DCIT 14(2), MUMBAI V. ANIL P. KHEMANI, MUMBAI

ITA 4933/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7395 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 05-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEBASHIS CHANDE
• Keywords: Search and seizure; Set aside
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI R.K. GUPTA, J.M. AND SHRI A.L. GEHLOT, A.M. ITA NO. 4933/M/2008 ASSESSMENT YEAR: 2005-06 DY. COMMISSIONER OF INCOME-TAX, APPELLANT 14(2), EARNEST HOUSE, 3 RD FLOOR, NARIMAN POINT, MUMBAI 400 021 VS. SHRI ANIL P. KHEMANI RESPONDENT 518, KALBADEVI ROAD, MUMBAI 400 002. (PAN AAKPK4124D) C.O. NO. 22/M/09 (IN ITA NO. 4933/M/2008 ASSESSMENT YEAR: 2005-06) SHRI ANIL P. KHEMANI CROSS OBJECTOR 518, KALBADEVI ROAD, MUMBAI 400 002. (PAN AAKPK4124D) VS. DY. COMMISSIONER OF INCOME-TAX, RESPONDENT 14(2), EARNEST HOUSE, 3 RD FLOOR, NARIMAN POINT, MUMBAI 400 021 REVENUE BY : MR. DEBASHIS CHANDE ASSESSEE BY : MR. RAJIV KHANDELWAL ORDER PER A.L. GEHLOT, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)- XIV, MUMBAI, PASSED ON 08 TH MAY, 2008 FOR THE ASSESSMENT ITA NO. 4933/M/08 & C.O. 22/M/09 ANIL P. KHEMANI 2 YEAR 2005-06. THE ASSESSEE ALSO FILED C.O. AGAINST THE SAID ORDER OF CIT(A). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE CIT(A) ERRED IN DELETING THE ADDITION MADE O F RS. 22,07,135/- ON ACCOUNT OF SEIZED GOLD JEWELLERY/ORN AMENTS. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT TH AT THERE WERE CONTRADICTIONS IN THE SUBMISSIONS OF THE ASSESSEE A ND THAT NO BOOKS OF ACCOUNTS FROM 1.4.2004 ONWARDS HAD BEEN MA INTAINED AND THE P&L A/C AND BALANCE SHEET OF THE ASSESSEE D ID NOT REFLECT THE CREDIT WORTHINESS EVEN TO PURCHASE SMAL L QUANTITY OF GOLD ORNAMENTS ON CREDIT AND THAT IN THE WRIT PETIT ION FILED BY THE ASSESSEE BEFORE THE MUMBAI HIGH COURT IN WHICH THE ASSESSEE CLAIMED THAT THE SEIZED ASSETS WERE HIS PROPERTY AS STOCK-IN- TRADE AND WITH REGARD TO THE AFFIDAVIT FILED BY SHR I RAMJIVANLAL K. SONI, PARTNER OF M/S M.L. KANHAILAL JEWELLERS. THE AFFIDAVIT WAS MADE ON 4.10.2004, MUCH AFTER THE DATE OF SEIZURE A ND THERE WERE INCONSISTENCIES WITH REGARD TO THE STATEMENTS GIVEN BY THE ASSESSEE BEFORE THE DDI(INV.), JABALPUR AND THUS TH E ASSESSEE FAILED TO EXPLAIN THE SOURCE OF INCOME AND SOURCE O F ACQUISITION OF SEIZED ASSETS. 4. FOR THESE AND OTHER REASONS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER OF THE CIT( A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED ON THIS POINT. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE DDIT( INV.), JABALPUR RECEIVED INTIMATION VIDE LETTER DATED 8/8/2004 FROM THE STATION INCHARGE OF POLICE STATION GHAMAPUR THAT CASH OF RS. 79,000/- AND GOLD ABOUT 4 KGS SEIZED BY THE POLICE FROM THE POSS ESSION OF SHRI ANIL O. KHEMANI, RESIDENCE OF RUSTOM BUILDING, I-B, 33, JS. ROAD, DAHASIR (W), MUMBAI. THE DDIT(INV.), JABALPUR HAD IMMEDIATE LY ISSUED LETTER DATED 9/8/2004 TO THE SUPERINTENDENT OF POLICE, JAB ALPUR, REQUESTING HIM NOT TO RELEASE ANY OF THE SEIZED CASH AND DOCUM ENTS OF SHRI ANIL P. KHEMANI, UNLESS HE HEAR FROM THE DEPARTMENT. FUR THER, PURSUANT TO WARRANT OF AUTHORISATION U/S 132A ISSUED BY THE DIT(INV.), BHOPAL AND THE ASSETS WERE SEIZED U/S 132A AND POSSESSION OF THE SAME WAS TAKEN FROM THE JABALPUR POLICE ON 23/8/2004. SUBSEQ UENTLY, THE DY. DIRECTOR OF INCOME-TAX (INV.)(AIU), UNIT-III, MUMBA I HAS ALSO INTIMATED ITA NO. 4933/M/08 & C.O. 22/M/09 ANIL P. KHEMANI 3 THAT SURVEY ACTION U/S 133A WAS CONDUCTED ON 11/8/2 004 AT THE OFFICE PREMISES OF THE ASSESSEE AT 518, KALBADEVI R OAD, MUMBAI ON THE BASIS OF INFORMATION RECEIVED BY HIM FROM THE D IRECTOR OF INCOME- TAX (INV.), BHOPAL THAT THE LOCAL POLICE HAD APPREH ENDED SHRI ANIL KHIMANI ON 8/8/2004 AT JABALPUR WITH 4.200 KGS OF G OLD ORNAMENTS AND JEWELLERY AND CASH RS. 79,000/-. SUBSEQUENTLY, SEARCH AND SEIZURE FILE CONSISTING APPRAISAL REPORT, PANCHNAMA , WARRANT OF AUTHRISATION U/S 132A(1), DOCUMENTS, STATEMENT, ETC . HAVE BEEN RECEIVED BY THE OFFICE OF AO ON 14/9/2006 FROM T HE ADIT(INV.)-I&II, JABALPUR VIDE HIS ENDORSEMENT LETTER DATED 22.08.20 06. IT WAS INTIMATED BY THE ADIT (INV.) I & II, JABALPUR, TH AT JEWELLERY/PRIMARY GOLD VALUED AT RS. 22.07 LAKHS AND CASH OF RS. 79,0 00/- WERE SEIZED AND THE POSSESSION WAS TAKEN FROM THE POLICE. THE D ETAILS OF ASSETS SEIZED WERE AS UNDER:- PARTICULARS QTY RATE(RS.) VALUE (RS.) 1 JEWELLERY 3594.005 GMS 575 2,065,553 2 PRIMARY GOLD (BISCUIT PIECES) 416.500 GMS 600 249,900 3 CASH 79,000 2,395,453 4. ON BEING ASKED BY THE AO TO EXPLAIN THE SOURCE O F ACQUISITION AND SOURCE OF INVESTMENTS IN RESPECT OF THE AFORESA ID SEIZED GOLD JEWELLERY/ORNAMENTS AND CASH, THE FILED DETAILS VID E LETTER DATED 15/11/2006, WHICH WERE NOTED BY THE AO AT PAGES 2 & 3 OF HIS ORDER. THE ASSESSEE IN SUPPORT OF HIS CLAIM SUBMITTED AFFI DAVIT DATED 17/10/2004 OF RAMJEEVANLAL K. SONI, PARTNER OF M/S M.L. KANHAIYALAL JEWELLERS AND COPY OF AFFIDAVIT OF SHRI KETAN JAMNADAS PAREKH, PROP OF M/S JANNUBHAI JEWELLERS MADE ON 2/1 0/2004 AT RAJKOT. THE AO DID NOT ACCEPT THE ASSESSEES SUBMI SSION OBSERVING THAT THE ASSESSEE HAD ADMITTED IN HIS STATEMENT BEF ORE DDIT (INV.), JABALPUR THAT THE MAIN SOURCE