Vijay Chawla, New Delhi V. ACIT CC-05, New Delhi

ITA 8005/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4320 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 03-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Income from undisclosed sources; Search and seizure; Retraction
• Section: 69A; 13; 145(3); 131; 145; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. K. N. CHARY, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 8005/DEL/2019 : ASSTT. YEAR : 2017-18 VIJAY CHAWLA, C/O RAJ KUMAR & ASSOCIATES, CA, L-7A (LGF), SOUTH EXTEN., PART-II, NEW DELHI-110049 VS . ACIT, CC-05, NEW DELHI-110055 (APPELLANT) (RESPONDENT) PAN NO. AADPC8726A ASSESSEE BY : SH. RAJ KUMAR GUPTA, CA REVENUE BY : SH. H. K. CHOUDHARY, CIT DR DATE OF HEAR ING: 1 5 . 10 .20 20 DATE OF PRONOUNCEMENT: 26 .10 .20 20 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-24, NEW DELHI DATED 16. 09.2019. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT UNDER THE FACTS AND CIRCUMSTANCES ADDITION OF RS.17,61,950/- U/S.69A R/W SEC. 115BBE AS FOR UNEXPLAINED CASH FOUND DURING SEARCH IS UNWARRANTED IN LAW AS WELL AS ON MERITS. 1.1 THAT WITHOUT PREJUDICE, IN VIEW OF THE STATEMEN T RECORDED DURING SEARCH ON 07.04.16, 11.04.16 AND 12.04.16, AT THE MOST, THE ISSUE OF CASH COULD HAD BEEN CONSIDERED FOR A.Y.16-17 ONLY AND NOT FOR A.Y. 17-18. ITA NO. 8005/DEL/2019 VIJAY CHAWLA 2 1.2 THAT IN VIEW OF EXPLANATIONS AND EVIDENCES FURNISHED WHICH REMAINED UNREBUTTED, THE CASH OF RS . 17,61,950/- SHOULD HAD BEEN HELD AS FULLY EXPLAINED EVEN ON MERITS. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, THERE IS NO LEGALITY AND JUSTIFICATION FOR MAKING AND SUSTAI NING ADDITION OF RS.2,50,000/- U/S.69A R/W SEC. 115BBE FOR CASH FOUND FROM LOCKER NO.487PNB BEING IN OLD CURRENCY NOTES AS OPERATIVE BEFORE DEMONETIZATION, WHICH HAD ZERO INTRINSIC VALUE AS ON THE DATE OF TH E SEARCH. 2.1 THAT WITHOUT PREJUDICE, IN VIEW OF THE FACT THA T THE LOCKER NO.487 OF PNB WAS LASTLY OPERATED ON 29.10.15 (A.Y.16-17) PRIOR TO THE DATE OF SEARCH, UNDER NO CIRCUMSTANCE, THE ISSUE OF THIS CASH CAN B E CONSIDERED IN A.Y.17-18. 2.2 THAT WITHOUT PREJUDICE, IN VIEW OF THE EXPLANATIONS FURNISHED, THE CASH OF RS.2,50,000/- STANDS EXPLAINED EVEN ON MERITS. 3. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE AC T WAS CARRIED OUT ON 07.04.2016 IN THE CASE OF THE ASSESS E. DURING THE SEARCH OPERATION, CASH AMOUNTING TO RS. 26,84,4 50/- WAS FOUND FROM THE RESIDENTIAL PREMISES C-17, NIZAMUDDI N EAST, NEW DELHI OUT OF WHICH CASH AMOUNTING TO RS. 17, 61 ,950/- BELONGING TO THE ASSESSEE WAS SEIZED. DURING THE SE ARCH OPERATION SH. VIJAY CHAWLA DEPOSED IN HIS STATEMENT RECORDED U/S 131 OF THE ACT THAT THERE IS APPROX RS.17 LAKHS CASH BELONGING TO HIM KEPT AT HIS HOUSE AND THE SAME IS HIS UNACCOUNTED INCOME NOT RECORDED IN HIS BOOKS OF ACC OUNTS. HE FURTHER STATED THAT HE IS READY TO PAY HIS TAX LIAB ILITY ON SUCH UNACCOUNTED INCOME. IN HIS STATEMENT RECORDED ON 12 .04.2016 DURING THE COURSE OF POST SEARCH ENQUIRES, THE ASSE SSEE WAS CATEGORICALLY ASKED TO FURNISH DETAILS REGARDING TH E PERIOD FOR ITA NO. 8005/DEL/2019 VIJAY CHAWLA 3 WHICH UNACCOUNTED INCOME BELONGS, NUMBER OF CLIENTS FROM WHOM THAT UNACCOUNTED MONEY HAS BEEN REPORTEDLY REC EIVED AND ANY RECEIPT/ACKNOWLEDGEMENT ISSUED TO RELATED C LIENTS. THE ASSESSEE THEN DEPOSED THAT CASH WAS BELONGING TO FY 2015-16 AND RECEIVED FROM 25-30 SEPARATE CLIENTS FOR WHICH NO RECEIPT /ACKNOWLEDGEMENT WAS ISSUED. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO EXPLAIN THE S OURCE OF CASH SEIZURE OF RS. 17,61,950/-. THE ASSESSEE SUBMI TTED THAT HE WAS NOT IN STABLE STATE OF MIND AND HAD UNDER PRESS URE ADMITTED THAT AMOUNT WAS HIS UNACCOUNTED MONEY AS H IS STATEMENT RECORDED AT THE TIME OF SEARCH ACTION WAS UNDER COERCION, THREATS AND SEVERE PRESSURE. THE ASSESSEE SUBMITTED THAT CASH SEIZED WAS INDEED CASH IN HAND OF THE ASS ESSEE AND HIS WIFE. 4. HOWEVER, THE AO FOUND THAT THE SAME WAS NOT DISC LOSED DURING THE SEARCH. THE SPOUSE OF THE ASSESSEE DID N OT DISCLOSE AS TO WHERE HER CASH IN HAND LIES. THE AO HELD THAT PERUSAL OF BOOKS OF THE ASSESSEE AND HIS WIFE REVEALED THAT UN SECURED LOAN IN BOOKS OF THE WIFE OF THE ASSESSEE WAS NOT REFLEC TED IN BOOKS OF THE ASSESSEE. HENCE, THE AO CONCLUDED THAT THE B OOKS OF ACCOUNTS OF THE ASSESSEE ARE NOT RELIABLE AND EXPLA NATION FURNISHED BY THE ASSESSEE WAS NOT ACCEPTABLE. ACCOR DINGLY, CASH FOUND AT THE PREMISES OF THE ASSESSEE REMAINED UNEX PLAINED AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSE E U/S 69A R.W.S. 115BBE OF THE ACT. 5. THE LD. CIT (A) CONFIRMED THE ADDITION HOLDING T HAT THE ASSESSEE HAS STATED THAT THE CASH FOUND RELATED TO AY 2017-18 AS ADMITTED BY THE ASSESSEE IN HIS STATEMENT RECORD ED DURING ITA NO. 8005/DEL/2019 VIJAY CHAWLA 4 POST SEARCH ENQUIRIES. ON THE ISSUE THAT THE ADDITI ON CANNOT BE MADE IN THE AY 2017-18, THE LD. CIT (A) HELD THAT O N DUE CONSIDERATION THE CASH TO THE TUNE OF RS. 17,61,950 /- HAS BEEN FOUND AND SEIZED IN FY 2016-17 HENCE ADDITION HAS T O BE MADE IN THE ASSESSMENT YEAR 2017-18. ALTHOUGH THE ASSESS EE STATED THAT THE SAID CASH HAS BEEN EARNED DURING FY 2015-1 6, THE LD. CIT (A) HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE EARNING OF SUCH INCOME IN FY 2015-16. IT WAS HELD T HAT SINCE THE ORIGINAL STATEMENT GIVEN BY THE ASSESSEE WAS NO T SUBSTANTIATED THE AO WAS FULLY JUSTIFIED IN TREATIN G THE SAID CASH OF RS. 17,61,950/- AS UNACCOUNTED INCOME OF THE ASS ESSEE FOR AY 2017-18. IT WAS HELD THAT SINCE THE ASSESSEE HAS NOT BEEN ABLE TO JUSTIFY EARNING OF PROFESSIONAL INCOME IN C ASH FROM 25 TO 30 CLIENTS AS ADMITTED IN COURSE OF SEARCH ACTION, THE CLAIM OF THE ASSESSEE THAT THE CASH OF RS. 17,61,950/- HAS B EEN RIGHTLY DEALT WITH IN A Y 2017-18. 6. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE I TAT. 7. DURING THE HEARING BEFORE US, THE LD. AR ARGUED THAT, 1. THE SEARCH TOOK PLACE ON 07.04.2016 WHEREIN THE CAS H OF RS.17,61,950/- HAS BEEN FOUND AND BY NO STRETCH OF IMAGINATION, IT CANNOT BE ASSUMED THAT THE ASSESSEE , A PRACTICING ADVOCATE HAS EARNED RS.17.61 LACS WITHIN A PERIOD OF 7 DAYS DURING THE YEAR. 2. SINCE, THE AMOUNT COULD NOT HAVE BEEN EARNED IN THE FY 2017-18, NO ADDITION IS WARRANTED BY THE AO IN THIS YEAR. 3. THE ASSESSEE HAS EXPLAINED BEFORE THE REVENUE AUTHO RITIES ON 12.04.2016 I.E. 5 DAYS AFTER THE SEARCH THAT THE AMOUNT ITA NO. 8005/DEL/2019 VIJAY CHAWLA 5 BELONGS TO FY 2015-16, HENCE IT SHOULD HAVE BEEN RI GHTLY ASSESSED IN THE ASSESSMENT YEAR 2016-17. 4. THE ASSESSEE HAS FILED A LETTER DATED 23.05.2016 RE GARDING THE RETRACTION OF STATEMENT GIVEN ON 07.04.2016 HEN CE NO ADDITION CAN BE MADE SOLELY BASED ON THE STATEMENT. 5. SINCE, THE RETRACTION IS WITHIN THE PERIOD ALLOWED BY VARIOUS JUDGMENTS AND WITHIN 24 DAYS OF GIVING THE STATEMENT, THE SAME SHOULD NOT BE CONSIDERED FOR ASSESSMENT PURPOSE. 6. THE REJECTION OF BOOKS OF ACCOUNTS AND CONSEQUENT A DDITION IS ILLEGAL AND WITHOUT ANY VALID REASONS. 8. ON THE OTHER HAND, THE LD. CIT DR STRONGLY ARGUE D ON VARIOUS PROVISIONS OF SECTION 69A OF THE IT ACT, TH E ARGUMENTS ARE AS UNDER: 1. AS PER THE SECTION 69A SINCE THE ASSESSEE IS FOUND TO BE THE OWNER OF THE MONEY AND SUCH MONEY IS NOT RECORD ED IN THE BOOKS OF ACCOUNTS, THE CASH FOUND ON 07.04.2016 HAS BEEN RIGHTLY ADDED IN THE ASSESSMENT YEAR 2017-18. 2. THE ASSESSEE BEING A PRACTICING ADVOCATE CANNOT CLA IM ANY THREAT OR COERCION ON THE DATE OF SEARCH WITH REGAR D TO RECORDING OF THE STATEMENT. HE RELIED ON THE JUDGME NT OF THE HONBLE APEX COURT IN THE CASE OF BANNA LAL JAA T CONSTRUCTION PVT. LTD. VS ACIT SLP NO. 7469 OF 2019 AND OTHER JUDGMENTS WHICH HAVE BEEN DULY PRODUCED, WHIC H ARE ON THE ISSUE OF RECORDING OF THE STATEMENT. 3. WITH RESPECT TO ASSESSMENT OF THESE AMOUNTS IN ASSESSMENT YEAR 2016-17, IT WAS ARGUED THAT THOUGH THE AMOUNTS MAY BE CLAIMED TO HAVE BEEN RECEIVED IN THE AY 2016-17 BUT SINCE THEY HAVE BEEN FOUND IN THE AY 20 17- ITA NO. 8005/DEL/2019 VIJAY CHAWLA 6 18, THE PROVISIONS OF THE ACT MANDATES THE REVENUE TO CONSIDER THE ASSESSMENT IN THE CURRENT YEAR AND THE AO WAS CORRECT IN MAKING THE ADDITION IN THE AY 2017-1 8. 4. REGARDING THE REJECTION OF BOOKS OF ACCOUNTS, IT WA S ARGUED THAT SINCE IT HAS BEEN ACCEPTED UNDER THE STATEMENT RECORDED U/S 131 THAT THE AMOUNTS HAVE NO T BEEN DECLARED IN THE RETURN, THE BOOKS CANNOT BE CONSIDERED RELIABLE. 5. THE PERIOD OF EARNING OF THE MONEY IS IMMATERIAL AN D THE CASH WAS FOUND ON 07.04.2016 AND THE AMOUNT HAS BEE N RIGHTLY BROUGHT TO TAX. 6. THE SANCTITY OF THE STATEMENT RECORDED ON THE DATE OF SEARCH CANNOT BE DISPUTED AT A LATER DATE. 9. REBUTTING THE ARGUMENTS OF THE LD. DR, THE LD. A R OF THE ASSESSEE ARGUED THAT THE STATEMENT RECORDED ON 12.0 4.2016 HAS NOT BEEN CONSIDERED BY THE AO AND ADDITION HAS BEEN MADE ONLY BASED ON STATEMENT RECORDED ON 07.04.2016. 10. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PER USED THE MATERIAL AVAILABLE ON RECORD. 11. WE FIND THAT FOLLOWING QUESTIONS EMANATES FROM THE FACTS OF THE CASE: 1. WHETHER THE AO WAS RIGHT IN NOT BELIEVING THE BOOKS OF ACCOUNTS? 2. WHETHER THE ADDITION CAN BE MADE SOLELY ON THE BASI S OF STATEMENT RECORDED ON THE DATE OF SEARCH I.E. ON 07.04.2016? ITA NO. 8005/DEL/2019 VIJAY CHAWLA 7 3. WHETHER IGNORING THE STATEMENT RECORDED ON 12.04.20 16 WHEREIN THE ASSESSEE EXPLAINED THAT THE AMOUNTS PER TAIN TO ASSESSMENT YEAR 2015-16? 4. WHETHER THE RETRACTION FILED BEFORE THE ADIT(INV.) ON 23.05.2016 CAN BE CONSIDERED VALID? 12. THE ARGUMENT THAT INSPITE OF THE UNDISPUTABLE E VIDENCES THAT THE AMOUNTS HAVE BEEN DULY REFLECTED IN THE BO OKS OF ACCOUNTS, THE AO WENT AHEAD WITH MAKING OF THE ADDI TION HAS BEEN EXAMINED. 13. WE HAVE PERUSED THE DOCUMENTS FILED BY THE ASSE SSEE BEFORE THE REVENUE AUTHORITIES TO EXPLAIN THE CASH FOUND AT THE RESIDENCE. THE DETAILS ARE AS UNDER: VIJAY CHAWLA B/S COMPLETE CASH BOOK CASH BOOK B/S AS ON 31.03.2015 01.04.2015 TO 31.03.2016 01.04.2016 TO 08.04.2016 AS ON 31.03.2016 SHALINI CHAWLA B/S COMPLETE CASH BOOK CASH BOOK B/S AS ON 31.03.2015 01.04.2015 TO 31.03.2016 01.04.2016 TO 08.04.2016 AS ON 31.03.2016 14. ON PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE , WE FIND THAT THE CASH IN HAND AS AT 31.03.2015 WAS RS.3,52, 074/- TAKING AS THIS OPENING BALANCE, THE CLOSING BALANCE OF CASH AS AT 31.03.2016 WAS RS.2,73,475/-. THE CASH AS ON 08.04. 2016 WAS RS.2,73,475/- OUT OF WHICH RS.2,73,000/- HAS BEEN S EIZED BY THE DEPARTMENT. SIMILARLY, THE CASH IN HAND OF MS. SHALINI CHAWLA WAS RS.8,98,867/- AS ON 31.03.2015 AS PER TH E BALANCE SHEET. THE CASH BOOK, OPENING BALANCE AS ON 01.04.2 015 WAS ITA NO. 8005/DEL/2019 VIJAY CHAWLA 8 RS.8,98,866/- AND THE CLOSING BALANCE AS ON 31.03.2 016 WAS RS.9,88,227/- OUT OF WHICH AMOUNT OF RS.9,80,000/- HAS BEEN SEIZED BY THE DEPARTMENT ON 08.04.2016. THE BALANCE SHEET OF MS. SHALINI CHAWLA AS ON 31.03.2016 REFLECTS AN AMO UNT OF RS.9,88,228/-. FROM THE PERUSAL OF THE DETAILS FILE D BEFORE THE REVENUE IT CAN BE HELD THAT THE AMOUNTS HAVE BEEN D ULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND HIS WIFE. 15. THE AO HELD THAT PERUSAL OF THE BOOKS OF ACCOUN TS OF THE ASSESSEE AND HIS WIFE REVEALS THAT UNSECURED LOANS IN THE BOOKS OF ACCOUNTS OF THE WIFE OF THE ASSESSEE IS NOT REFL ECTED IN BOOKS OF THE ASSESSEE. HENCE, THE AO REJECTED THE BOOKS O F ACCOUNTS. FOR THE SAKE OF READY REFERENCE, THE RELEVANT PORTI ON OF THE ASSESSMENT ORDER IS REPRODUCED BELOW: THE ASSESSEE SUBMITS THAT CASH SEIZED WAS CASH IN HAND OF THE ASSESSEE AND HIS WIFE. HOWEVER, THE SAME WAS NOT DISCLOSED DURING THE SEARCH. SPOUSE OF THE ASSESSEE DID NOT DISCLOSE AS TO WHERE HER CASH IN HAND LIES . ALSO A PERUSAL OF BOOKS OF THE ASSESSEE AND HIS WIFE REVEALS, THAT UNSECURED LOAN IN BOOKS OF THE WIFE O F THE ASSESSEE IS NOT REFLECTED IN BOOKS OF THE ASSESSEE. HENCE, BOOKS OF THE ASSESSEE ARE NOT RELIABLE AND EXPLANATION FURNISHED BY THE ASSESSEE US NOT ACCEPTABLE. ACCORDINGLY, CASH FOUND AT THE PREMISE OF THE ASSESSEE REMAINS UNEXPLAINED AND THE SAME IS ADDED TO THE INCOME OF THE ASSESSEE U/S 69A R.W.S. 115BBE OF THE ACT. IN VIEW OF THE FOREGOING, I AM SATISFIED THAT THE ASSESSEE HAS FAILED TO DISCLOSE THE NATURE AND SOUR CE OF THE ABOVE UNDISCLOSED INCOME, THEREFORE, PENALTY U/ S 271AAB OF THE ACT IS INITIATED SEPARATELY. 16. FROM THE ABOVE, WE ARE UNABLE TO ACCEPT THE CON TENTION OF THE AO THAT SPOUSE OF THE ASSESSEE DID NOT DISCLOS E AS TO WHERE ARE CASH IN- HAND LIES. FURTHER, THE AO REJE CTED BOOKS OF ACCOUNTS HOLDING THAT THE UNSECURED LOANS IN BOOKS OF THE WIFE OF THE ASSESSEE IS NOT REFLECTED IN THE BOOKS OF TH E ASSESSEE. ITA NO. 8005/DEL/2019 VIJAY CHAWLA 9 THE AO CANNOT EXPECT TO FIND THE DETAILS OF THE UNS ECURED LOANS OF THE WIFE OF THE ASSESSEE IN THE BOOKS OF ACCOUNT S OF THE ASSESSEE. THIS CANNOT BE A VALID REASON TO REJECT H IS BOOKS OF ACCOUNTS. 17. SECTION 145 OF THE INCOME TAX ACT 1961, LAYS DO WN THAT INCOME CHARGEABLE UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION OR INCOME FROM OTHER SOURCES SHALL , BE COMPUTED IN ACCORDANCE WITH EITHER CASH OR MERCANTI LE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. S UBSECTION 3 OF SECTION 145 LAYS DOWN THAT WHERE THE ASSESSING O FFICER IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE THE METHOD OF ACCOUNTING NAMELY CASH OR MERCANTILE SYSTEMS OR ACCOUNTING STANDARDS AS NOTIFIED BY THE CENTRAL GOVERNMENT, HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE ASSESSING OFFICER MAY MAKE AN ASS ESSMENT IN THE MANNER PROVIDED IN SECTION 144 OF THE ACT. 18. THE SECTION 145 AS IT STANDS NOW RESTRICTS THE CHOICE OF SYSTEM TO EITHER THE CASH OR MERCANTILE SYSTEM AND CENTRAL GOVERNMENT HAS POWERS TO NOTIFY ACCOUNTING STANDARD S TO BE FOLLOWED BY THE ASSESSEE. AFTER GOING THROUGH THE V ARIOUS DECISIONS OF THE COURTS UPHOLDING THE REJECTION OF BOOKS OF ACCOUNTS OR OTHERWISE IT CAN BE SAID THAT THE A.O M AY PROCEED UNDER SECTION 145(3) UNDER ANY OF THE FOLLOWING CIR CUMSTANCES: (A) WHERE HE IS NOT SATISFIED ABOUT THE CORRECTNES S OR COMPLETENESS OF THE ACCOUNTS; OR (B) WHERE METHOD OF ACCOUNTING CASH OR MERCANTILE HAS NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE; OR ITA NO. 8005/DEL/2019 VIJAY CHAWLA 10 (C) ACCOUNTING STANDARDS AS NOTIFIED BY THE CENTRA L GOVERNMENT HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE. 19. IN ORDER TO INVOKE ONE OF THE OTHER PARAMETERS FOR REJECTION OF BOOKS OF ACCOUNT IN A PARTICULAR CASE, THEN A DEFINITE REASON TO BE MENTIONED IS SINE-QUA NON ON PART OF THE ASSESSING OFFICER BEFORE REJECTION OF BOOKS OF ACCO UNTS. 20. THE ASSESSING OFFICER IS REQUIRED TO ANALYZE VA RIOUS OTHER HEADS AND DETAILS FOR THE RELEVANT PERIOD, BEFORE D RAWING ANY CONCLUSION ON REJECTION OF BOOKS OF ACCOUNTS. THERE FORE, THE COURTS EXPECT THAT THE ASSESSING OFFICER SHALL BRIN G ON RECORD SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASS ESSEE BEFORE INVOKING THE PROVISIONS OF SECTION 145(3). THE REJE CTIONS OF BOOKS OF ACCOUNT SIMPLY WITHOUT MENTIONING THE REAS ONS WOULD NOT SUFFICE AND CANNOT STAND THE TEST OF APPEAL. 21. IN REJECTING THE BOOKS OF ACCOUNTS OF THE ASSES SEE THERE SHALL BE JUSTIFICATION FOR THE SAME. IN THE INSTANT CASE, THE TWO OBSERVATIONS MADE BY THE ASSESSING OFFICER CANNOT B E SAID TO BE JUSTIFIABLE REASONS TO REJECT THE BOOKS OF ACCOUNTS . FURTHER, IN CASE WHERE THE BOOKS OF ACCOUNTS ARE REJECTED U/S 1 45(3) THEN THE ASSESSMENT OUGHT TO HAVE BEEN COMPLETED U/S 144 OF THE ACT. SECTION 144 PROVIDES FOR BEST JUDGMENT METHOD OF ASSESSMENT BY ASSESSING OFFICER AND TO COMPLETE THE ASSESSMENT U/S 144(1), THE ASSESSING OFFICER HAS TO AFFORD AN OPPORTUNITY TO THE ASSESSEE TO THAT EXTENT. 22. SINCE, THE AMOUNTS HAVE BEEN DULY REFLECTED IN THE BOOKS OF ACCOUNTS AND THE REASONS SPECIFIED BY THE ASSESS ING OFFICER ARE NOT JUSTIFIABLE AND SINCE THE ASSESSMENT HAS NO T BEEN ITA NO. 8005/DEL/2019 VIJAY CHAWLA 11 COMPLETED FOLLOWING THE DUE PROCEDURE AS MENTIONED U/S 144, WE HEREBY HOLD THAT NO ADDITION IN THE CASE OF THE ASSESSEE IS CALLED FOR. 23. AS THE ISSUE HAS BEEN DECIDED ON THE REJECTION OF BOOKS OF ACCOUNTS, ANY ADJUDICATION ON THE OTHER ARGUMENTS T AKEN UP BY THE PARTIES WOULD BE ONLY ACADEMIC IN NATURE AND HE NCE NOT RESORTED. 24. GROUND NO. 2 RELATES TO ADDITION ON ACCOUNT OF OLD CURRENCY NOTES WHICH HAD ZERO INTRINSIC VALUE AS ON THE DATE OF OPERATION OF LOCKER NO. 487. DURING THE OPERATION OF LOCKER O N 25.04.2017 AN AMOUNT OF RS.2,50,000/- HAS FOUND. THE LAST DATE OF OPERATION OF THE LOCKER WAS 29.10.2015 AND IT WAS OPERATED BY THE REVENUE ON 25.04.2017. THERE WERE NO LOCKER OPE RATIONS BETWEEN 01.04.2016 TO 25.04.2016. HENCE, IT WAS ALT ERNATIVELY ARGUED THAT THE AMOUNT RIGHTLY BELONGS TO ASSESSMEN T YEAR 2016-17. THE REVENUE ARGUED THAT THE FACTUM THAT TH E ASSESSEE HAS HAD THIS AMOUNT AT THE TIME OF OPERATING OF T HE LOCKER PROVES UNEXPLAINED SOURCE OF THE MONEY LIABLE TO BE TAXED U/S 69A. 25. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PER USED THE MATERIAL AVAILABLE ON RECORD. 26. THE AMOUNT HAS BEEN ADDED AS UNEXPLAINED MONEY U/S 69A FOR THE ASSESSMENT YEAR 2017-18. HENCE, IT NEEDS TO BE CONSIDERED AS TO WHETHER FOR THE PERIOD BETWEEN 01. 04.2016 TO 25.04.2016, POSSESSION OF THESE NOTES HAVE ANY INTR INSIC VALUE OR NOT. ON THIS ISSUE, WE ARE GUIDED BY THE JUDGMEN T OF HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS ANDHR A PRADESH ITA NO. 8005/DEL/2019 VIJAY CHAWLA 12 YARNS COMBINES PVT. LTD. 200 CTR 641. THE OPERATIVE PART OF THE SAID JUDGMENT IS AS UNDER: 9. HAVING HEARD THE LEARNED COUNSEL FOR THE PARTIE S TO THE LIS AND AFTER CAREFULLY CONSIDERING THE FINDING S AND THE CONCLUSIONS REACHED BY THE TRIBUNAL, WE ARE OF VIEW, THAT THE TRIBUNAL IS JUSTIFIED IN THEIR CONCL USION. THE REASON BEING, THE ASSESSEE WAS IN POSSESSION OF UNEXPLAINED MONEY OF RS.1,35,000 DURING THE PREVIOU S YEAR RELEVANT TO THE ASSESSMENT YEAR AND THIS AMOUN T WAS ADDED TO THE RETURN OF INCOME FILED BY THE ASSESSEE WHILE COMPLETING THE ASSESSMENTS FOR THE ASST. YR. 1978-79. THE ASSESSMENT ORDER SO PASSED I S ACCEPTED BY THE ASSESSEE, MAY BE IN VIEW OF SMALLNE SS OF THE TAX QUANTIFIED BY THE ITO IN SPITE OF SUCH ADDITION. HOWEVER, IN THE PENALTY PROCEEDINGS, THE ASSESSEE HAD CONTENDED THAT THE ADDITION MADE DID NOT REPRESENT THE CONCEALED INCOME, SINCE ON THE DATE, WHEN HE WAS FOUND 'TO BE IN POSSESSION OF THE AFORESAID AMOUNT, THE SAME DID NOT HAVE ANY VALUE I N VIEW OF REFUSAL BY THE RBI TO HONOUR THE HIGH DENOMINATION NOTES WHEN IT WAS TENDERED FOR EXCHANGE. IN TOMLINS LAW DICTIONARY, 'MONEY' IS DEFINED AS, THAT METAL, BE IT GOLD OR SILVER, WHICH RECEIVES AUTHORITY BY THE PRINCES IMPRESS TO BE CURRENT; FOR AS WAX IS NOT A SEAL WITHOUT PRINT, SO METAL IS NOT MONEY WITHOUT IMPRESSION. MONEY IS SAI D TO BE THE COMMON MEASURE OF ALL COMMERCE, THROUGHOUT THE WORLD, AND CONSISTS PRINCIPALLY OF T HREE PARTS, THE MATERIAL WHEREOF IT IS MADE, BEING SILVE R OR GOLD; THE DENOMINATION OR INTRINSIC VALUE, GIVEN BY THE KING, BY VIRTUE OF HIS PREROGATIVE; AND THE KINGS STAMP THEREON. IT BELONGS TO THE KING ONLY, TO PUT A VALUE AS WELL AS THE IMPRESSION ON MONEY. 10. THE EXPRESSION MONEY HAS DIFFERENT SHADES OF MEANING. IN THE CONTEXT OF INCOME-TAX PROVISIONS, I T CAN ONLY BE .A CURRENCY, TOKEN, BANK NOTES OR OTHER CIRCULATING MEDIUM IN GENERAL USE, WHICH HAS THE REPRESENTATIVE VALUE. THEREFORE, THE CURRENCY NOTES ON THE DAY WHEN IT WAS FOUND TO BE IN POSSESSION OF TH E ASSESSEE SHOULD HAVE HAD THE REPRESENTATIVE VALUE, NAMELY, IT COULD BE TENDERED AS A MONEY, WHICH HAS INTRINSIC VALUE. IN THE INSTANT CASE, THE FINAL FAC T ITA NO. 8005/DEL/2019 VIJAY CHAWLA 13 FINDING AUTHORITY, NAMELY, THE TRIBUNAL, AFTER NOTI CING THE ORDINANCE ISSUED BY THE CENTRAL GOVERNMENT, COUPLED WITH THE FACT OF RBI REFUSING TO EXCHANGE T HE HIGH DENOMINATION NOTES WHEN IT WAS TENDERED FOR EXCHANGE, HAS COME TO THE CONCLUSION, THAT ON THE DAY, WHEN THE ASSESSEE WAS FOUND TO BE IN POSSESSIO N OF HIGH DENOMINATION NOTES, THEY WERE ONLY SCRAP OF PAPER AND THEY COULD NOT BE USED AS CIRCULATING MEDIUM IN GENERAL USE AS THE REPRESENTATIVE VALUE AND, THEREFORE, IT COULD NOT BE SAID THAT THE ASSES SEE WAS IN POSSESSION OF UNEXPLAINED MONEY, APPEARS TO US, CORRECT, PROPER AND REASONABLE CONCLUSION. THEREFORE, THE HIGH DENOMINATION NOTES WHICH, WERE IN POSSESSION OF THE ASSESSEE AS ON 24TH JAN., 1978 CANNOT BE SAID AS UNEXPLAINED MONEY, WHICH THE ASSESSEE HAD NOT DISCLOSED IN HIS RETURN OF INCOME . 27. FURTHER, WE FIND THAT THE LOCKER WAS LAST OPERA TED ON 29.10.2015. THE FACT THAT THE LOCKER HAS NOT BEEN O PERATED IN THE ASSESSMENT YEAR 2017-18 IS BEFORE THE REVENUE A UTHORITIES. HENCE, THE AMOUNT DEEMED TO HAVE BEEN UNDISCLOSED I NCOME FOR THE ASSESSMENT YEAR 2016-17 WHEREAS THE AMOUNT HAS BEEN BROUGHT TO TAX FOR THE ASSESSMENT YEAR 2017-18. HEN CE, THE ADDITION MADE IN THE AY 2017-18 CANNOT BE UPHELD. 28. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/10/2020. SD/- SD/- (K. N. CHARY) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 26/10/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR