Iftikhar Ahmed, Ghaziabad V. DCIT, New Delhi

ITA 7086/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3292 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 31-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Keywords: Gift; Search and seizure; Question of law
• Section: 143(3); 132

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.:- 1810/DEL /2015 ASSESSMENT YEAR: 2012-13 RAKESH MAHAJAN J-PH-01, PEARL GATEWAY TOWER, SECTOR-44, NOIDA 201301 PAN AFKPM6342Q VS. DCIT, CENTRAL CIRCLE 3, NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 7086/DEL/2014 ASSTT. YEAR 2012-13 IFTIKHAR AHMED A-1201, PHASE-1, GH-5, NIRALA EDEN PARK, AHINSAKHAND-II, INDIRAPURAM GHAZIABAD PAN ADRPA1569N VS. DCIT, CENTRAL CIRCLE 3, NEW DELHI. (APPELLANT) (RESPONDENT) O R D E R PER AMIT SHUKLA, J.M . ASSESSEE BY: SHRI RAHUL KHARE, ADVOCATE DEPARTMENT BY : SMT. PARAMITA TRIPATHY, CIT(DR) DATE OF HEARING 09/11/2017 DATE OF PRONOUNCEMENT 15/11/2017 ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 2 THE AFORESAID APPEALS HAVE BEEN FILED BY THE ABOVE M ENTIONED ASSESSES AGAINST SEPARATE IMPUGNED ORDERS OF EVEN DA TE, 7 TH OCTOBER, 2014 IN THE CASES OF SHRI IFTIKHAR AHMED PASSED BY L D. CIT(A) II NEW DELHI ; AND ORDER DATED 17 TH MARCH, 2015 IN THE CASE OF SHRI RAKESH MAHAJAN PASSED BY THE LD. CIT(A) XXVI NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE ASSESSMENT YEAR 2012-13. SINCE THE ISSUES INVOLVED IN BOTH THE APPEALS ARE COMMON AR ISING OUT OF IDENTICAL SET OF FACTS, THEREFORE, THEY WERE HEARD TOGETH ER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. AS A LEAD CASE WE ARE TAKING UP THE APPEAL IN THE CASE OF SHRI RAKESH MAHA JAN BEING ITA NO.,1810/DEL/2015 WHEREIN THE ASSESSEE HAS CHALLENG ED TWO ADDITIONS, VIZ., FIRSTLY, ADDITION OF RS. 5,34,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH FOUND DURING THE COURSE OF SEARCH;: AND SECONDLY , ADDITION OF RS. 10,52,124/- MADE ON ACCOUNT OF ALLEGE D UNEXPLAINED JEWELLERY FOUND DURING SEARCH. 2. THE BRIEF FACTS QUA THE ISSUE INVOLVED ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 (4) WAS CARRIED OUT ON 4.8 .2011 AT THE BUSINESS AND RESIDENTIAL PREMISES OF NIRALA GROUP WH ICH ALSO COVERED THE PREMISES OF ASSESSEE. DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF SHRI RAKESH MAHAJAN, CASH AM OUNTING TO RS. 5,34,000/- WAS FOUND. IN HIS EXPLANATION, THE ASSESSE E BEFORE THE AO SUBMITTED THAT HE HAS RECEIVED SUM OF RS. 5 LACS FROM M /S. NIRALA DEVELOPERS PVT. LTD. AS IMPREST ON 3.8.2011 AND IN SU PPORT, THE ASSESSEE SUBMITTED A COPY OF CASH BOOK FROM THE PERIO D 1.8.2011 TO 31.8.2011 OF THE SAID COMPANY. THE LD. AO NOTED THAT TH ERE IS NO ENTRY OF RS. 5 LACS IN THE NAME OF IMPREST ACCOUNT OF S HRI RAKESH MAHAJAN AS ON 3.8.2011 AND NEITHER THERE IS ANY ENTRY OF IMPREST IN THE NAME OF ANY DIRECTOR IN THE BOOKS OF M/S. NIRALA D EVELOPERS PVT. ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 3 LTD. HE HELD THAT, SINCE ASSESSEE IS DIRECTOR IN VARIO US GROUP COMPANIES AND LOOKING AFTER DAY TO DAY ACTIVITIES OF TH E COMPANY AND DURING THE SEARCH HE COULD NOT EXPLAINED THAT HE HAD RE CEIVED IMPREST MONEY FROM M/S. NIRALA DEVELOPERS PVT. LTD. AND THERE FORE, HE TREATED THE SAID CASH AMOUNTING TO RS. 5,34,000/- AS UNEXPLA INED MONEY U/S. 69A. 3. BEFORE THE LD. CIT (A), THE ASSESSEE EXPLAINED THAT CASH FOUND AND SEIZED FROM THE GROUP WAS AS UNDER :- S. NO. PREMISES OF ASSESSEES CASH FOUND (RS.) CASH SEIZED (RS.) 1. RAKESH MAHAJAN 5,34,000 5,00,000 2. SURESH KUMAR GARG 7,48,000 6,48,000 3. IFTIKHAR AHMED 42,50,000 42,50,000 4. NIRALA DEVELOPERS PVT. LTD. 13,81,000 13,81,000 TOTAL 69,13,000 67,79,000 IT WAS FURTHER SUBMITTED THAT IN THE ENTIRE NIRALA GROUP SU M OF RS. 10 CRORES WAS DISCLOSED AND OFFERED TO TAX OUT OF WHICH S UM OF RS. 1,95,47,000/- WAS OFFERED IN THE CASE OF NIRALA DEV ELOPERS PVT. LTD. FOR THE ASSESSMENT YEAR 2012-13 AND SUBMITTED THAT THE SA ME SHOULD BE TELESCOPED WITH ANY KIND OF ADDITION MADE. IT WAS FURTHER SUBMITTED THAT THE CASH FOUND FROM THE RESIDENCE OF ASSE SSEE AND ANOTHER DIRECTOR, SHRI IFTIKHAR AHMED WAS PART OF CAS H SHOWN AS CASH-IN-HAND AS ON 3.8.2011 IN THE CASH BOOK OF THE COMPANY AND ALSO THE RELEVANT ENTRIES THEREIN WAS POINTED OUT. FOR TH E SAKE OF READY ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 4 REFERENCE THE RELEVANT EXTRACT OF ENTRIES EXPLAINED BETW EEN THE DATE 1.8.2011TO 12.8.2011 IS REPRODUCED AS UNDER:- DATE PARTICULARS VCH TYPE VCH/ INV NO. DEBIT CREDIT 01.08.2011 TO OPENING BALANCE 54,00,000 01.08.2011 TO BANK OF BARODA 02/09 CONTRA 62 1,00,0 00 01.08.2011 BY SITE OFF.IMPREST A/C-2 JOURNAL 1273 1,00,000 01.08.2011 TO F307 ABHISHEK SINDAL RECEIPT 229 2,07 ,550 01.08.2011 BY BANK OF BAROEDA 02/09 CONTRA 63 2,07 ,550 03.08.2011 TO E701 SHISHU PAL RECEIPT 234 59,500 03.08.2011 TO F707 SUMIT VOHRA RECEIPT 235 182,350 03.08.2011 BY(AS PER DETAILS) IMPREST A/C IFTIKHAR AHMED IMPREST A/C RAKESH MAHAJAN IMPREST A/C SKG PAYMENT 42,50,000DR 5,00,000 DR 6,48,000 DR 596 53,98,000 03.08.2011 TO IMPREST A/C RECEIPT 236 10,17,371 06.08.2011 BY ADVACNE TAX A.Y. 12-13 PAYMENT 612 1 2,61,221 11.08.2011 TO BANK OF BARODA 02/09 CONTRA 65 1,00, 000 12.08.2011 BY SITEOFF.IMPREST A/C-2 PAYMENT 652 1 ,00,000 THUS IT WAS SUBMITTED THAT THE CASH FOUND FROM THE RESIDE NCE OF THE ASSESSEE STANDS FULLY EXPLAINED OUT OF CASH-IN-HAN D REFLECTED IN THE BOOKS OF THE NIRALA DEVELOPERS PVT. LTD.; AND ARE A LTERNATIVELY IT IS COVERED IN THE SURRENDER OF RS.1,95,47,000/- MADE IN THE CASE OF THE SAID COMPANY. ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 5 4. HOWEVER, THE LD. CIT(A) REJECTED THE ASSESS EES CONTENTION ON THE GROUND THAT:- FIRSTLY, THE ASSESSEES EXPLANATION GIVES CONTRADICTORY CLAIM O F OWNERSHIP AND DOES NOT LEAD TO INFERENCE THAT CASH FOU ND FROM THE RESIDENCE OF THE ASSESSEE BELONGING TO NIRALA DEVE LOPERS PVT. LTD.; SECONDLY, THE ASSESSEES CONTENTION THAT CASH OF RS. 5,34,000/- WAS INCLUDED IN THE DISCLOSURE OF RS.1,95,47,000/- M