OF INCOME IS ONLY FRO M SALARY, BUSINESS IN OIL AND PLASTIC BAGS UP TO AY 2004-05. IT WAS F URTHER OBSERVED THAT ITA NO. 4933/M/08 & C.O. 22/M/09 ANIL P. KHEMANI 4 THE ASSESSEE HAD ALSO ADMITTED THAT NO BOOKS OF ACC OUNTS FROM 1/4/2004 ONWARDS HAD BEEN MAINTAINED. THE AO ALSO O BSERVED THAT THE ASSESSEE HAD GIVEN CONTRADICTORY STATEMENT FOR MAINTENANCE OF REGULAR BOOKS OF ACCOUNTS. IT WAS ALSO OBSERVED BY THE AO THAT PROFIT & LOSS A/C BALANCE SHEET DID NOT REFLECT CREDITWORT HINESS OF THE ASSESSEE TO PURCHASE EVEN SMALL QUANTITY OF GOLD OR NAMENTS ON CREDIT, SO THE ASSESSEES CLAIM THAT SOME PART OF THE GOLD ORNAMENTS WERE PURCHASED ON CREDIT WAS NOT BELIEVABLE AND ACCEPTAB LE. IT WAS OBSERVED BY THE AO THAT THE ASSESSEE APPROACHED THE SESSION COURT AT JABALPUR ON 30/8/2004 FOR RELEASE OF SEIZED GOLD/OR NAMENTS AND CASH. IN THE AFFIDAVIT BEFORE THE COURT THE ASSESSE E STATED THAT EXCEPT THE PETITIONER I.E. THE ASSESSEE NOBODY HAS CLAIMED THE OWNERSHIP OVER THE SEIZED PROPERTIES. THE AO CONCLUDED THAT THIS I S THE BEST EVIDENCE TO SHOW THAT THE ASSESSEE IS THE ACTUAL OWNER OF TH E SEIZED ASSETS. THE ASSESSEE ALSO FILED WRIT PETITION BEFORE THE HONBL E JURISDICTIONAL HIGH COURT VIDE W.P. NO. 1444 OF 2006, THE ASSESSEE CLAI MED THAT THE SEIZED ASSETS ARE AT HIS PROPERTY I.E. STOCK IN TRADE. IN RESPECT OF THE AFFIDAVIT OF SHRI RAMJEEVANLAL K. SONI, PARTNER OF M/S M.L. K ANHAIYALAL JEWELLERS, THE AO OBSERVED THAT THE AFFIDAVIT WAS M ADE ON 4/10/2004 MUCH AFTER THE SEIZED ACTION TAKEN PLACE AND THERE WERE VARIOUS DISCREPANCIES IN THE STATEMENT GIVEN BY THE ASSESSE E AND CONTENTS GIVEN IN THE AFFIDAVIT. IN THE AFFIDAVIT OF SHRI RA MJEEVANLAL STATED THAT GOLD ORNAMENTS WEIGHING 1505.800 GRAMS DO NOT BELON G TO THE ASSESSEE BUT BELONGS TO M/S M.L. KANHAIYALAL JEWELL ERS WHEREAS THE ASSESSEE ADMITTED BEFORE THE DDIT(INV.), JABALPUR T HAT HE HAD PURCHASED ABOUT 1500 GRAMS GOLD FROM M/S M.L. KANHA IYALAL JEWELLERS. THE ASSESSEE ALSO ADMITTED THAT THERE WE RE NO BILLS AT ALL AND THERE WERE ONLY CHALLANS. THE AO WAS OF THE VIE W THAT THE ASSESSEES SUBMISSION IS INCORRECT THAT THE GOLD JE WELLERY BELONGED TO M/S M.L. KANHAIYALAL JEWELLERS. SIMILLARY, THE AO N OTICED THAT IN OTHER TRANSACTION FOR JEWELLERY WEIGHING 1375.480, IT WAS CLAIMED THAT IT WAS RECEIVED ON APPROVAL BASIS VIDE NILL NO. 15 DATED 3/8/2004 FROM JANNUBHAI JEWELLERS, RAJKOT.. THE PROPRIETOR S HIR KETAN ITA NO. 4933/M/08 & C.O. 22/M/09 ANIL P. KHEMANI 5 JAMNADAS PAREKIN IN HIS AFFIDAVIT MADE ON 2/10/2004 CLAIMED THAT THE SEIZED JEWELLERY WEIGHING 1375.480 BELONGS TO H IM AND NOT THE ASSESSEE. THE AO NOTICED THAT THERE WERE DISCREPAN CIES IN THE WEIGHT OF THE ORNAMENTS. THE AO ALSO NOTICED THAT THE ASSE SSEE HAD FAILED TO EXPLAIN THE REMAINING JEWELLERY WEIGHING 666.650 GR AMS AND STANDARD GOD BAR WEIGHING 416.200 GRAMS. SINCE THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF INCOME, SOURCE OF ACQUISITION OF SEIZ ED ASSETS, THE AO MADE ADDITION OF RS. 22,07,135/- ON ACCOUNT OF GOLD JEWELLERY/ORNAMENTS WEIGHING 3965.260 GRAMS. 5. THE AO ALSO MADE ADDITION OF RS. 79,000/- ON AC COUNT OF CASH SEIZED. THE CLAIM OF THE ASSESSEE IN THIS REGARD WA S THAT RS. 79,000/- WAS CARRYING ON BY THE ASSESSEE FOR BUSINESS TRIP. THE AMOUNT WAS SHOWN IN THE BOOKS OF ACCOUNT REGULARLY MAINTAINED. THE RELEVANT ENTRY IN THE CASH BOOK WAS VERIFIED BY THE ADIT DUR ING THE COURSE OF SURVEY. THE AO FOUND THAT THE ASSESSEES SUBMISSION IS INCORRECT. THE AO ALSO NOTED THAT THE ASSESSEE HAD NOT MAINTAINED BOOKS OF ACCOUNT IN THE CURRENT YEAR UNDER CONSIDERATION. 6. THE CIT(A) DELETED THE ADDITION OF RS. 22,07,135 /- BY EXAMINING THE ISSUE IN DETAIL AND BY MAKING THE CATEGORICAL F INDINGS THAT THE APPELLANT HAS FURNISHED AFFIDAVIT FROM RAMJEEVANLAL K. SONI, PARTNER AND SHRI KETAN JAMNADAS PAREKH IN SUPPORT OF THE CL AIM THAT JEWELLERY WEIGHING 1505.800 GMS WAS RECEIVED FROM M /S M.L. KANHAIYALAL JEWELERS AND FURTHER JEWELLERY WEIGHING 1755.480 GMS WAS RECEIVED FROM ANOTHER CONCERN VIZ., M/S JANUBHAI JE WLLERS, RAJKOT. THE CIT(A) FURTHER OBSERVED THAT THERE IS MERIT IN THE ARS CONTENTION THAT THE EVIDENCE FURNISHED IN SUPPORT OF THE CLAIM WAS NOT CONTROVERTED BY THE AO NOR ANY FURTHER ENQUIRY HAS BEEN MADE BY THE AO TO DISPROVE THE CORRECTNESS OF THE CLAIM/EVIDENC E FURNISHED BY THE APPELLANT.FURTHER DURING SIMULTANEOUS ENQUIRIES CON DUCTED AT THE PREMISES OF KANHAIYALAL JEWELERS, RAMJEEVANLAL K. S ONI, THE PARTNER OF THE FIRM CONFIRMED THE ABOVE TRANSACTIONS WITH THE APPELLANT. THE ITA NO. 4933/M/08 & C.O. 22/M/09 ANIL P. KHEMANI 6 CIT(A) ALSO OBSERVED THAT NECESSARY ENTRIES OF THE ABOVE TRANSACTIONS WERE FOUND RECORDED IN THE STOCK REGISTER. THUS, TH E CONTENTION AND CLAIM MADE BY THE APPELLANT STOOD DULY SUPPORTED BY THE DOCUMENTARY EVIDENCE AND ALSO BY THE CONFIRMATIONS/STATEMENTS B Y THE THIRD PARTIES. AS AGAINST THIS, THE AO HAD SIMPLY DISBELI EVED THE CLAIM OF THE APPELLANT ON THE BASIS OF CERTAIN INCONSISTENCI ES IN THE STATEMENT OF THE APPELLANT AND SOME MINOR ERRORS WITH REGARD TO THE LANGUAGE AND CONTENTS OF THE VOUCHER SUBMITTED BEFORE THE CO URT. THE CIT(A) WAS OF THE VIEW THAT THE INCONSISTENCIES/ERRORS POI NTED OUT BY THE AO ARE MARGINAL AND KEEPING IN VIEW THE STRONG DOCUMEN TARY EVIDENCE AGAINST WHICH HAD NOT BEEN CONTROVERTED BY THE AO B Y BRINGING ANY ADVERSE EVIDENCE ON RECORD, IT WAS DIFFICULT TO REJ ECT THE APPELLANTS CLAIM. FINALLY, THE CIT(A) HELD THAT THE APPELLANT S CLAIM THAT 666.650 GMS OF GOLD JEWELLERY AND 416.200 GMS OF GOLD BAR W AS OWNED BY THE APPELLANT AND THE RENT OF JEWELLERY WEIGHING 2881.2 80 GMS BELONGED TO TWO PARTIES NAMELY M/S M.L. KANHAIYALLA JEWELLERS ( 1505.800 GMS) AND JANUBHAI JEWLLERRS, RAJKOT (1375.480 GKMS.). 5. HOWEVER, THE CIT(A), CONFIRMED THE ADDITION OF R S. 79,000/- ON ACCOUNT OF CASH SEIZED BY OBSERVING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS AND SUBMISS IONS AND ADMITTEDLY NO BOOKS OF ACCOUNTS FOR THE SUBJECT YEA R WERE MAINTAINED BY THE ASSESSEE AND THEREFORE THE CLAIM THAT THE CASH OF RS. 79,000/- WAS AVAILABLE AS CASH IN HAND WAS N OT CORRECT. THE BALANCE SHEET FILED LATER ON BY THE APPELLANT C AN BE AN AFTER THOUGHT. ACCORDINGLY, THE ADDITION MADE AT RS. 79,0 00/- AS UNEXPLAINED CASH IS HEREBY CONFIRMED. THUS, THIS GR OUND OF APPEAL IS DISMISSED. 6. THE LEARNED DR WHILE REFERRING PARA 9 AT PAGE 4 OF AOS ORDER, SUBMITTED THAT THE AO HAS GIVEN CATEGORICAL FINDING THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF JEWELLERY. THE AO HAS GIVEN REASONS CONSIDERING EACH EXPLANATION GIVEN BY THE ASSESSEE. THE LEARNED DR FURTHER SUBMITTED THAT THE CIT(A) HAS ACCEPTED THE ASSESSEES SUBMISSIONS WITHOUT APPRECIATING THE FACTS RECORDED BY THE AO. ITA NO. 4933/M/08 & C.O. 22/M/09 ANIL P. KHEMANI 7 7. THE LEARNED AR REITERATED THE SUBMISSIONS, WHICH WERE MADE BEFORE THE REVENUE AUTHORITIES. THE LEARNED AR WHIL E REFERRING PAGE 55 OF THE ASSESSEES PAPER BOOK SUBMITTED THAT THE ASS ESSEE HAS FULLY EXPLAINED THE GOLD JEWELLERY AND SEIZED CASH BY FUR NISHING RELEVANT VOUCHERS AND AFFIDAVITS. THE LEARNED AR FURTHER SUB MITTED THAT DURING THE SURVEY AT THE PREMISES OF M/S KANHAIYALAL JEWEL LERS GOLD ACCOUNT REGISTERS IN THE FORM OF GS11 AND ORNAMENT ACCOUNT REGISTER IN THE FORM OF GS-12 WERE FOUND DULY MAINTAINED AND ENTRIE S WERE FOUND RECORDED. IT IS ALSO THE SUBMISSION OF THE LEARNED AR THAT SECTION 132(4A) DOES NOT APPLY TO THE FACTS OF THE CASE UND ER CONSIDERATION. THE LEARNED AR FURTHER SUBMITTED THAT SECTION 132(4 A) IS NOT APPLICABLE TO FRAMING OF REGULAR ASSESSMENT. THE LE ARNED AR SUBMITTED THAT FOLLOWING SUMMARY WAS SUBMITTED PERT AINING RECONCILIATION OF GOLD JEWELLERY:- DATE VOU, NO. WEIGHT (IN GMS) PAGE JANUBHAI 03.08.04 15 (GUJARATI HAND-WRITTEN & NOT PRINTED 1755 480 ON APPROVAL 13 M. KANHAIYA 06.08.04 48 (HAND WRITTEN & NOT PRINTED) 1505.800 ON APPROVAL 14 CHENAJI NARSINGHJI 20.04.04 503 600.000 PURCHASED 15 M. KANHAIYALAL 20.04.04 13 66.650 ALLOY 16 M. KANHAIYALAL 06.08.04 47 666.650 17 TO SHREE RADHAKRISHN AN (JODHPUR) 07.08.04 19 ( DELIVERED) 3927.930 380.000 18 GOLD JEWELLERY 3547.930 TRISHLA ENT. (GOLD BULLION) 02.08.04 110 416.200 PURCHASED 19 3964.130 SEIZED 4380.330 SEIZED CASH ITA NO. 4933/M/08 & C.O. 22/M/09 ANIL P. KHEMANI 8 8. THE LEARNED AR ALSO DREW OUR ATTENTION TO PAGE 6 4 OF THE ASSESEES PAPER BOOK WHERE A COPY OF CERTIFICATE OF REGISTRATION UNDER SECTION 22/22A OF THE BOMBAY SALES TAX, 1959 IS PL ACED AND SUBMITTED THAT THE ASSESSEE HAS STARTED BUSINESS OF GOLD AND SILVER ORNAMENTS, ELECTRONICS WITH EFFECT FROM 15.05.2002. THE ENTRY RELATED TO BUSINESS CLASS OF GOOD DEALT IN GOLD, SILVER ORN AMENT AND ELECTRICS HAVE BEEN INSERTED IN THE SAID CERTIFICATE WITH EFF ECT FROM 15.05.2002. 9. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. THE ADMITTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAS EXPLAINED THE SEIZED GOLD ORNAMENTS BE FORE THE REVENUE AUTHORITIES AS WELL AS BEFORE US, WHICH HAS BEEN RE PRODUCED IN ARS SUBMISSIONS VIDE PARA 7 OF THIS ORDER. WE FIND THAT THE ASSESSEE FURNISHED TWO AFFIDAVITS RAMJEEVANLAL K. SONI, PART NER AND SHRI KETAN JAMNADAS PAREKH, PARTNER OF M/S JANUBHAI JEWELLERS, BEFORE THE AO. THE AFFIDAVIT OF ASSESSEE HAS ALSO BEEN FILED BEFOR E THE CIT(A). HOWEVER, THE ADMITTED FACTS OF THE CASE ARE THAT TH E AO DID NOT CROSS EXAMINE THE PARTIES. THE APEX COURT IN THE CASE OF MEHTA PARIKH & CO. V. CIT, 30 ITR 181 (SC), WHEREIN IT HAS BEEN LAID D OWN THAT IF NONE OF THE PARTIES CONSIDERED, IF NECESSARY, TO CROSS EXAM INE THE DEPONENT WITH REFERENCE TO THE STATEMENT MADE IN THE AFFIDAV IT, UNDER THE CIRCUMSTANCES, IT WAS NOT OPEN TO THE REVENUE TO CH ALLENGE THE CORRECTNESS OF THE STATEMENT MADE BY THE DEPONENT I N THE AFFIDAVIT. IN OTHER WORDS, CONSEQUENTIALLY, THE ASSESSEE WAS E NTITLED TO ASSUME THAT THE AUTHORITIES WERE SATISFIED WITH THE AFFIDA VIT AS SUFFICIENT PROOF ON THIS POINT. IN THE PRESENT CASE, IN THE AFFIDAV ITS FILED BY THE PARTIES, IT IS CLEARLY STATED THAT 666.650 GMS OF G OLD JEWELLERY AND 416.200 GMS GOLD BAR WERE STOCK-IN-TRADE OF THE ASS ESSEE AND THE SAME WERE SHOWN IN THE BALANCE SHEET PREPARED AS ON 31.03.2005 (AS STATED BY THE ASSESSEE IN HIS AFFIDAVIT DATED 29 TH APRIL08). THE BALANCE GOLD JEWELLERY OF 2881.880 GMS BELONGED TO THE FOLLOWING PARTIES:- 1. M/S M.L. KANHAIYALAL JEWELLERS, MUMBAI 1505.800 GMS ITA NO. 4933/M/08 & C.O. 22/M/09 ANIL P. KHEMANI 9 2. M/S JANUBHAI JEWELLERS, RAJKOT (1755.480 380.000) 1375.480 GMS TOTAL 2881.280 GMS ============ 380.00 GRAMS OF GOLD DELIVERED TO THE PARTY SHREE R ADHAKRISHNAN. 10. IN THE LIGHT OF THE LAW LAID DOWN BY THE APEX C OURT THE CONTENTS OF THE AFFIDAVITS ARE TO BE ACCEPTED AS CORRECT AND IN THE LIGHT OF THAT, WE FIND THAT THE ASSESSEE HAS FULLY RECONCILED AND EXPLAINED THE GOLD/GOLD ORNAMENTS. IT IS ALSO TO BE NOTED HERE TH AT WHEN THERE IS A CATEGORICAL SUBMISSION THAT SOME PART OF GOLD AND G OLD JEWELLERY BELONGING TO OTHER PARTIES RECEIVED ON APPROVAL BAS IS, THE AO OUGHT TO HAVE EXAMINED THOSE PARTIES TO ASCERTAIN THE CORREC T FACTS. IN THE CASE UNDER CONSIDERATION, THE AO DID NOT MAKE ANY ENQUIR Y FROM THOSE PARTIES AND WITHOUT ANY ENQUIRY AND UNLESS FOUND CO NTRARY MATERIAL, THE ADDITION CANNOT BE SUSTAINED MERELY ON THE BASI S OF ASSUMPTIONS, PRESUMPTIONS, CONJECTURES AND ON ACCOUNT OF LACK OF ENQUIRY BY THE AO. THE CIT(A) HAS GIVEN A CATEGORICAL FINDING THA T DURING THE COURSE OF SURVEY CONDUCTED AT THE BUSINESS PREMISES IN THE CASE OF SHRI ANIL KHIMANI ON 11.8.04 AND AT THE PREMISES OF M/S KANHA IYALAL JEWLLERS AND GOLD ACCOUNT REGISTERS IN THE FORM OF GS11 AND ORNAMENT ACCOUNT REGISTER IN THE FORM OF GS12 WERE FOUND DULY MAINTA INED AND NECESSARY ENTRIES OF PURCHASE OF GOLD ORNAMENTS WER E RECORDED IN THE REGISTER. FURTHER DURING SIMULTANEOUS ENQUIRIES CO NDUCTED AT THE PREMISES OF KANHAIYALAL JEWELLERS, RAMJEEVANLAL K. SONI, THE PARTNER OF THE FIRM CONFIRMED THE TRANSACTIONS WITH THE ASS ESSEE. NECESSARY ENTRIES OF THE ABOVE TRANSACTIONS WERE FOUND RECORD ED IN THE STOCK REGISTER. THE ASSESSEE ALSO FILED CONFIRMATIONS/STA TEMENTS BY THIRD PARTIES. THE ASSESSEE HAS SUBSTANTIAL EVIDENCE IN S UPPORT OF HIS CLAIM. WHEN THE ASSESSEE FURNISHED SUFFICIENT MATER IALS AND THE AO CHOSE NOT TO EXAMINE THOSE PARTIES, IN THAT CIRCUMS TANCES, IT CAN BE PRESUMED THAT THE AO WAS SATISFIED WITH THE MATERIA L FURNISHED BY THE ASSESSEE. UNDER THE CIRCUMSTANCES, THERE IS NO QUE STION OF GIVING ONE MORE INNINGS TO THE AO TO IMPROVE THEIR CASE. IN TH E LIGHT OF ABOVE DISCUSSION, WE CONFIRM THE ORDER OF CIT(A) IN DELET ING THE ADDITION ITA NO. 4933/M/08 & C.O. 22/M/09 ANIL P. KHEMANI 10 MADE OF RS. 22,07,135/- ON ACCOUNT OF SEIZED GOLD JEWELLERY/ORNAMENTS. C.O. NO. 22/M/2009 BY THE ASSESSEE 11. THE ASSESSEE HAS RAISED THE FOLLOWING CROSS OBJ ECTIONS:- 1. THE LEARNED CIT(A) ERRED IN NOT DISPOSING OF THE FOLLOWING GROUND OF APPEAL NO. 1 REGARDING JURISDICTION OF TH E AO TO FRAME THE ASSESSMENT ORDER. THE LEARNED DC OF IT HAS ERRED IN ASSUMING JURISD ICTION AND THEREBY ERRED IN FRAMING THE ASSESSMENT. NO REASONS HAVE BEEN ASSIGNED BY HIM FOR NOT ADJUDI CATING THE GROUND OF APPEAL. 2. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LEARNED AO IN MAKING AN ADDITION OF RS. 79,000/- AS UNEXPLA INED CASH ON THE GROUND THAT THE APPELLANT HAS NOT MAINTAINED BO OKS OF ACCOUNT. 12. GROUND NO.1 HAS NOT PRESSED BY THE LEARNED AR, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 13. IN RESPECT OF GROUND NO. 2, THE LEARNED AR HAS SUBMITTED THAT CIT(A) OUGHT NOT TO HAVE UPHELD THE FINDING OF THE AO THAT THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT. THE A SSESSEE FILED BALANCE SHEET AS ON 31 ST MARCH, 2005 WITH THE RETURN OF INCOME FOR THE RELEVANT PREVIOUS YEAR AND ALSO PRODUCED THE SA ME INCLUDING CASH BOOK DURING THE COURSE OF ASSESSMENT. THE LEARNED A R CONTENDED THAT THE OBSERVATION OF THE REVENUE AUTHORITIES THAT NO BOOKS OF ACCOUNT WERE MAINTAINED BY THE ASSESSEE IS FACTUALLY INCORR ECT. THE LEARNED AR SUBMITTED THAT CASH SUMMARY WAS GIVEN FROM TIME TO TIME TO THE AO AS WELL AS TO THE CIT(A). 14. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. ITA NO. 4933/M/08 & C.O. 22/M/09 ANIL P. KHEMANI 11 15. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES AND PERUSED THE RECORD. THE CIT(A) CONFIRMED THE ADDITI ON OF RS. 79,000/- ON ACCOUNT OF CASH IN HAND THAT THE BALANCE SHEET F ILED BY THE ASSESSEE IS AN AFTER THOUGHT. THE ASSESSEE FILED CA SH SUMMARY FOR THE PERIOD 01.04.2004 TO 16.08.2004 WHEREIN CLOSING CAS H BALANCE AS ON 16.08.2004 IS RS. 1,12,335.34. IN THE LIGHT OF DETA ILED DISCUSSION ON THE SIMILAR ISSUE IN REVENUES APPEAL VIDE PARAS 9 & 10 OF THIS ORDER, WE ARE OF THE VIEW THAT CIT(A) IS NOT CORRECT IN CO NFIRMING THE ADDITION OF RS. 79,000/- MERELY OBSERVING THAT THE ASSESSEE FILED CASH BALANCE SHEET LATER ON IS AN AFTER THOUGHT WAS WITHOUT EXA MINING THE CONTENTS OF THE BALANCE SHEET BY ANY OF THE AUTHORITIES. IN THE LIGHT OF ABOVE DISCUSSION, WE DELETE THE ADDITION OF RS. 79,000/- ON ACCOUNT OF CASH IN HAND. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND C.O. OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED ON THIS 12 TH DAY OF MARCH, 2010 SD/- SD/- (R.K. GUPTA) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED: 12 TH MARCH, 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV ITA NO. 4933/M/08 & C.O. 22/M/09 ANIL P. KHEMANI 12 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 5.03.10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 09.03.10 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER