Shri Tarun Raj Jain, Ratlam V. The I T O w 1, Ratlam

ITA 149/IND/2009

• Counselvise Citation: 14922714 RSA 2009
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 24-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: M C MEHTA; HITESH CHIMNANI CAS
• Keywords: Business income; Loose papers; Fair market value; Retraction
• Section: 143(3); 142(1); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ABAPJ 2493 H I.T.A.NO.149/IND/2009 A.Y. : 2005-06 TARUNRAJ JAIN, INCOME-TAX OFFICER, NAMLI, VS WARD (1), DISTRICT RATLAM RATLAM APPELLANT RESPONDENT APPELLANT BY : SHRI M. C. MEHTA AND SHRI HITESH CHIMNANI, CAS RESPONDENT BY : SHRI ARUN DEWAN, SR. DR O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 23.1.2009 FOR THE ASSESSMENT YEAR 2 005-06, IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME -TAX ACT, 1961. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE : - 1. THAT THE HON'BLE CIT(A) HAS ERRED IN SUSTAINING TH E ADDITION MADE BY THE LD. AO, WARD (1), RATLAM, OF -: 2: - 2 RS. 9,763.00 ON THE BASIS OF TRADING RESULTS WITHOU T PROPER APPRECIATION OF FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE HON'BLE CIT(A) HAS ERRED IN SUSTAINING TH E ADDITION MADE BY THE LD. AO, WARD (1), RATLAM, OF RS. 28,08,725/- AS INCOME FROM OTHER SOURCES. THE INCOME DECLARED AT THE TIME OF SURVEY U/S 133 WITHOUT ANY BASIS AND APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE FACTS, IN BRIEF, ARE THAT 4. FACTS IN BRIEF ARE THAT THE ASSESSEE DERIVES INCOM E FROM PURCHASE AND SALE OF PESTICIDES, CLOTH AND GOL D AND SILVER ORNAMENTS. THERE WAS SURVEY U/S 133A AT THE RESIDEN TIAL CUM BUSINESS PREMISES OF THE ASSESSEE ON 29.01.2005. DU RING SURVEY, INVENTORY OF GOLD AND SILVER ORNAMENTS WERE PREPARED AND PHYSICAL CASH WAS ALSO COUNTED. THE SURVEY TEAM ALSO FOUND SOME LOOSE PAPERS. STATEMENT OF THE ASSESSEE WAS ALSO RECORDED, WHEREIN HE ACCEPTED TO PAY TAX ON THE EXC ESS CASH FOUND, ENTRIES ON THE LOOSE PAPERS, AND ON SILVER A ND GOLD -: 3: - 3 ORNAMENTS SO FOUND. DURING THE COURSE OF THE SAID S URVEY, INVENTORY OF ORNAMENTS MADE OF GOLD, SILVER, CASH A ND LOOSE PAPERS FOUND WERE PREPARED AND THE FOLLOWING DISCRE PANCIES. WERE NOTICED :- A) EXCESS CASH FOUND DURING SURVEY RS. 3,73,468/- B) ENTRIES CONTAINED LOOSE PAPERS RS. 3,43,715/- C) UNACCOUNTED SILVER ORNAMENTS AS PER INVENTORY PREPARED U/S 133A RS. 11,86,947/- D) UNACCOUNTED GOLD ORNAMENTS FOUND AS PER INVENTORY DRAWN U/S 133A RS. 9,04,595/- TOTAL RS. 28,08,715/- ON BEING QUESTIONED, VIDE ANSWER TO Q.NO.12, OF THE STATEMENT RECORDED DURING THE COURSE OF SURVEY, THE ASSESSEE HAD ACCEPTED THE INVENTORY SO PREPARED AND TO TREAT THE ABOVE UNEXPLAINED INCOME TOTALING TO A SUM OF RS. 28,08,7 15/- AS HIS INCOME FOR THE CURRENT FINANCIAL ( I.E. PERIOD UNDER ASSESSMENT ) FROM UNDECLARED SOURCES AND PROMISED T O PAY TAXES AS PER PREVAILING RATES. THE TAX PAYABLE ON THE INCOME SO DETECTED DURING THE COURSE OF SURVEY AND OFFERED FO R TAXATION -: 4: - 4 VOLUNTARILY AMOUNTED TO RS. 9,45,417/-. HOWEVER, TH E ASSESSEE MADE PAYMENT OF TAX AMOUNTING TO RS. 1,00, 000/- ONLY AGAINST THE ABOVE SUM PAYABLE. ACCORDINGLY, A NOTICE U/S 156 REQUIRING THE ASSESSEE FOR PAYMENT OF ADVANCE T AX UNDER SUB-SECTION (3) OR SUB-SECTION (4) OF SECTION 210 D ATED 25.04.2005 WAS ISSUED TO THE ASSESSEE REQUIRING HIM TO PAY TAXES AMOUNTING TO RS. 9,45,417/-. IN COMPLIANCE TO THE ABOVE, NO FURTHER PAYMENT OF TAXES WAS MADE EXCEPT THE ABOVE SUM OF RS. 1 LAKH. IN THE RETURN FILED, AS PER STAT EMENT OF INCOME, THE ASSESSEE HAS DECLARED A TOTAL BUSINESS INCOME OF RS. 3,40,237/-, WHICH INCLUDED AN AMOUNT OF RS. 2,5 0,000/- SHOWN UNDER THE HEAD INCOME DECLARED U/S 133A. THE FOLLOWING NOTE HAS BEEN ATTACHED WITH THE RETURN OF INCOME IN A SEPARATE SHEET :- MR.TARUNRAJ JAIN, PROP. M/S. BABULAL PREMCHAND, NAMLI, DEALS IN CLOTH, AGRICULTURAL, MEDICAL, AGRIS EEDS. A SURVEY WAS CONDUCTED ON 29.1.2005 BY THE INCOME TAX AUTHORITY AT THE PREMISES OF THE ASSESSEE. AT THE T IME OF SURVEY, THE FOLLOWING ITEMS WERE FOUND AND RECORDED BY THE INCOME TAX DEPARTMENT TEAM :- -: 5: - 5 ITEMS WEIGHT VALUE ESTIMATED BY THE INCOME TAX DEPARTMENT ( RS.) (1) GOLD JEWELLERY & OTHER GOLD ITEMS 1,482 KGS. 11,86,947 (2) JEWELLERY MODE OF SILVER 116.607 KGS. 9,04,595 (30 LOOSE SLEEPS OF AMOUNT IN RS. AND NAME OF SOME PARTIES, OLD REGISTRY CASH ETC. 7,17,183 TOTAL 28,08,715 THE ASSESSEE RETRACT THE COMPLETED PROCEEDINGS OF T HE INCOME TAX DEPARTMENT AND DECLARES ONLY RS. 2.50 LA CS IN THE 3 RD ITEM. THE ASSESSEE WAS IN IMMENSE PRESSURE AT THE TIME OF THE DECLARATION AND THE ORNAMENTS BELON GING TO THE FAMILY MEMBERS AND JEWELLERY OF SILVER WHICH WAS ON GIRWI A/C OF ANOTHER FIRM WAS DECLARED BY HIM WRONGLY. -: 6: - 6 5. THE AO ISSUED NOTICE U/S 142(1) REQUIRING ASSESS EE TO EXPLAIN THE ADDITIONAL INCOME SURRENDERED DURING THE COURSE OF SURVEY. THE A. R. APPEARED BEFORE THE AO, WHEREIN HE CONFIRMED THE RETRACTION. THE REPLY FILED BEFORE THE AO WAS AS UNDER :- SIR, THE INCOME TAX DEPARTMENT HAS MADE A SURVEY ON MY SHOP LOCATED AT NAMLI ON 29.01.2005. DURING THE SURVEY, THEY GOT SOME LOOSE PAPERS (SLIP), CASH , GOLD AND SILVER ORNAMENTS ETC. FROM MY SHOP AND THE STATEMENT IN RESPECT OF MY UNDISCLOSED INCOME OF RS. 28,08,715/- HAD BEEN NOTED. IN THIS REGARD I WANT TO SAY THAT THE SCALE OF OPERATION OF MY BUSINESS IS VERY SMALL AND BY SUDDENLY SEEING THE SO MANY INCOME TAX OFFICER OF THE I. T. DEPARTMENT, I LOST MY MENTAL STABILITY AN D DURING THAT INSTABILITY ONLY, I MADE THAT STATEMENT REGISTERED. THOUGH IT IS NOT MY INTENTION TO RENDER THE PROCEEDING OF DEPARTMENT INVALID, BUT MY ONLY INTENTION IS TO PUT SOME FACTS BEFORE YOUR KNOWLEDGE. I BELIEVED THAT YOU WOULD CONSIDER THEM -: 7: - 7 AND MAKE JUSTICE. FIRSTLY I WOULD LIKE TO STATE THA T THE OCCUPATION OF MY WIFE IS MORTGAGING THE ORNAMENTS, AND GIVING LOANS ON INTEREST. THE RATIO OF MORTGAGE IS THAT OF 80-20 %. IT MEANS 80 % IS SILVE R ORNAMENTS AND 15 20 % BELONGS TO GOLD. ALSO THE STRUCTURE OF OUR FAMILY IS THAT OF JOINT NATURE AND THE ORNAMENTS (GOLD) BELONGS TO THE LADIES OF OUR FAMILY ARE ALSO KEPT AT THE HOME. THERE WERE FOUR LADIES IN OUR HOUSE, AND ARE STILL WITH US. 1. SMT. NAZAR BAI (GRAND MOTHER. 2. SMT. PUKHRAJ BAI W/O BABULAL JAIN (MOTHER) 3. SMT. MANJU W/O MAHESH JAIN 4. SMT. USHA W/O TARUN JAIN ( WIFE ) AND THE ORNAMENTS OF ALL THE FOUR LADIES CONTAINING CHAINS, ANKLETS, BRACELETS, RINGS ETC. OUR FAMILY BELONGS TO THE JAIN COMMUNITY AND THERE IS LOT OF IMPORTANCE OF ORNAMENTS OF GOLD. ALSO, MY WIFE DOES THE MORTGAGING BUSINESS. AND THE INCOME TAX RETURN OF THE SAME YEAR SHOWS THAT NEAR ABOUT 1148145/- HAS BEEN SHOWN IN THE -: 8: - 8 MORTGAGE A/C IN THE YEAR CONCERN. MY WIFE FORWARDS THE LOAN NEAR ABOUT 70 80% OF FAIR MARKET VALUE O F THE ORNAMENTS. FOR YOUR PERUSAL WE ARE ENCLOSING THE COPY OF RETURN OF MY WIFE. IN THIS WAY THE STATEMENT SHOWING THE ORNAMENTS BELONG TO MY HOUSE AND MY WIFES BUSINESS. I HAVE MADE THE STATEMENT IN MENTAL PRESSURE OF THE BELONGING OF THE ASSETS. ALSO THE CASH RECEIPT (LOOSE SLIP ) OBTAINED DOES N OT BELONG TO US. OUR BUSINESS CUSTOMER AND MY WIFES BUSINESS CUSTOMER ALL BELONG TO THE SMALL VILLAGES AROUND NAMLI. THEY ALSO SOMETIMES KEPT THEIR CASH WITH US FOR SECURITY. A SLIP MENTIONING THE NAME OF THE PERSON, THE VILLAGE AND AMOUNT KEPT BY THEM IS KEPT FOR RECORD, SO THAT WE DO NOT FORGET. THUS ALL THE SLIP MENTIONING THE SAME ARE AS SECURITY KEPT B Y THEM, WHICH ARE NOT ENTERED IN THE BOOKS OF BUSINESS. HOWEVER, THE AO DID NOT AGREE WITH THE ABOVE SUBMISSIONS AND MADE THE FOLLOWING ADDITIONS :- -: 9: - 9 A) EXCESS CASH FOUND DURING SURVEY RS.3,73,468 B) ENTRIES CONTAINED IN LOOSE PAPERS RS. 3,43,715/ - C) UNACCOUNTED STOCK OF SILVER FOUND RS.11,86,947/- D) UNACCOUNTED STOCK OF GOLD FOUND RS. 9,04,595/- TOTAL INCOME RS. 29,08,725/- TOTAL INCOME ROUNDED OFF TO RS. 29,08,730/ - 6. BEFORE THE CIT(A), IT WAS CONTENDED THAT THE ASSESS EE WAS IN IMMENSE PRESSURE AT THE TIME OF DECLARATION AND THE ORNAMENTS BELONGING TO THE FAMILY MEMBERS AND JEWEL LERY OF SILVER, WHICH WAS ON GIRVI ACCOUNT OF ANOTHER FIRM WAS DECLARED BY THE ASSESSEE WRONGLY. IT WAS ALSO SUBMI TTED THAT WIFE OF THE ASSESSEE WAS DOING MORTGAGE BUSINESS AN D THE INCOME TAX RETURNS FOR THE THREE YEARS ALSO SHOWED MORTGAGE LOAN OF RS. 11,48,145/-. ACCORDINGLY, IT WAS SUBMIT TED THAT ORNAMENTS BELONGED TO MY HOUSE AND MY WIFES BUSINE SS AND THE STATEMENT WAS MADE DURING SURVEY IN MENTAL PRES SURE. IT WAS STATED THAT SMALL VILLAGERS ALSO KEEP THEIR CAS H AS SECURITY WITH THE ASSESSEE AND THE SLIPS SO FOUND ONLY RECOR DS THE AMOUNT GIVEN AS SECURITY BY THE VILLAGERS. THE LD. CIT(A) DID -: 10: - 10 NOT IMPRESS WITH THE ASSESSEES CONTENTION AND HE C ONFIRMED THE ACTION OF THE AO AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 7. IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTATI VE THAT THE ASSESSEE WAS CARRYING ON BUSINESS IN A SMA LL VILLAGE NEAR RATLAM. THE BUSINESS WAS CARRIED ON FROM THE S AME HOUSE, WHERE HE WAS RESIDING. SURVEY WAS CONDUCTED BY FOUR OFFICERS AND ASSESSEE WAS PRESSURIZED TO ACCEPT THE THINGS AS STATED BY THE SURVEY PARTY. THE ASSESSEE GOT VERY M UCH DISTURBED AND LOST COMPLETE MENTAL CONTROL AND HE W ENT ON ACCEPTING THE THINGS DICTATED BY THE OFFICERS. HE F URTHER CONTENDED THAT WIFE OF THE ASSESSEE SMT.USHA JAIN W AS CARRYING ON GIRVI BUSINESS, WHICH SHE WAS CONSISTEN TLY SHOWING IN THE INCOME TAX RETURN. INTEREST INCOME W AS RETURNED AND UNDER SCRUTINY ASSESSMENT FOR ASSESSME NT YEAR 2005-06 SUCH INTEREST INCOME AND GIRVI BUSINESS WAS ACCEPTED BY THE DEPARTMENT. OUR ATTENTION WAS INVITED TO THE BALANCE SHEET OF WIFE SMT. USHA JAIN, WHEREIN ADVANCES GIVE N IN THE GIRVI BUSINESS WAS DULY INDICATED. IN THE ASSESSMEN T YEAR 2004-05, THE GIRVI ACCOUNT SHOWED BALANCE OF RS. 9, 69,180/-. -: 11: - 11 IN THE ASSESSMENT YEAR 2005-06, RS. 11,48,145/- AND ASSESSMENT YEAR 2006-07 AT RS. 13,52,959/-. THESE A DVANCES WERE STATED TO BE GIVEN AGAINST GIRVI OF SILVER AND GOLD ORNAMENTS BY THE VILLAGERS. HE FURTHER CONTENDED TH AT THE DEPARTMENT HAS CALCULATED EXCESS CASH OF RS. 3,73, 468/- AND ASSESSEE WAS FORCED TO SURRENDER RS.2.50 LAKHS. HOW EVER, THE CASH BALANCE OF WIFE AMOUNTING TO RS.1,42,519/- WAS NOT CONSIDERED BY THE DEPARTMENT. WITH REGARD TO THE EN TRIES IN LOOSE PAPERS, THE LD. AUTHORIZED REPRESENTATIVE SUB MITTED THAT IT WAS IN RESPECT OF PURCHASE OF AGRICULTURAL LAND ON 8.8.1995 AMOUNTING TO RS. 40,573/- AND ON 9.5.1998 AT RS. 71 ,000/-. AS PER LD. AUTHORIZED REPRESENTATIVE, THESE WERE OU T OF DATES AND NO ADDITION WAS CALLED FOR IN THE ASSESSMENT YE AR 2005- 06. AS PER LD. AUTHORIZED REPRESENTATIVE, BALANCE A MOUNT OF RS. 2,21,142/- WAS IN RESPECT OF DEPOSITS BY AGRICU LTURIST WITH THE ASSESSEE, THERE WAS NO REASON TO TREAT SUCH DEP OSIT AS ASSESSEES INCOME. HE FURTHER SUBMITTED THAT IN ASS ESSEES FAMILY, THERE WERE FOUR LADIES, WHOSE JEWELLERY WAS ALSO ADDED IN THE INCOME OF THE ASSESSEE AND TAKEN BY THE SURV EY PARTY. HE SUBMITTED THAT STATEMENT GIVEN DURING SURVEY PRO CEEDINGS -: 12: - 12 CAN ALWAYS BE RETRACTED BY PROVING THAT THE ADDITIO NS AS AGREED WERE NEITHER CORRECT NOR MADE UNDER FREE WIL L, BUT UNDER DURESS. FOR THIS PROPOSITION, RELIANCE WAS PL ACED ON THE FOLLOWING DECISIONS :- I) ABSALOM VS. TALBOT, (1944) 26 TAX CASE 166, 192. II) ABDUL KAYUME VS. CIT, (1990) 184 ITR 404, 411 (ALL) III) PULLANGODE RUBBER VS. STATE OF KERALA, 91 ITR 18 ( S. C. ) 8. FURTHER RELIANCE WAS PLACED ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF DHINGRA METAL WORKS, 328 ITR 384, WHEREIN IT WAS HELD THAT STATEMENT CANNOT BE RECORD ED DURING SURVEY AND EVEN IF STATEMENT IS TAKEN, IT IS NOT FI NAL AND CAN BE DISPUTED. RELIANCE WAS ALSO PLACED BY THE LD. AU THORIZED REPRESENTATIVE ON THE DECISIONS REPORTED AT 263 ITR 101 (KERALA), 300 ITR 157 (MADRAS), 184 ITR 404, 130 TT J 159 & 128 TTJ 619. -: 13: - 13 9. FURTHER CONTENTION OF LD. AUTHORIZED REPRESENTATIVE WAS THAT BENEFIT OF TELESCOPYING SHOULD BE ALLOWED IN RESPECT OF NOTINGS IN LOOSE PAPERS OUT OF EXCESS CASH FOUND AN D FOR WHICH RELIANCE WAS PLACED ON THE DECISION REPORTED IN 14 ITJ 615 AND 134 TTJ 723. 10. IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTAT IVE THAT THE ASSESSEE HAS RIGHT FROM THE BEGINNING BEEN STATING THAT HIS WIFE WAS CARRYING ON THE BUSINESS OF GIRVI OF THESE ITEMS. IN SUPPORT OF THE SAID CLAIM, IT WAS EXPLAIN ED THAT THE SAID ITEMS ARE COVERED BY THE GIRVI LOANS ADVANCED BY HIS WIFE AS PER STATEMENT ENCLOSED PROVING THAT NEARLY RS. 1 4,35,181/- WORTH OF JEWELLERY ITEMS PERTAINED TO GIRVI BUSINES S AND BALANCE JEWELLERY BELONGED TO 4 LADIES OF THE HOUSE HOLD, WHICH CONSIDERING THE STATUS OF THE FAMILY IS VERY REASON ABLE (NEARLY RS. 1,50,000/- OF JEWELLERY BELONGING TO EACH LADY ) AND HENCE BE ACCEPTED. 11. ON THE OTHER HAND, CONTENTION OF THE LD. SENIOR D.R . WAS THAT THE ASSESSEE IN THE COURSE OF SURVEY HIMSE LF HAS ACCEPTED, THE ASSETS SO FOUND AND ALSO AGREED TO PA Y TAXES THEREON. THERE WAS NO VALID JUSTIFICATION FOR RETRA CTION. -: 14: - 14 ACCORDINGLY, HE ARGUED THAT THE ADDITION MADE BY TH E LOWER AUTHORITIES SHOULD NOT BE INTERFERED. 12. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D ALSO DELIBERATED ON THE CASE LAWS RELIED BY THE LD. AUTH ORIZED REPRESENTATIVE AND LD. SENIOR D.R. FROM THE RECORD, WE FOUND THAT THE ASSESSEE WAS CARRYING ON BUSINESS OF CLOTH , PESTICIDES, GOLD AND SILVER ORNAMENTS AT NIMLI, A S MALL VILLAGE NEAR RATLAM. HIS WIFE SMT. USHA JAIN WAS ALSO CARRY ING ON BUSINESS OF GIRVI, WHEREIN ADVANCES WERE GIVEN AGAI NST SECURITY OF GOLD AND SILVER ITEMS. THERE WAS SURVEY AT ASSESSEES PREMISES, WHEREIN HE WAS RESIDING AS WEL L AS CARRYING ON BUSINESS. INVENTORY OF GOLD ORNAMENTS A ND SILVER ORNAMENTS WERE PREPARED AND STATEMENT OF THE ASSESS EE WAS RECORDED, WHEREIN HE AGREED FOR ADDITION OF ALL THE SE ASSETS IN HIS INCOME. INVENTORY OF CASH WAS ALSO PREPARED, WH ICH WAS ALSO ADDED IN ASSESSEES INCOME. ADDITIONS WERE ALS O MADE IN RESPECT OF NOTINGS IN LOOSE PAPERS. HOWEVER, WHILE FILING RETURN OF INCOME, THE ASSESSEE RETRACTED FROM HIS STATEMEN T GIVEN DURING SURVEY, HIS RETURN OF INCOME WAS FILED AT RS . 3,40,237/- -: 15: - 15 , WHICH INCLUDED AMOUNT OF RS. 2.50 LAKHS SHOWN UND ER THE HEAD INCOME DECLARED U/S 133A. CONTENTION OF ASSE SSEE WAS THAT HIS STATEMENT WAS RECORDED UNDER COERCIVE MEAS URE AND HE WAS VERY MUCH DISTURBED AND WAS NOT IN BALANCE S TATE OF MIND, THEREFORE, AGREED TO WHATEVER DEPARTMENTAL OF FICER HAS STATED TO HIM. THERE IS NO DISPUTE TO THE WELL SETT LED PROPOSITION THAT STATEMENT GIVEN DURING SURVEY PROC EEDINGS CAN BE RETRACTED BY PROVING THAT THE ADDITIONS AS A GREED WERE NEITHER CORRECT NOR MADE UNDER FREE WILL BUT UNDER DURESS ETC. ONUS IS ALWAYS ON THE ASSESSEE TO PROVE THAT THE ST ATEMENT SO RECORDED WERE NOT CORRECT AND FOR THIS PURPOSE HE H AS TO BRING MATERIAL ON RECORD TO SUGGEST THE CORRECT STATE OF AFFAIRS. IN THE INSTANT CASE, WE FOUND THAT ADDITION OF RS. 3,73,46 8/- WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH FO UND DURING SURVEY. WE FOUND THAT WIFE OF THE ASSESSEE W AS ALSO CARRYING ON GIRVI BUSINESS, WHEREIN SHE WAS HAVING CASH BALANCE OF RS. 1,42,519/- AS ON 29.1.2005, AS PER B OOKS OF GIRVI BUSINESS. THIS BALANCE IS EVIDENT FROM THE B ALANCE SHEET OF HER WIFE FILED ALONGWITH RETURN FOR THE YEAR END ING ON 31.3.2005 IN RESPECT OF HER GIRVI BUSINESS. THIS RE TURN WAS -: 16: - 16 UNDER SCRUTINY OF DEPARTMENT, WHEREIN POSITION OF C ASH IN HAND WAS NOT DISPUTED. ACCORDINGLY, WE DIRECT THE A O TO MODIFY THE ADDITION MADE ON ACCOUNT OF EXCESS CASH AND TO REDUCE THE ADDITION BY OF RS. 1,42,519/- IN RESPECT OF CASH BELONGING TO THE WIFE AS ON DATE OF SURVEY. 13. WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF GOLD JEWELLERY WEIGHING 1482 GMS., WE FOUND THAT SOME OF THESE ITEMS WERE CONSISTED OF CHAIN, RINGS, PATLI (BANGLE S) TOPS ETC. HAVING WEIGHT OF 912 GMS. THESE JEWELLERY WERE BELO NGING TO FOUR LADIES OF THE FAMILY LIVING IN THAT HOUSE. AS PER C.B.D.T. INSTRUCTION NO.1916 DATED 11.5.1994, A HINDU MARRIE D LADY CAN KEEP GOLD ORNAMENTS OF 500 GMS., UNMARRIED LADI ES 250 GMS. AND MALE PERSONS 100 GMS. CONSIDERING THE S TATUS OF THE ASSESSEE FAMILY, IT CAN REASONABLY BE HELD THAT OUT OF TOTAL 1482 GMS. GOLD JEWELLERY FOUND, JEWELLERY WEIGHING 912 GMS., BELONGED TO THE LADIES OF ASSESSEE FAMILY RECEIVED BY THEM ON MARRIAGE OR OTHER HINDU FESTIVALS, WHICH CAN NOT BE ADDED IN ASSESSEES INCOME. ACCORDINGLY, THE AO IS DIRECTED TO DELETE ADDITION IN RESPECT OF GOLD JEWELERY WEIGHING 912 G MS. AS BELONGING TO LADIES. WE DIRECT ACCORDINGLY. -: 17: - 17 14. WITH REGARD TO THE JEWELLERY MADE OF SILVER WEIGHIN G 116.607 KGS. CONTENTION OF THE ASSESSEE WAS THAT IT WAS OUT OF GIRVI BUSINESS RECEIVED BY HER WIFE WHILE ADVANCING MONEY. DURING THE RELEVANT ASSESSMENT YEAR, SHE HAD GIVEN ADVANCE OF RS. 11,48,145/- AND THE SILVER JEWELLERY WAS RECEIV ED BY HER AGAINST SUCH ADVANCE. THE LD. AUTHORIZED REPRESENTA TIVE ALSO PLACED ON RECORD, THE COPY OF INCOME TAX ASSESSMENT ORDER OF THE WIFE OF THE ASSESSEE, WHEREIN DECLARED INCOME O F GIRVI BUSINESS WAS RS. 94130/- AND GIRVI ACCOUNT INDICATE D ADVANCING OF RS. 11,48,145/-. IN THE INTEREST OF JU STICE AND FAIR PLAY, WE RESTORE THIS GROUND BACK TO THE FILE OF AO FOR VERIFYING THE JEWELLERY KEPT BY WIFE OF THE ASSESSEE AS SECUR ITY AGAINST THE ADVANCES MADE BY HER IN GIRVI BUSINESS. NEEDLES S TO SAY THAT THE ASSESSEE SHOULD BRING COGENT MATERIAL ON R ECORD TO SUBSTANTIATE HIS STAND THAT SILVER JEWELLERY SO FOU ND WAS OUT OF HER WIFES GIRVI BUSINESS. THE AO HAS TO DECIDE THE MATTER AFRESH. WE DIRECT ACCORDINGLY. 15. THE AO HAS ALSO MADE TRADING ADDITION OF RS. 9763/- . WE HAD SEEN THE COMPARATIVE CHART OF TRADING RESULT FOR THE ASSESSMENT YEAR 2003-04 TO 2005-06 AS PLACED ON THE RECORD. -: 18: - 18 IN VIEW OF THE FACT THAT TRADING RESULTS DECLARED B Y THE ASSESSEE WAS BETTER THAN THOSE OF THE ASSESSMENT YEAR 2004-0 5 AND THE BOOKS OF THE ASSESSEE HAVING NOT BEEN REJECTED BY T HE ASSESSING OFFICER, THE AD HOC ADDITION MADE ON ACCO UNT OF GROSS PROFIT IS NOT CALLED FOR. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 9763/-. WE DIRECT ACCORD INGLY. 16. WITH REGARD TO THE ADDITION OF RS. 3,43,715/- MADE ON ACCOUNT OF LOOSE PAPERS, WE FOUND THAT THESE LOOSE PAPERS INCLUDED PURCHASES OF RS. 1,21,573/- ( RS. 40,573 + 71,000) WHICH RELATED TO THE PURCHASES OF TWO PCS. OF AGRIC ULTURAL LAND IN THE ASSESSMENT YEAR 1996-97 AND 1997-98. COPIES OF THESE PURCHASE DEEDS ARE ALSO PLACED ON RECORD, ONE IS DA TED 8.5.95 OF RS. 40,573/- AND ANOTHER IS DATED 9.5.98 OF RS. 71,000/-. WE DO NOT FIND ANY MERIT FOR THE ADDITION OF RS. 1, 21,573/- IN THE ASSESSMENT YEAR 2005-06. 17. WITH RESPECT TO BALANCE ADDITION OF RS. 2,22,142/- IN RESPECT OF NOTINGS FOUND IN THE LOOSE PAPERS, CONTE NTION OF THE ASSESSEE WAS THAT BENEFIT OF TELESCOPY SHOULD BE GI VEN OUT OF THE CASH FOUND DURING SURVEY. AS PER LOOSE PAPERS, IT APPEARS THAT THESE ARE DEPOSITS BY THE AGRICULTURIST. AS AD DITION HAS -: 19: - 19 ALREADY BEEN MADE ON ACCOUNT OF EXCESS CASH FOUND, WE DIRECT THE AO TO GIVE BENEFIT OF TELESCOPYING OUT OF ADDIT ION MADE ON ACCOUNT OF EXCESS CASH IN RESPECT OF ENTRIES IN LO OSE PAPERS AMOUNTING TO RS. 2,22,142/-. AS PER OUR OBSERVATION AT PARA 16 ADDITION OF RS. 3,73,468/- WAS MADE ON ACCOUNT O F EXCESS CASH, OUT OF WHICH WE HAVE ALREADY DIRECTED TO GIVE CREDIT OF CASH OF RS. 1,42,519/-BELONGING TO THE WIFE OF THE ASSESSEE. THUS, THERE REMAINS ADDITION OF RS. 2.31 LAKHS. THU S, OUT OF PROPOSED BALANCE ADDITION OF RS. 2.22 LAKHS ON ACCO UNT OF LOOSE PAPERS, WE DIRECT THE AO TO GIVE CREDIT FOR R S. 2.22 LAKHS OUT OF EXCESS CASH FOUND WHICH HAS BEEN SEPARATELY ADDED BY THE ASSESSING OFFICER. WE DIRECT ACCORDINGLY. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH JUNE, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH JUNE, 2011. CPU* 20276