ADE IN THE CASE OF NIRALA DEVELOPERS PVT. LTD. IS NOT CORRECT, B ECAUSE THERE IS NO LINKAGE OF SUCH CLAIM GIVEN BY THE ASSESSEE; THIRDLY, THE ENTRIES OF THE CASH BOOK OF NIRALA DEVELOPERS PV T. LTD., FILED BEFORE THE AO GIVES A DIFFERENT NARRATION AND DO NOT MATCH ENTRIES APPEARING IN THE CASH BOOK OF THE SAID CO MPANY. IT WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS . FOURTHLY, HE ALSO HIGHLIGHTED FOLLOWING DISCREPANCIES FROM THE ENTRIES IN THE CASH BOOK OF THE COMPANY:- THE APPELLANT HAS CLAIMED THAT RS. 53,98,000 (COMPR ISING OF RS. 5 LAKHS DEBITED TO HIS ACCOUNT, RS. 42.50 LAKHS DEBITED TO THE ACCOUNT OF IFTIKHAR AHMED AND RS. 6.48 LAKHS DE BITED TO SURESH KUMAR GARG), WAS PAID INTO THEIR RESPECTIVE IMPREST A/C THROUGH VOUCHER NO. 596 ON 03.08.2011, WHEREAS, THE CASH BOOK FILED IN THE ASSESSMENT PROCEEDINGS OF NIRALA DEVELOPERS P LTD. SHOWS PAYMENT OF RS. 53,98,000 TOWARDS ADVANCE TAX FOR A.Y. 12-13 BY VOUCHER NO. 611 ON 06.08.2011. CONTRARY TO THE APPELLANTS CLAIM, NO IMPREST ACCOU NTS OF DIRECTORS APPEAR IN THE CASH BOOK OF NIRALA DEVELO PERS P LTD. (THOUGH THERE IS AN IMPREST ACCOUNT FOR SITE OFFICE ) ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 6 AS PER THE DOCUMENT RELIED BY THE DIRECTOR, ADVANCE TAX PAID BY NIRALA DEVELOPERS P LTD. ON 06.08.2011 AS PER VOUCH ER NO. 612 WAS ONLY RS. 12,61,221 WHEREAS NIRALA DEVELOPERS P LTD HAS CLAIMED AS PER ITS CASH BOOK, ADVANCE TAX OF RS. 53 ,98,000 AND RS. 13,81,000, PAID AS PER VOUCHER NO. 611 AND 612 RESPECTIVELY ON 06.08.2011. THERE IS ALSO DISCREPANCY IN RESPECT OF THE RECEIPT OF RS. 10,17,371 IN IMPREST A/C WHICH IS SHOWN IN THE DOC UMENT RELIED BY THE APPELLANT TO HAVE BEEN RECEIVED ON 03 .08.2011 BY VOUCHER NO. 236, WHEREAS THE CASH BOOK FILED BY NIR ALA DEVELOPERS P LTD. SHOWS THAT THE SUM WAS RECEIVED O N 06.08.2011 BY VOUCHER NO. 245. LASTLY, HE CAME TO THE CONCLUSION THAT DOCUMENT RELIED BY THE ASSESSEE IS PATENTLY INCORRECT, FABRICATED AND UNRELI ABLE, THEREFORE, SAME IS RELIABLE TO BE REJECTED AND THUS, A SSESSEES EXPLANATION ON THE CASH SEIZED FROM HIS RESIDENCE FO UND IS UNEXPLAINED. 5. BEFORE US, THE LD. COUNSEL DREW OUR ATTENTION TO TH E CASH BOOK OF THE NIRALA DEVELOPERS PVT. LTD. FOR THE PERIOD OF 1S T OF APRIL, 2011 TO 30 TH SEPTEMBER 2011 AND SPECIFICALLY DREW OUR ATTENTION TO THE ENTRIES MADE FROM 3 RD AUGUST TO 6 TH AUGUST, 2011 AND POINTED OUT THAT ON THE CREDIT SIDE AN AMOUNT OF RS.53,98,000/- WAS APPEARING WHICH MENTIONED IMPREST ACCOUNT AND THIS IMPREST ACCOUNT CON TAINED THE CASH LYING WITH THE DIRECTORS NAMELY; (I) IFTIKHAR AH MED RS. 42,50,000/-; (II) RAKESH MAHAJAN - RS. 5,00,000/-; AND III) SURESH KUMAR GARG - RS, 6,48,000/-. DURING THE COURSE OF SE ARCH AND SEIZURE THE CASH IN HAND OF RS. 53,98,000/- AS REFLECTED IN THE COMPANYS ACCOUNT WAS NOT FOUND FROM THE PREMISES OF THE COMPAN Y AS THESE CASH WERE LYING WITH THE DIRECTOR OF THE COMPANY. AT THE TIME OF SEARCH ONLY AND ALSO BEFORE THE AO IT WAS CATEGORICALL Y STATED AND ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 7 SUBMITTED THAT THE CASH FOUND FROM THE RESIDENCE OF THESE DIRECTORS WERE THE CASH BELONGING TO THE COMPANY AND DULY REFLEC TED IN THE CASH BOOK OF THE COMPANY. THE OBSERVATION AND FINDINGS OF THE LD. CIT (A) TO POINT OUT THAT THE ENTRIES DO NOT MATCH AND THERE DISCREP ANCY IS ABSOLUTELY ERRONEOUS, BECAUSE RS. 53,98,000/- WAS ON ACCOUNT OF IMPREST ACCOUNT AND NOT THE ADVANCED TAX BECAUSE THE ADV ANCED TAX ON THE SAME DATE WAS SEPARATELY SHOWN AS RS. 13,81,0 00/- AND IT WAS ON AFTER TWO DAYS OF OFFER OF UNDISCLOSED INCOME CAS H WAS TO BE DEPOSITED FOR ADVANCE TAX. THUS, THE AMOUNT OF CASH FO UND DULY STANDS DULY EXPLAINED FROM THE CASH-IN-HAND OF THE ASS ESSEE COMPANY. 6. ON THE OTHER HAND LD. CIT DR STRONGLY RELIED UPON THE ORDER OF THE LD. CIT(A) AND POINTED OUT THAT THE EXPLANATION GIVEN BY THE LD. COUNSEL IS AGAIN NOT CORRECT, AS LD. CIT(A) HAS CLEA RLY BROUGHT OUT THAT THE SUM OF RS. 53,98,000/- IS APPEARING ON THE DATE 6 .8.2011 AND SHOWS THE PAYMENT OF ADVANCE TAX. THUS SUCH A CASH CAN NOT BE SAID TO BE AVAILABLE AS SOURCE OF CASH FOUND AT THE PREMIS ES OF THE ASSESSEE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AS WELL THE MA TERIAL REFERRED TO BEFORE US. THE MAIN ISSUE INVOLVED HERE IS THAT, WHE THER THE CASH AMOUNTING TO RS. 5,34,000/- FOUND FROM THE RESIDENCE OF TWO DIRECTORS NAMELY, SHRI RAKESH MAHAJAN AND SHRI IFTIKHAR AHMED (CASH OF RS. 42,50,000/-) IS FROM THE SOURCE OF CASH-IN-HAND OF TH E COMPANY M/S.NIRALA DEVELOPERS PVT. LTD. IN WHICH THESE TWO PE RSON WERE DIRECTORS. THE CONTENTION OF THE ASSESSEE IS THAT, AS O N THE DATE OF SEARCH, I.E., 4.8.2011 THERE WAS CASH AVAILABLE IN T HE BOOKS OF NIRALA ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 8 DEVELOPERS AND THESE CASH AMOUNT WERE KEPT AT THE RESIDE NCE OF THE DIRECTORS. THUS, THE CASH FOUND STANDS EXPLAINED FROM THE SOURCE OF CASH-IN-HAND WITH THE COMPANY. FROM THE PERUSAL OF THE RELEVANT CASH BOOK OF THE COMPANY, THE COPY OF WHICH IS APPEARING A T PAGE 16 OF THE PAPER BOOK FOR THE PERIOD 30 TH JUNE 2011 TO 7.9.2011, WE FIND THAT THERE IS A HUGE OPENING BALANCE UP TILL 3.8.2011 AND AS ON THAT DATE THE AVAILABILITY OF CASH IN THE CASH BOOK IS RS. 53,9 8,000/-. OUT OF THIS CASH, ADVANCE TAX HAS BEEN PAID TOWARDS THE INCOME OF FERED DURING THE COURSE OF SEARCH ON 6.8.2011. THE CASH OF RS. 53 ,98,000/- AS ON 3.8.2011 HAS BEEN STATED TO BE LYING WITH THE THREE DIREC TORS OF THE COMPANY. IT IS NOT THE CASE OF THE DEPARTMENT AT ALL THAT THE CASH-IN- HAND AS RECORDED IN THE SAID BOOKS OF ACCOUNTS WAS F OUND FROM THE PREMISES OF THE COMPANY, I.E., M/S. NIRALA DEVELOPER S PVT. LTD. IF THE CASH RECORDED IN THE COMPANYS BOOK HAS BEEN STATED TO BE LYING WITH THE DIRECTORS WHICH WAS NOT FOUND FROM THE PREMISES OF THE COMPANY AND ALSO AT THE TIME OF THE SEARCH AND DURING THE COUR SE OF THE ASSESSMENT PROCEEDINGS EXPLANATION WAS GIVEN THAT THE SAME CASH WAS FOUND FROM THEM, THEN WITHOUT THEIR BEING ANY CONTRA RY MATERIAL TO REBUT SUCH EXPLANATION, IT CAN BE SAFELY INFERRED THA T THE CASH OF THE COMPANY WAS LYING WITH THE DIRECTORS. OTHERWISE, THE QU ESTION WOULD BE ARISE THAT, IF ONE DAY PRIOR TO THE SEARCH THE CASH-I N-HAND OF RS. 53,98,000/- AS RECORDED IN CASH BOOK OF THE COMPANY IS NOT FOUND DURING THE COURSE OF SEARCH THEN WHERE HAS IT GONE. I F THE EXPLANATION WAS GIVEN THAT IT DEBITED TO THE INTEREST ACCOUNT OF THE DI RECTORS AND THE SAME AMOUNT HAS BEEN FOUND FROM THE POSSESSION OF THE DIRECTORS, THEN THE PREPONDERANCE OF THE PROBABILITIES LIES IN FAV OUR OF THE ASSESSEE THAT, IT IS THE SAME CASH OF THE COMPANY WHICH HAS BEEN FOUND FROM THEIR PREMISES. ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 9 8. COMING TO THE VARIOUS OBSERVATIONS OF THE LD. CIT(A) POINTING OUT THE VARIOUS DISCREPANCY IN THE ENTRIES IN THE CASH BOOK , IN OUR HUMBLE OPINION, SUCH OBSERVATIONS ARE NOT CORRECT FROM THE VER Y FACE OF THE CASH BOOK, BECAUSE HE HAS COMPLETELY MISSED THE POIN T A VERY VITAL FACT, WHETHER ANY CASH IN HAND WAS AVAILABLE ON THE DA TE OF SEARCH OR NOT. HE IS ONLY GOING BY THE FACT THAT AN AMOUNT OF RS. 53,98,000/- HAS BEEN SHOWN AGAINST ADVANCE PAYMENT OF TAX ON 6.8.2 011. THE PAYMENT OF ADVANCE TAX ON 6.8.2011 IS MERELY UTILISATIO N OF CASH FOR THE PAYMENT OF TAX FOR THE AMOUNT OFFERED BY THE COMPAN Y DURING THE COURSE OF THE SEARCH. HE HAS NOT REBUTTED THAT ON DATE OF SEARCH, WHETHER THIS MUCH AMOUNT OF CASH WAS AVAILABLE IN THE CASH BOOK OR NOT; AND WHETHER AT THE TIME OF SEARCH THE CASH RECORDED IN THE CASH BOOK WAS EITHER FOUND FROM THE PREMISES OF THE COMPAN Y OR FROM SOMEWHERE ELSE, ESPECIALLY WHEN GLOBAL SEARCH WAS C ARRIED OUT AT VARIOUS PLACES OF THE NIRALA GROUP. SO FAR AS HIS AL LEGATION THAT ASSESSEE HAS BEEN GIVING VARIED EXPLANATION THAT, FIR STLY, THE SAID CASH FOUND SHOULD BE INCLUDED IN THE DISCLOSURE OF RS. 1, 95,47,000/-; AND SECONDLY, THE SOURCE OF CASH IS EXPLAINED FROM CASH -IN-HAND OF THE COMPANY, IN OUR OPINION IT DOES NOT TANTAMOUNT TO CHANG ING OF STAND, ALBEIT THE ASSESSEE HAS EXPLAINED THAT WHATEVER CASH HAS BEEN FOUND, THE SAME SHOULD BE CONSIDERED TO BE COVERED UNDER THE HUGE DISCLOSURE MADE BY THE COMPANY AS ULTIMATELY THE CASH FOUND BELONG TO THE COMPANY ONLY. NOWHERE THE ASSESSEE HAD STATED THA T THE CASH BELONGS TO THE ASSESSEE AND THEN HE HAS CHANGED THE STAN D THAT IT IS OUT OF THE CASH BOOK OF THE COMPANY. CONSISTENTLY ASSE SSEE HAS BEEN STATING THAT THE CASH FOUND IS FROM THE COMPANYS ACCOUNT WHICH IS DULY RECORDED IN ITS BOOK. THUS, WE DO NOT FIND ANY REASON TO DISBELIEF THE ASSESSEE THAT THE SOURCE OF THE CASH FOUND IS OUT OF THE CASH-IN- ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 10 HAND OF THE COMPANY AS RECORDED IN ITS BOOKS OF ACCOU NT. ACCORDINGLY, THE ADDITION OF RS. 5 LACS IS DIRECTED TO BE DELETED. 9. SO FAR AS THE CASH AMOUNTING OF RS. 34,000/- IS CONCERNED WHICH IS NOT PART OF THE IMPREST ACCOUNT, WE ARE OF THE OPINION THAT SINCE IT IS VERY SMALL AMOUNT OF CASH AND WHICH COULD BE OUT OF PERSONAL SAVINGS ETC. FROM THE SOURCE OF INCOME EARNE D BY THE ASSESSEE, NO ADVERSE INFERENCE SHOULD BE DRAWN. THU S, WE DIRECT THE DELETION OF ENTIRE CASH OF RS. 5,34,000/-. 10. AS REGARD THE SECOND ISSUE IS CONCERNED, I.E. , ADDITION ON ACCOUNT OF UNEXPLAINED JEWELLERY, THE BRIEF FACTS ARE THAT, DURING THE COURSE OF SEARCH AND SEIZURE CARRIED AT THE RESIDENTIA L PREMISES OF THE ASSESSEE AND HIS LOCKER, JEWELLERY WEIGHING 1182 GR AMS WAS FOUND, WHICH WAS VALUED AT RS. 30,80,840/-. THE DETAILS OF W HICH IS APPEARING AT PAGE 2 OF THE ASSESSMENT ORDER. IT WAS ACC EPTED BY THE ASSESSEE THAT NEITHER HE NOR HIS FAMILY MEMBERS WERE F ILING WEALTH TAX RETURN NOR COULD THE ASSESSEE SUBSTANTIATE WITH THE DOCUM ENTARY EVIDENCE THE SOURCE OF ACQUISITION, EXCEPT FOR STATING TH AT ALL THESE JEWELLERIES WERE RECEIVED ON THE OCCASION OF MARRIA GES, BIRTH OF THE CHILDREN AND OTHER SOCIAL CEREMONIES OVER THE PERIOD OF TIME. THE JEWELLERY FOUND BELONGS TO HIS WIFE, MOTHER AND HIS UNMARRIED DAUGHTER AND MINOR CHILDREN. HOWEVER, THE AO HELD THA T OUT OF THE SAID VALUE OF JEWELLERY OF RS. 30,80,840/-, JEWELLE RY TO THE EXTENT OF RS. 10,52,124/- CAN BE TREATED TO BE UNEXPLAINED AND AFTER GIVING BENEFIT OF OTHER JEWELLERY IN VIEW OF THE INSTRUCTION NO. 191 6 ISSUED BY CBDT 11.05.1994. ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 11 11. LD. CIT (A) TOO HAS CONFIRMED THE SAID ADDI TION AND HELD THAT THE SHELTER SOUGHT BY THE ASSESSEE ON CBDT INSTRUCTIO N NO. 1916 DATED 11.5.94, IS ONLY FOR THE PURPOSE OF SEIZURE OF JEWELLERY AND NOT FOR EXPLAINING THE SOURCE OF ACQUISITION. IN SUPPORT , HE ALSO RELIED UPON THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF VGP RAVIDAS AND V.G. SELVARAJ VS. CIT, 2014 TIOL-1731 -HC-MAD-IT. 12. BEFORE US, LD. COUNSEL SUBMITTED THAT LOOKING T O THE FACT THAT TOTAL JEWELLERY FOUND WAS 1236.24 GRAMS AND ASSESSEE HAS FAMILY MEMBERS CONSISTING OF TWO MARRIED WOMEN, I.E., WIFE AND MOTHER AND ONE UNMARRIED DAUGHTER AND TWO MINOR CHILDREN. IF ON E GOES BY THE CIRCULAR ISSUED BY THE CBDT THEN ALMOST THE ENTIRE JEWE LLERY STANDS EXPLAINED. IF THE TOTAL JEWELLERY OF THE ENTIRE FAMILY M EMBERS AS PER THE CBDT INSTRUCTION IS TO BE PRESUMED, THEN IT COMES TO 170 0 GRAMS AS AGAINST THIS, ONLY 1236.24 GRAMS HAVE BEEN FOUND. THU S, SUCH A JEWELLERY CANNOT BE TREATED AS UNEXPLAINED. 13 ON THE OTHER HAND, LD. CIT DR STRONGLY RELIE D UPON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE CBDT INSTRUCTION A RE ONLY FOR THE PURPOSE OF SEIZURE AND NOT TO EXPLAIN THE SOURCE. NOWHERE THE ASSESSEE BEFORE THE AO OR LD. CIT(A) COULD EXPLAIN THE SOURCE OF ACQUISITION OF JEWELLERY AND LD. AO HAS ALREADY GIV EN A HUGE BENEFIT OF THE JEWELLERY FOUND BASED ON THE CBDT INSTRUCTION. HENC E, NO FURTHER RELIEF SHOULD BE GIVEN. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS WELL AS MA TERIAL REFERRED TO BEFORE US. THE ENTIRE DETAILS OF JEWELLERY FOUND FROM THE PREMISES AND LOCKER OF THE ASSESSEE AS WELL AS HIS MOTHER WERE AS UNDER:- ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 12 PERSONS SEARCH AT JEWELLERY FOUND- WEIGHT (GRAMS) JEWELLERY FOUND- VALUE (RS.) JEWELLERY SEIZED WEIGHT (GRAMS) JEWELLERY SEIZED VALUE (RS.) RAKESH MAHAJAN (APPELLANT) RESIDENCE BANK LOCKER 209.43 405.17 4,49,765 10,52,124 - 405.17 - 10,52,124 RENUKA MAHAJAN (WIFE) BANK LOCKER 232.17 5,93,128 - - KAUSHALYA MAHAJAN (MOTHER) BANK LOCKER RESIDENCE 319.00 8,30,464 - - TOTAL 1236.24 30,80,840 405.17 10,52,124 ADMITTEDLY THE ASSESSEE COULD NOT GIVE ANY EVI DENCE IN THE FORM OF PURCHASE VOUCHERS OR BILLS FOR ACQUISITION OF JE WELLERY. HOWEVER, THE ASSESSEES CONTENTION HAS BEEN THAT THESE JEWELLERIES HA VE BEEN ACQUIRED OVER THE PERIOD OF TIME AND ALSO RECEIVED A T THE TIME OF MARRIAGES AND VARIOUS SOCIAL FUNCTIONS. THE AO HAS GIVEN PART BENEFIT OF CBDT INSTRUCTION NO.1916 DATED 11 TH MAY, 1994 WHICH LAYS DOWN THE GUIDELINES FOR SEIZURE OF JEWELLERY AND ORNAMENTS IN THE COURSE OF SEARCH. THE LD. CIT (A) HAS HELD THAT THE SAID CIRCUL AR IS NOT MEANT FOR PROVING THE SOURCE OF ACQUISITION BUT IT IS MERELY LA YS DOWN GUIDELINES FOR SEIZURE OF THE JEWELLERY AND IN SUPPORT HE HAS AL SO REFEREED TO JUDGMENT OF HONBLE MADRAS HIGH COURT. ON THE CONTRARY , WE FIND THAT HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RATAN LAL VYAPARI LAL JAIN, 339 ITR 351 (GUJ.) , WHILE INTERPRETING THE SAME CBDT NO.1916 (SUPRA) THE HONBLE HIGH COURT OBSERVED AND HELD AS UNDER :- 10. THOUGH IT IS TRUE THAT THE CBDT CIRCULAR NO. 1 916, DATED 11 TH MAY, 1994 LAYS DOWN GUIDELINES FOR SEIZURE OF JEWE LLERY AND ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 13 ORNAMENTS IN THE COURSE OF SEARCH, THE SAME TAKES I NTO ACCOUNT THE QUANTITY OF JEWELLERY WHICH WOULD GENERALLY BE HELD BY FAMILY MEMBERS OF AN ASSESSEE BELONGING TO AN ORDINARY HIN DU HOUSEHOLD. THE APPROACH ADOPTED BY THE TRIBUNAL IN FOLLOWING THE SAID CIRCULAR AND GIVING BENEFIT TO THE ASSESSEE, E VEN FOR EXPLAINING THE SOURCE IN RESPECT OF THE JEWELLERY B EING HELD BY THE FAMILY IS IN CONSONANCE WITH THE GENERAL PRACTICE I N HINDU FAMILIES WHEREBY JEWELLERY IS GIFTED BY THE RELATIVES AND FR IENDS AT THE TIME OF SOCIAL FUNCTIONS, VIZ. MARRIAGES, BIRTHDAYS, MAR RIAGE ANNIVERSARY AND OTHER FESTIVALS. THESE GIFTS ARE CU STOMARY AND CUSTOMS PREVAILING IN A SOCIETY CANNOT BE IGNORED. THUS ALTHOUGH THE CIRCULAR HAD BEEN ISSUED FOR THE PURPOSE OF NON -SEIZURE OF JEWELLERY DURING THE COURSE OF SEARCH, THE BASIS FO R THE SAME RECOGNIZES CUSTOMS PREVAILING IN HINDU SOCIETY. IN THE CIRCUMSTANCES, UNLESS THE REVENUE SHOWS ANYTHING TO THE CONTRARY, IT CAN SAFELY BE PRESUMED THAT THE SOURCE TO THE EXTENT OF THE JEWELLERY STATED IN THE CIRCULAR STANDS EXPLAIN ED. THUS, THE APPROACH ADOPTED BY THE TRIBUNAL IN CONSIDERING THE EXTENT OF JEWELLERY SPECIFIED UNDER THE SAID CIRCULAR TO BE A REASONABLE QUANTITY, CANNOT BE FAULTED WITH. IN THE CIRCUMSTAN CES, IT IS NOT POSSIBLE TO STATE THAT THE TRIBUNAL HAS COMMITTED A NY LEGAL ERROR SO AS TO GIVE RISE TO A QUESTION OF LAW. 15. APPLYING THE RATIO OF THE AFORESAID JUDGEMENT O N THE FACTS OF THE PRESENT CASE AND LOOKING TO THE ASSESSEES FAMILY CONSISTING OF ASSESSEE HIMSELF, HIS WIFE, HIS MOTHER, ONE MAJOR UN MARRIED DAUGHTER, ONE MINOR DAUGHTER AND ONE MINOR SON AND THE STATUS OF THE ASSESSEE BEING OWNER AND DIRECTOR OF VARIOUS COMPANIES THEN IT HAS TO BE PRESUMED THAT CERTAIN AMOUNT OF JEWELLERY WOULD BE AVAI LABLE. IF THE AVAILABILITY OF JEWELLERY ESPECIALLY IN THE CONCEPT O F INDIAN TRADITION AND GENERAL PRACTICE IN HINDU FAMILIES WHEREBY JEWEL LERY IS GIFTED BY THE RELATIVES AND FRIENDS AT THE TIME OF SOCIAL FUNCTIONS , VIZ. MARRIAGES, BIRTHDAYS, MARRIAGE ANNIVERSARY AND OTHER FESTIVALS, S UCH GIFTS IN THE FORM OF JEWELLERY ARE CUSTOMARY AND SUCH PRACTICE PR EVAILING IN OUR ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 14 SOCIETY CANNOT BE IGNORED. IT WAS FOR THIS PREVALENT NO RM AND PRACTICE IN THE INDIAN FAMILIES WHERE JEWELLERIES ARE GIFTED AT TIME OF MARRIAGE AND BIRTH OF CHILDREN AND THE MARRIED LADIES RECEIVIN G STRIDHAN FROM BOTH SIDE OF THE FAMILY, IT IS PRESUMED THAT FAMILY HAV ING CERTAIN STATUS WILL HAVE SOME JEWELLERY. THAT IS WHY, CBDT VID E IT AFORESAID INSTRUCTION, HAS LAID DOWN A CRITERIA OF AVAILABILITY OF JEWELLERY WITH VARIOUS CATEGORY OF FAMILY MEMBERS. HERE IN THIS CASE TOTAL JEWELLERY WEIGHING OF 1236.24 GRAMS WAS FOUND AND IF ONE GOES BY THE QUANTITY LAID/ PRESCRIBED PER CATEGORY OF FAMILY MEMBERS BY THE CBDT INSTRUCTION, THEN IT WORKS OUT TO 1700 GRAMS, WHICH I S LOWER THAN THE TOTAL JEWELLERY FOUND. WE THEREFORE, FOLLOWING THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT HOLD THAT THE JEWELLERY OF 1236.24 CANNOT BE TREATED AS UNEXPLAINED. THIS JUDGMENT OF HONBLE G UJARAT HIGH COURT HAS ALSO BEEN FOLLOWED BY THIS BENCH IN CATENA O F CASES. THUS, WE HOLD THAT THE JEWELLERY TREATED TO UNEXPLAINED JEWELL ERY OF RS. 10,52,124/- IS DIRECTED TO BE DELETED. 16. NOW COMING TO THE APPEAL OF SHRI IFTIKHAR AHME D, THE ONLY ADDITION WHICH HAS BEEN CHALLENGED BEFORE US IS, UNE XPLAINED CASH OF RS. 42,50,000/- FOUND FROM HIS RESIDENCE AT THE TIME O F SEARCH. ASSESSEE IS ONE OF THE DIRECTOR IN NIRALA DEVELOPERS PVT. LTD. AND WE HAVE ALREADY DISCUSSED THIS ISSUE IN DETAIL WHILE DIS CUSSING THE APPEAL OF SHRI RAKESH MAHAJAN THAT THE SOURCE OF CASH FOUND STANDS EXPLAINED FROM THE CASH BOOK OF NIRALA DEVELOPERS PV T. LTD. THE FINDING GIVEN THEREIN WILL APPLY MUTATIS MUTANDIS IN THIS APPEAL ALSO ITA NO. 1810/DEL/2015 RAKESH MAHAJAN VS. DCIT ITA NO. 7086/DEL/2 014 IFTIKHAR AHMED VS. DCIT 15 AND ACCORDINGLY, THE ADDITION OF RS. 42, 50,000/- IS DELETED AND ACCORDINGLY APPEAL OF THE ASSESSEE IS ALLOWED. 17. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH NOVEMBER, 2017. SD/- SD/- (PRASHANT MAHARISHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15/11 /2017 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI