that the Appellant has earned unaccounted income and from the sequence of events and various statements recorded of the Appellant and his brothers, the only conclusion that arrives is that the Appellant did not want to reveal his unaccounted business activity even after search by ED and inquiries by income-tax department by explaining the same to have been earned from the business carried out by his two brothers. However, when both the brothers denied of earning any unaccounted income from their business as also involvement of Appellant in the financial affairs of their business, the Appellant finally came out with truth and revealed his own unaccounted business activity carried out by him and committing to offer income therefrom in the returns of income and paying tax on the same. Considering the fact that the Appellant wanted to hide his unaccounted business activity and the entire business activity being carried out in cash, it is obvious as per human nature and psychology that he would not keep any evidence of earning this income in cash. Hence, in my view, it is not correct to merely stress upon for evidence of carrying out unaccounted business activity, and thereby reject the additional income offered to tax in the return of income filed for all the years. Rather, considering the entire circumstances of the facts of the present case along with the statements recorded of the Appellant, the nature and source of earning unaccounted income via unaccounted business activity of bakery and trading in vegetable and fruits, being plausible explanation, needs to be accepted. 19. The AO has also not disputed the fact brought on record that the same bakery business was shifted to partnership firm M/s. Jain Industries for part of the financial year ending on 31.03.2021 and entirely from financial year ending on 31.03.2022 and income offered to tax in the return of income filed by the said firm. This also proves that the Appellant was carrying on the bakery business and has earned unaccounted income therefrom and the Appellant has disclosed the same as additional income in the returns of income filed u/s. 153A of the Act/revised return of income. 20. The Appellant has relied upon several decisions in the submission in support of the contention that once nature and source of unaccounted income is explained 10 ITA No.958/PUN/2024 and it being plausible explanation, the deeming provisions of sec.69A r.w.s. 115BBE of the Act does not apply. The decisions relied upon in the submission do support the contention of the Appellant and in any case, it is already held that the circumstances existing during the period from April 2020 to July 2020 being peculiar, it is obvious that it is not possible to earn / acquire unaccounted income / assets in that period. Thus, considering the overall facts of the case, I am inclined to accept the contentions of the Appellant and hold that the provisions of section 69A r.w.s. 115BBE of the Act is not applicable in the Appellant's case. The AO is thus directed to delete the addition made of Rs.4,34,60,000/- u/s 69A r.w.s. 115BBE of the Act. 21. Consequently, the AO is directed to assess the additional income offered to tax in the revised return of income filed for the impugned year earned from the business of bakery products and trading in vegetables and fruits. The assets found at the time of ED search i.e. cash of Rs. 62,20,000/- and gold bars of 7 kg are held to have been earned/ purchased out of the undisclosed income from business earned in various years, thereby taxing the source of income and not application of income. The assets are held to be available / acquired in each of the year out of the unaccounted income earned in that year. It is human nature and as a prudent person to not keep the unaccounted funds idle and make investment in assets, etc. for capital appreciation. Both source of income and its application cannot be added in the hands of the same Assessee. In the case of CIT v. Jawanmal Gemaji Gandhi (1985) 151 ITR 353 (Bom), it has been held that gold acquired in latter part of the year can be assumed to have been acquired from the undisclosed income earned in that very year and this undisclosed income constituted fund from which the asset was acquired. Similarly, the Hon'ble Supreme Court in the case of CIT v. S. Nelliappan (1967) 66 ITR 722 (SC) held that even in the absence of direct evidence of any connection between the cash credit entries and the income withheld from the books of account by the assessees if the Tribunal inferred that there was a connection between the profits withheld from the books and the cash credit entries, then the said conclusion must be upheld and it cannot be said that the conclusion is based upon speculation. In Kantilal & Bros. v. ACIT (1995) 52 ITD 412 (Pune) it is held that once the contention of the assessee that the amount as reflected in the 'seized paper represented borrowings of the assessee was accepted, it would be proper to presume that such amount was utilized for the acquisition of assets found at the time of search. It is further held that when an explanation is filed by the assessee, it is incumbent on the revenue to consider the said explanation judiciously. It is the duty of the A.O. to consider the explanation with reference to the surrounding circumstances and in the light of material gathered. The AR has relied upon catena of decisions to hold that there cannot be double taxation of same income twice in the hands of the same person and there is neither any dispute on this ratio nor the AO has made any double taxation. The AO taxed assets found in the year of search and thereby rejected the additional income disclosed in the return of income for all the years thereby avoiding double taxation. On same footing, the decision rendered herein directs the AO to tax the additional income offered and disclosed to tax in the returns of income filed for all the years and delete the addition made on basis of assets found in the year of 11 ITA No.958/PUN/2024 search. Thus, there is no case of double taxation in the case of the present Appellant. 22. Thus, the ground No. 2 of appeal is decided in favor of the Appellant as discussed hereinabove and the AO is directed to carry out the consequential direct of taxing the additional income of Rs.22,07,250/- offered to fax in the revised return of income filed for the impugned assessment year and delete the addition of Rs.4,34,60,000/- made u/s.69A r.w.s. 115BBE of the Act.” 8. Aggrieved with such order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 62.20 lakhs made u/s. 69A on account of un-explained cash found and the addition of Rs.3,72,40,000/- made u/s. 69A on account of un-explained investment in gold weighing 7000 gms found during the ED search action dated 30/07/2020 at the assessee's residential premises. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assets found at the time of ED search i.e. cash of Rs.62,20,000/- and gold bars of 7 K.G. have been purchased from undisclosed income earned in various years and thereby taxing the source of income and not application of income. 3. Whether on the facts in the circumstances of the case and in law, the Ld. CIT(A) has erred in relying on the assessee's submission which was not supported by any supporting documentary evidences viz. bills/vouchers, etc. in support of purchase of gold bars weighing 7 K.G. and cash found of Rs. 62.20 lakh. 4. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) is justified in not appreciating the fact that the then A.O. has rightly rejected the assessee's submission which was not supported by any reasonable and satisfactory evidences and hence the order of the AO be confirmed. 5. The appellant craves leave to add, alter, modify, delete and amend any of the grounds, as per the circumstances of the case. 9. The Ld. DR strongly challenged the order of the Ld. CIT(A) deleting the addition made by the Assessing Officer u/s 69A r.w.s. 115BBE of the Act. He 12 ITA No.958/PUN/2024 submitted that the assessee failed to submit the proof of purchase of gold and the source of unaccounted cash found for the relevant assessment year as stated by the assessee. The assessee has clearly failed to produce any reasonable and satisfactory evidence to prove that the unaccounted cash and gold bars weighing 7kg were purchased in various assessment years as offered by the assessee in the income tax returns. Thus, it is clear that merely to reduce the tax liability the assessee has distributed his unaccounted income across the assessment years 2015- 16 to 2021-22 as per his convenience. Since the Assessing Officer has correctly rejected the income offered for the preceding years i.e. from assessment year 2015- 16 to 2020-21 and made the addition in assessment year 2021-22, therefore, the Ld. CIT(A) was not justified in deleting the addition. He accordingly submitted that the order of the Ld. CIT(A) be set aside and that of the order of the Assessing Officer be restored. 10. The Ld. Counsel for the assessee on the other hand reiterated the arguments made before the Ld. CIT(A) and heavily relied on the order of Ld. CIT(A). He submitted that the assessee in response to the notice issued u/s 153A of the Act for assessment years 2015-16 to 2020-21 has filed his returns of income offering additional income earned from the business activity as revealed by him in the statement recorded on 08.10.2020. Similarly for assessment year 2021-22, the assessee filed his revised return of income offering the additional income earned from the business activity as revealed by him in the statement recorded. Referring 13 ITA No.958/PUN/2024 to the following table, he submitted that the assessee for all these years has offered the following additional income: Sr. No. Asst. Year Additional income 1 2015-16 38,24,590 2 2016-17 42,02,070 3 2017-18 37,41,230 4 2018-19 36,73,960 5 2019-20 44,21,200 6 2020-21 44,12,590 7 2021-22 22,07,250 Total 2,64,82,890 11. Referring to para 3 of the assessment order, the Ld. Counsel for the assessee drew the attention of the Bench to the observations of the Assessing Officer which reads as under: “3. The assessee is engaged in the business of trading of vegetables, fruits and bakery products mainly bread, pav, khari etc. During the year under consideration the assessee has shown income from salaries and income from other sources.” 12. He submitted that the income generated from the business activity of selling bakery items and trading of fruits and vegetables, etc. for the preceding 6-7 years was invested in purchase of gold from time to time and a part of the cash was also available from such business. However, it is an admitted fact that the assessee has not maintained any books of account nor has kept any bills or vouchers for purchase of gold bars. He submitted that the assessee during the course of assessment proceedings has categorically explained the source of acquisition of gold bars and cash which is from the business activity carried out by the assessee since past 6-7 years. 14 ITA No.958/PUN/2024 13. Referring to the provisions of section 69A of the Act, he submitted that in order to apply the said provisions, two conditions i.e. the assessee is found to be the owner of money, bullion, jewellery, etc. which is not recorded in the books of account and the assessee offers no explanation about the nature and source of acquisition of such asset or the Assessing Officer is not satisfied with the explanation offered, have to be fulfilled. However, in the instant case, the assessee has explained the source of such gold bars and cash which is from the unaccounted business activity carried out by the assessee from year to year. Further, cash and gold so found during the course of search action is application of funds and not source of funds. Once the source of funds is explained and admitted to the income tax department and duly accepted by the Assessing Officer, the Assessing Officer ought to tax the source of income and not application of income as unaccounted income earned from the business and thereby assess business income. He submitted that once the assessee has rightly offered the unaccounted business income in all the years for and from assessment year 2015-16, the same ought to be accepted and thus, the provisions of section 69A of the Act are not applicable. 14. The Ld. Counsel for the assessee referring to the following circulars / orders issued by the Govt., submitted that when there was complete lockdown due to Covid-19 pandemic during April, 2020 to June, 2020 and again partly in the month of July, 2020 in Aurangabad, it was not possible for the assessee to buy the gold bars in the month of July, 2020 so as to bring the same to tax in assessment year 2021-22. 15 ITA No.958/PUN/2024 Covid-19 lockdown orders in State of Maharashtra: (i) Order No. 40-3/2020-DM-I(A) dated 24th March 2020 issued by Government of India Ministry of Home Affairs imposing Nationwide Lockdown w.e.f. 25.03.2020 for a period of 21 days. Copy of order is attached herewith as Annexure-8 for your ready reference and record; (ii) Order No. 40-3/2020-DM-I(A) dated 14th April 2020 issued by Government Of India Ministry of Home Affairs for extension of imposing Nationwide Lockdown up to 03.05.2020. Copy of order is attached herewith as Annexure-9 for your ready reference and record; (iii) Order No. 40-3/2020-DM-I(A) dated 1ST May 2020 issued by Government Of India Ministry of Home Affairs for extension of imposing Nationwide Lockdown for a further period of two weeks w.e.f. 04.05.2020. Copy of record is attached herewith as Annexure-10 for your ready reference and record; (iv) Order No. 40-3/2020-DM-I(A) dated 1ST May 2020 issued by Government Of India Ministry of Home Affairs for extension of imposing Nationwide Lockdown for a further period of two weeks w.e.f. 17.05.2020. Copy of record is attached herewith as Annexure-11 for your ready reference and record; (v) Order No. DMU/2020/CR.92/DisM-1 dated 31st May 2020 for Easing of Restrictions and Phase-wise opening of Lockdown (MISSION BEGIN AGAIN) wherein shops were allowed to operate with restriction of timing from 9.00 am to 5.0pm on P1-P2 basis to extend the lockdown in the entire State of Maharashtra further till midnight of 30th June 2020. Copy of order is attached herewith as Annexure-12 for your ready reference and record; (vi) Order No. 2020/256 issued by Municipal Commissioner Aurangabad for Imposing complete and strict Lockdown in Aurangabad from 10/07/2020 to 18/07/2020. Copy of order is attached herewith as Annexure-13 for your ready reference and record. 15. Referring to the statement recorded of the assessee u/s 131 of the Act on 31.07.2020, copy of which is placed at pages 234 to 238 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the reply of the assessee in response to question No.7 where he has stated that the gold bars were purchased from the unaccounted cash generated from the business of catering and 16 ITA No.958/PUN/2024 sweets. Referring to the statement recorded on 08.10.2020, copy of which is placed at pages 239 to 242 of the paper book-1, the Ld. Counsel for the assessee drew the attention of the Bench to the reply of the assessee in response to question No.4 where he has reiterated that the cash of Rs.62.20 lakh and the gold weighing 7000 gms belong to him and were purchased through the income generated from his business of selling bakery items like Pan, various types of bread, Pizza base, Pani Puri, trading of vegetable and fruits. It has further been stated in the said reply that the said business is done by him for the last 6-7 years. The Ld. Counsel for the assessee submitted that due to Covid-19 pandemic it is neither possible to earn such huge undisclosed income in a span of 4 months i.e. April, 2020 to July, 2020 nor acquire assets found in search by the ED and this valid factual contention is not negated by the Assessing Officer by giving any cogent reasons. He submitted that the bakery business done by the assessee was subsequently shifted to the partnership firm namely M/s. Jain Industries for part of the financial year ending on 31.03.2021 and entirely from financial year ending on 31.03.2022 and the income offered to tax in the return of income filed by the said firm has also been accepted by the Revenue. He accordingly submitted that when the Assessing Officer has accepted the fact that the assessee was earning undisclosed income from the business of bakery products and trading in fruits and vegetables, he should have assessed the said income year on year as per the undisclosed income offered in the returns of income filed in response to notice u/s 153A and should not have brought to tax cash of Rs.62,20,000/- and the investment in gold weighing 17 ITA No.958/PUN/2024 7000 gms valued at Rs.3,72,40,000/- both totaling to Rs.4,34,60,000/- to tax u/s 69A of the Act for the impugned assessment year. 16. Referring to the decisions of Hon'ble Supreme Court in the case of Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) and CIT v. Durga Prasad More [(1971) 82 ITR 540 (SC), the Ld. Counsel for the assessee drew the attention of the Bench to the theory of human probability and submitted that it is not possible on the part of the assessee to earn such huge income in a span of 4 months during the Covid-19 period when the entire country was passing through lockdown. He also relied on the following decisions: i) CIT vs. Jawanmal Gemaji Gandhi (1985) 151 ITR 353 (Bom) ii) CIT vs. Tyaryamal Balchand (1987) 165 ITR 453 (Raj) iii) CIT vs. Golani Brothers (2018) 300 CTR 245 (Bom) iv) CIT vs. S. Nelliappan (1967) 66 ITR 722 (SC) v) CIT vs. K.S.M. Guruswamy Nadar & Sons (1984) 149 ITR 127 (Mad) vi) PCIT vs. M/s. Tata Medical Centre Trust vide IA No.GA/1/2023, order dated 26.09.2023 vii) M/s. Overseas Leathers vs. DCIT vide ITA No.962/Chny/2022, order dt 05.04.2023 viii) Shri Bhuwan Goyal vs. DCIT vide ITA No.1385/Chd/2019, order dated 28.09.2020 ix) DCIT vs. Tapesh Tyagi vide ITA No.1344/Del/2021, order dated 27.10.2023 x) Jayashri Shrikant Deshmukh vs. ACIT vide ITA No.776/PUN/2022, order dated 17.05.2023 xi) Kantilal & Bros. vs. ACIT (1995) ITD 412 xii) DCIT vs. M/s. Madhu Developers vide ITA No.2375/Mum/2023, order dated 27.11.2024 17. He accordingly submitted that the order of the Ld. CIT(A) being in accordance with law, should be upheld and the grounds raised by the Revenue be dismissed. 18 ITA No.958/PUN/2024 18. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.4,34,60,000/- u/s 69A being cash of Rs.62,20,000/- and gold bars weighing 7kg valued at Rs.3,72,40,000/-, found and seized by the ED during the course of search at the premises of the assessee which was subsequently requisitioned by the Income Tax Department, on the ground that the assessee could not explain that the cash and gold bars were purchased from the income of the past years as claimed by the assessee in the returns of income filed in response to the notice u/s 153A of the Act. Further, the Assessing Officer also rejected the claim of additional income declared by the assessee in the revised return filed for assessment year 2021-22 on the ground that the assessee could not justify the basis for declaring the additional income earned from the business activity. We find the Ld. CIT(A) deleted the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. 19. We do not find any infirmity in the order of the Ld. CIT(A) on this issue. A perusal of the statement recorded u/s 131 of the Act on 31.07.2020 by the DDIT (Inv) Unit at Aurangabad shows that the assessee in his reply to question 7 has categorically stated that the same was out of his business in the last 5 to 6 years. For the sake of clarity, we reproduce the entire statement of the assessee so recorded u/s 131 of the I.T. Act, 1961 on 31.07.2020 which reads as under: 19 ITA No.958/PUN/2024 “Statement on oath of Shri. Pankaj Mugdiya, residing at Plot No.97, N-3 CIDCO, Aurangabad recorded on 31/07/2020 u/s 131 of the Income Tax Act. 1961 -------------------------------------------------------------------------------------------- OATH “I swear in the name of God that I will speak the truth, only truth and nothing but the truth. I further confirm that I have been made aware of the consequences of making a false statement under oath” Sd/- (Sushil B. Shendge) (Shri. Pankaj Mugdiya) DDIT (Inv), Unit-1, Sd/- Aurangabad (Deponent) Q.1. Please identify yourself. Ans- I am Shri. Pankaj Mugdiya, Age: 42 years. My residential address is Plot No.97, N-3, CIDCO, Aurnagabad My mobile No. is 9422209000. My PAN is AFUPM5496F. Q.2. Please confirm that oath has been administered upon you and you are reminded that this statement is being recorded on oath and you have been made aware of the consequences of giving false statement on oath including penalties u/s.179 of IPC, sec 180 of IPC, sec 181 of IPC, sec 275A of the Information Technology Act and Sec 277A of the Income Tax Act. Sec 179 of IPC: Refusing to answer question. Sec 180 of IPC: Refusing to sign the statement Sec 181 of IPC: False statement on oath Sec 277A of Income Tax Act, 1961: Enabling others to evade taxes. Sd/- Sd/- (Sushil B. Shendge) (Shri. Pankaj Mugdiya) DDIT (Inv), Unit-1, Aurangabad Ans. Yes, I confirm that oath has been administered upon me and the consequences of giving false statement under oath and other penal provisions as mentioned above have been explained to the Q.3 Please state whether statement can be recorded in English language or any other language. 20 ITA No.958/PUN/2024 Ans. Yes, the statement can be recorded in English language. Q.4 Kindly furnish details of your family members? Ans: Sir, we are joint family living together. The details of my family members are as under- Sr. No Name Age Relation Occupation 01 Shri Praveen Mugdiya 58 Uncle Business 02 Smt Suvarna Mugdiya 55 Aunty Housewife 03 Shri Ravindra Mugdiya 51 Brother Business 04 Smt Beena Mugdiya 49 Sister-in-law Business 05 Smt Sapna Mugdiya 39 Wife Business Q.5 Please explain about your source of income? Ans: Sir, I am getting income from salary from M/s. Namrata Caterers which is a proprietary concern of my brother Shri Nitin Mugdiya. Q.6 Please explain as to whether you are maintaining regular books of accounts i.e. cash book, ledger, etc? Ans: No, I do not maintain regular books of accounts as I am salaried person. Sd/- Sd/- (Sushil B. Shendge) (Shri. Pankaj Mugdiya) DDIT (Inv), Unit-1, Aurangabad Q7. In your statement recorded on 30.07.2020, you stated cash of Rs.62,20,000/- and gold weighing 7000 gms belongs to you. Please explain the sources of the same. Ans. Sir, the cash of Rs.62.20 Lakh is generated from the business of M/s. Namrata Caterers and M/s Namrata Sweets. The proprietor of M/s Namrata Caterers is my brother Shri Nitin Mugdiya and proprietor of M/s. Namrata Sweets is my another brother Shri Ravendra Mugdiya. But for all practical purposes both businesses are being run solely by me. Sir the above mentioned cash is generated through receipt of M/s Namrata Caterers and M/s Namrata Sweets approximately from last 5 to 6 years. The cash received from the business is kept in the safe located in my cousin brother bedroom. As regards the gold it is also purchased from the unaccounted cash generated from the business of catering and sweets. Whenever the cash used to get excess, I purchased gold from time to time as the gold is easier 21 ITA No.958/PUN/2024 to maintain. Sir, the cash and the gold bars seized by ED belong to me only. Q8. The cash mentioned in the answer to the question no.4 was kept in your house without being deposited to the bank. Please offer your comments. Ans. Sir, the cash mentioned in my answer is not recorded in the books of accounts of M/s. Namrata Caterers. Sir, in the business of Catering and retail business of Sweet Shop, I used to get payments in cash as well as in cheques. I have recorded all the payments received by cheques but most of the cash receipts were not recorded. The cash of Rs.62.20 Lakh is unaccounted cash generated from the business of M/s Namrata Caterers and M/s Namrata Sweets. Q9. Please provide the details of the parties from whom the cash payments were received. Ans. Sir, I have not maintained any records regarding the cash receipts. Since the cash is generated over a period of approximately 5 to 6 years. I do not remember any details regarding the parties from whom the cash payments were received. Sd/- Sd/- (Sushil B. Shendge) (Shri. Pankaj Mugdiya) DDIT (Inv), Unit-1, Aurangabad Q10. Please provide the details regarding the purchase of Gold bar of weighing 7000 gms. Ans. Sir, I used to purchase gold from time to time from different person (jeweller) as per the availability of unaccounted cash. Sir I do not remember the exact details of quantity, rate and amount of cash paid etc. at this moment. Sir the mode of payment for the purchase of gold bar was in cash. All the cash which was used to purchase the gold found represents unaccounted cash receipts generated from the business of M/s Namrata Caterers and M/s Namrata Sweets. Sir 1 will submit the details within 7 days. Q11. During the search action of ED some jewellery was found which was later kept in a locker in your house under seal. Please offer your comment regarding the source of the same. Ans. Sir, the jewellery and omament found at my home belongs to my family. Sir we are joint family. My uncle and my cousin brother along with their family stay in the same house. The jewellery belongs to the ladies of the family. These ornaments are purchased from time to time in the past. Sir, my family members are regular filer of Income tax returns. We have also maintained the capital accounts and balance sheets. I am submitting the copies of the same for verification. 22 ITA No.958/PUN/2024 Q12. Please provide the details the jewellery along with the bills and vouchers. Also state the mode of payments. Ans. Sir, the jewellery is kept under seal by the ED in the locker at my house, so it is not possible to provide the details at this moment. Sir I will provide the bills and voucher of the jewellery after completion of verification and valuation by Sd/- Sd/- (Sushil B. Shendge) (Shri. Pankaj Mugdiya) DDIT (Inv), Unit-1, Aurangabad DD Sir the payments was made through bank as well as in cash I am unable to provide itemwise details at this moment Q13. Have you and your family members filed wealth Tax returns? Ans. Sir, I don't remember the exact status of this moment. I have to confirm from my other family members and my CA. I will submit the copies of the return within 7 days. Q.14 Do you want to say anything else? Ans. Sir, I accept again that the cash and gold bars seized by ED are from my unaccounted income. But the jewellery kept in the locker sealed by the ED belongs to my family members and purchased from the regular income duly reflected in the ITR filed. I will submit all necessary documents regarding the same with in due course of time. Sd/- Sd/- (Sushil B. Shendge) (Shri. Pankaj Mugdiya) DDIT (Inv), Unit-1, Aurangabad DECLARATION Whatever stated above by me is true and correct to the best of my knowledge and belief. The statement was recorded with sound mind and without threat, coercion or undue influence upon me. I have understood the contents of the above statement and I shall abide by the same. I have read over the statement and it is correctly recorded.” Sd/- Sd/- (Sushil B. Shendge) (Shri. Pankaj Mugdiya) DDIT (Inv), Unit-1, Aurangabad 23 ITA No.958/PUN/2024 20. Similarly, we find the statement of the assessee was again recorded u/s 131 on 08.10.2021 wherein in reply to question No.4, he has categorically stated that he was doing the business for the last 6 to 7 years and the cash so found and the gold bars so seized were out of the income of last 6 to 7 years. The statement of the assessee so recorded reads as under: “Statement on oath of Shri. Pankaj Mugdiya, residing at Plot No.97, N-3 CIDCO, Aurangabad recorded on 08/10/2020 u/s 131 of the Income Tax Act. 1961 -------------------------------------------------------------------------------------------- OATH “I swear in the name of God that I will speak the truth, only truth and nothing but the truth. I further confirm that I have been made aware of the consequences of making a false statement under oath” Sd/- (Sushil B. Shendge) (Shri. Pankaj Mugdiya) DDIT (Inv), Unit-1, Sd/- Aurangabad (Deponent) Q.1. Please identify yourself. Ans- I am Shri. Pankaj Mugdiya, Age: 42 years. My residential address is Plot No.97, N-3, CIDCO, Aurnagabad My mobile No. is 9422209000. My PAN is AFUPM5496F. Q.2. Please confirm that oath has been administered upon you and you are reminded that this statement is being recorded on oath and you have been made aware of the consequences of giving false statement on oath including penalties u/s.179 of IPC, sec 180 of IPC, sec 181 of IPC, sec 275A of the Information Technology Act and Sec 277A of the Income Tax Act. Sec 179 of IPC: Refusing to answer question. Sec 180 of IPC: Refusing to sign the statement Sec 181 of IPC: False statement on oath Sec 277A of Income Tax Act, 1961: Enabling others to evade taxes. 24 ITA No.958/PUN/2024 Sd/- Sd/- (8/10/2020) (Sushil B. Shendge) (Shri. Pankaj Mugdiya) DDIT (Inv), Unit-1, Aurangabad Ans: Yes, I confirm that oath has been administered upon me and the consequences of giving false statement under oath and other penal provisions as mentioned above have been explained to me. Q.3 Please state whether statement can be recorded in English language or any other language. Ans: Yes, the statement can be recorded in English language. Q.4. In your statement recorded on 31.07.2020, you have stated that cash of Rs.62,20,000/- and gold weighing 7000 gms belongs to you and it was purchased through cash generated from the business of your brothers i.e. M/s. Namrata Caterers and M/s Namrata Sweets. Therefore the statements of your brothers Shri Nitin Mugadiya and Shri Ravindra Mugadiya, proprietors of M/s. Namrata Caterers and M/s Namrata Sweets respectively, were recorded u/s 131 on 24.09.2020. During their statements both the persons have out rightly rejected your statement. They have denied any connection of their business with the alleged cash and gold found in your possession. I am showing you the statements recorded in respect of your brothers. Please go through the same and explain the sources of the cash and gold as both the persons have denied having any connection with the alleged cash and gold. Ans. Sir, the cash of Rs.62.20 Lakh and the gold weighing 7000 gms belongs to me. It has been purchased through income generated from my business of selling bakery items like Pav, various types of Bread, Pizza base, Pani Puri, trading of vegetable and fruits. The said business is done by me for last 6 to 7 years. It is true that there is no connection of Namrata Caterer or Namrata Sweets with the cash and Gold. Still I wish to submit that the goodwill of Namrata brand has helped in my business. During the action the officers asked for all sources of my income, and I used to get the salary from Namrata Caterer, therefore I have stated the name of Namrata Caterer. Also my business of trading was totally unaccounted, therefore I have not stated this business to authorities during action. Therefore due to this fact and also due to stress of the action, I have stated the names of Namrata Caterer and Namrata Sweets in my earlier statement. Q5. In answer to above question you have stated that you are doing business of selling bakery items like Pav, Bread, Pizza base, Pani Puri, trading of vegetable and fruits. In this regard please furnish documentary evidences such as books of accounts, bills and vouchers for sale and purchase etc. 25 ITA No.958/PUN/2024 Ans. Sir, initially the business was started at very low volume. The business has increase after some time due to mouth publicity and quality of goods sold. However I have not maintained any books of account for this business. Also the sale and purchases are made for a very less quantity with large number of people, therefore I do not have any bills and vouchers for this business. Q.6. Please state the approximate turn over and profitability of the above mentioned business. Ans. Sir, the approximate turnover of this business is around Rs.10 lakh per month means there is turnover of Rs.1 to 1.5 Cr per year and the profitability in this business is approximately 30 to 40%. Q.7. Please state whether you have shown the profit earned from the above stated business in the returns of income filed by you. Ans. Sir, I have not offered the income of above stated business in my return of income for any previous year. The cash found and gold has been purchased out of unaccounted income from the above stated business, Q.8. In answer to above question you have stated that the cash is generated form unaccounted business and gold is also purchased from the unaccounted income of the said business. Please furnish documentary evidence such as bills for purchase of gold etc. Sd/- Sd/- (8/10/2020) (Sushil B. Shendge) (Shri. Pankaj Mugdiya) DDIT (Inv), Unit-1, Aurangabad Ans. Sir, the gold has been purchased during last 5 to 6 years therefore the bills are not traceable however I am trying to trace the bills and I will submit the same after the bills are traced. As regard the cash it is submitted that the cash is accumulated within the period of 2 to 3 years from the unaccounted income of above business. I further wish to state that I am working out the tentative profit for all years since commencement of business and I promise to offer the unaccounted income and I will pay the taxes thereon. Q.9. Do you want to say anything else? Ans. Sir, I accept again that the cash and gold bars seized by ED are from my unaccounted income from the above stated business of selling bakery items like Pav, various types of Bread, Pizza base, Pani Puri, trading of vegetable and fruits. 26 ITA No.958/PUN/2024 As stated in the above answer, I will offer this income for taxation and I will pay the due taxes after finalizing the accounts. Sd/- Sd/- (8/10/2020) (Sushil B. Shendge) (Shri. Pankaj Mugdiya) DDIT (Inv), Unit-1, Aurangabad DECLARATION Whatever stated above by me is true and correct to the best of my knowledge and belief. The statement was recorded with sound mind and without threat, coercion or undue influence upon me. I have understood the contents of the above statement and I shall abide by the same. I have read over the statement and it is correctly recorded. Sd/- (8/10/2020) (Shri. Pankaj Mugdiya)” 21. We find on the basis of the requisition u/s 132A of the Act, the Assessing Officer issued notice u/s 153A for 6 assessment years i.e. assessment years 2015- 16 to 2020-21 and the assessee in response to the same filed the return of income declaring the additional income. In our opinion, once the Assessing Officer, upon satisfaction had issued notice u/s 153A for 6 years preceding the year in which the search and seizure was conducted he is not justified in rejecting the income declared in the said returns especially when the assessee had categorically stated in his statement recorded u/s 131 of the Act by the DDIT (Inv) Unit, Aurangabad that he was earning income from sale of vegetables, fruits, bakery products etc since last 6/7 years. It is also a matter of fact that the entire country was under lockdown for some period w.e.f. 25.03.2020 for 21 days which was subsequently extended on various occasions, the details of which are given at para 12 of this order. 27 ITA No.958/PUN/2024 22. We find some force in the arguments of the Ld. Counsel for the assessee that when most of the business establishments were closed during the pandemic i.e. from March, 2020 to July, 2020, it is highly improbable on the part of the assessee to earn such huge income during the period of lockdown and the closure of business establishments other than essential commodities. It is also a matter of fact that the gold bars so seized do not contain any serial number so as to say that all those bars were purchased from one person on a particular date. There is no clarity from the order of the Assessing Officer that the gold bars so seized contain any serial number or identity so as to fasten the liability on the assessee that it was purchased during July, 2020. Since the assessee in the instant case has already offered the income in the returns in response to notice u/s 153A and paid the taxes, the same in our opinion, should not have been rejected by the Assessing Officer especially when he himself issued a notice u/s 153A separately for the 6 years preceding the assessment year 2021-22. 23. Since the assessee in the instant case has categorically stated the source of such cash and the gold bars before the ED and before the DDIT (Inv) Unit that it is from his business activities for last 6/7 years, therefore, the question of applicability of the provisions of section 115BBE of the Act also in our opinion, does not arise. In our opinion, once the source of investment is established, the provisions of section 69A of the Act are not applicable since the assessee has offered an explanation. 28 ITA No.958/PUN/2024 24. We find the Mumbai Bench of the Tribunal in the case of DCIT vs. M/s. Madhu Developers (supra) has held as under: \"8. Thus, from the statement recorded, it is very much clear that the source of additional income offered by the assessee is from business. In fact, the A.O. has not disputed the aforesaid factual position. Keeping in perspective, the aforesaid factual position, if we examine the provision of section 69A of the Act, it can be seen that the provision has two limbs. Firstly, the assessee must be found to be the owner of any money, bullion, jewellery or other valuable article not recorded in the books of account, maintained by him for any source of income. Secondly, the assessee does not offer any explanation about the nature and source of acquisition of the said money, bullion, jewellery or other valuable article, or the explanation offered by him is not satisfactory, in the opinion of the A.O. 9. In the facts of the present appeal, even assuming that the first limb of section 69A of the Act is attracted, however, it cannot be said that the assessee has not offered any explanation regarding the nature and source of the money. Not only in course of the survey action, but subsequently the assessee has clearly stated that the unaccounted money found at the time of survey was out of his business. Not only the A.O. has not contradicted the aforesaid claim of the assessee, but he has failed to identify any other source of income of the assessee, except business. Thus, when there is no contrary material brought on record to dispel assessee's claim that the unaccounted money is out of business, the provisions of section 69A of the Act would certainly not get attracted.\" 25. We find the Chennai Bench of the Tribunal in the case of M/s. Overseas Leathers v. DCIT (supra) has held as under: “16. In this view of the matter and considering facts and circumstances of the case and also by following the case laws discussed herein above, we are of the considered view that when the assessee has explained source for excess stock found during the course of survey, is out of income generated from current year year business and explanation offered by the assessee is plausible explanation, then income offered towards excess stock cannot be treated as unexplained investment u/s. 69B of the Act, and also provisions of section 115BBE of the Act. The AO and the Ld. CIT(A) without appreciating relevant facts assessed additional income offered towards excess stock as unexplained investment u/s. 69B of the Act and levied tax u/s. 115BBE of the Act. Thus, we set aside the order passed by the ld. CIT(A) and direct the AO to assess additional income offered towards excess stock found during the course of survey under the head profits and gains of business and profession as considered by the assessee.” 29 ITA No.958/PUN/2024 26. We find the Delhi Bench of the Tribunal in the case of DCIT v. Tapesh Tyagi (supra) has held as under: “8. As rightly observed by the learned First Appellate Authority, section 69A uses word \"may\", which implies that if explanation offered by the assessee regarding source of money, bullion, jewellery or other valuable articles is satisfactory, it cannot be treated as unexplained money under Section 69A of the Act. In the facts of the present appeal, there is nothing on record to suggest that assessee's explanation regarding the source of the income offered has either been doubted or disputed at the time of search and seizure operation or even during the assessment proceedings. Therefore, in our view, the income offered by the assessee cannot be treated as unexplained money under Section 69A of the Act. Therefore, as a natural corollary, section 115BBE of the Act would not be applicable.” 27. We find the Co-ordinate Bench of the Tribunal in the case of Jayashri Shrikant Deshmukh v ACIT (supra) has held as under: “6 In the present case, it was found that the appellant was in possession of the gold, jewellery of 957.48 gms and out of which gold, jewellery of 850 gms was treated as explained by the Assessing Officer in terms of the CBDT Instruction (supra). As regards to the balance of jewellery of 107.48 gms, the assessee had offered an explanation that this jewellery was acquired out of the agricultural income generated by the Bigger HUF on the lands held by it. This explanation cannot be termed as \"not plausible explanation\" and, therefore, we are of the considered opinion that the Assessing Officer was not justified in treating the gold, jewellery of 107.48 gms as unexplained and brought to tax. In the circumstances, we direct the Assessing Officer to delete the addition of Rs.3,26,740/-made u/s 69A of the Act.” 28. So far as the additional income declared in the return for assessment year 2021-22 is concerned, once the assessee has declared higher income in the return filed in response to the notice u/s 153A, the same also in our opinion should not have been rejected by the Assessing Officer. In this view of the matter and in view of the detailed reasoning given by the Ld. CIT(A) on this issue, we do not find any 30 ITA No.958/PUN/2024 infirmity in the order of the Ld. CIT(A). Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed. 29. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 24th February, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 24th February, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘B’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune 31 ITA No.958/PUN/2024 S.No. Details Date Initials Designation 1 Draft dictated on 10.02.2025 Sr. PS/PS 2 Draft placed before author 11.02.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "