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IN THE INCOME TAX APPELL ATE TRIBUNAL

MUMBAI BENCHES, ‘H’, MUMBAI

B EFO R E SH R I DINESH KUMAR AGARWAL ( J M) AN D SH R I B . RA M AKO T A IAH ( A M)

ITA No.4630/Mum/2008
(Assessment Year: 2005-06)

Mr.Hem raj K.Jethani , Dy. Co mmissioner of

103, Sidhartha T owers, Income Tax,
Kopri Colony,
Central Circle-I,
Thane(E). V/s
PAN: ABDPJ4124G Pawar Indl.Estate,
Edulji Road,
Cherai,
Thane(W).
APPELLANT RESPONDENT

ITA No.4631/Mum/2008
(Assessment Year: 2005-06)

Mr.Bharat Hem raj Jethani, Dy. Co mmissioner of

103, Sidhartha T owers, Income Tax,
Kopri Colony,
Central Circle-I,
Thane(E). V/s
PAN: ABDPJ4125H Pawar Indl.Estate,
Edulji Road,
Cherai,
Thane(W).
APPELLANT RESPONDENT

ITA No.4632/Mum/2008
(Assessment Year: 2005-06)

Mrs. Darshana Kailash Dy. Co mmissioner of

Jethani, Income Tax,
103, Sidhartha T owers,
Central Circle-I,
Kopri Colony, V/s
Thane(E). Pawar Indl.Estate,
PAN: ABDPJ4123B Edulji Road,
Cherai,
Thane(W).
APPELLANT RESPONDENT
Date of Hearing : 3.4.2012
Date of Pronouncement : 18 .4.2012
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Assessees by : Shri M.Subramanian

Respondent by : Shri Ajay

O R D E R

PER DINESH KUMAR AGARWAL (JM)

All these appeals by three respective assessees are

directed against the separate orders dated 10.4.2008 passed
by the ld. CIT(A) for the Assessment Year 2005-06. Since facts
are identical and issues involved are common, all these
appeals are disposed of by this common order for the sake of
convenience.

ITA No.4630/Mum/2008(By Mr.Hem raj K. Jethani)

2. Briefly stated facts of the case are that the assessee

an individual derives income from salary, business income

and other sources. The assessee’s business premises as well

as residential premises were searched u/s 132 of the Income

Tax Act, 1961 (the Act) on 9.9.2004 along with other group

cases. The return was filed on 31.10.2005 declaring total

income at Rs.3,17,200/-. However, the assessment was

completed at an income of Rs.10,86,070/- including the

addition of unexplained cash credit Rs.3,88,500/- and

unexplained investment in diamond jewellery Rs.3,80,374/-,

vide order dated 13.12.2006 passed under section 143(3) read

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with section 153B(b) of the Act. On appeal, the Ld.CIT(A)

dismissed the appeal.

3. Being aggrieved by the order of the Ld.CIT(A), the

assessee is in appeal before us.

4. Ground No.1 is against the validity of the order passed

by the AO and Ground No.2 is the general ground.

5. At the time of hearing, the Ld. Counsel for the assessee

did not press the above grounds which was not objected to by

the Ld.DR.

6. That being so and in the absence of any other supporting

materials placed on record by the Ld. Counsel for the assessee,

the Ground Nos.1 and 2 taken by the assessee are, therefore,

rejected being not pressed.

7. Ground No.3 is against the sustenance of addition of

unexplained cash Rs.3,88,500/-.

8. Brief facts of the above issue are that during the course

of assessment proceedings, the AO observed that during the

course of search, at the residence of assessee, cash of

Rs.5,83,350/- was found and out of it cash of Rs.3,88,500/-

was found from the bed room of the assessee. On inquiry

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during the course of search the assessee was unable to give

the source except stating that it is a combined cash of family.

He also admitted that books of accounts were not up-to-date.

However, during the course of assessment proceedings the

assessee submitted that the cash of Rs.5,83,350/- from the

residence belong to various family members including M/s Bell

Computronics, proprietary concern of Shri Bharat Jethani

son of the assessee . The assessee further submitted that the

cash was kept at the residence for the safety purposes.

However, the AO did not accept the assessee’s explanation.

According to the AO the assessee has no business relation

with M/s Bell Computronics. Further M/s Bell Computronics

has bank account, therefore, it cannot be believed that for

safety purposes cash was kept at the residence than into bank

account. In this view of the matter and keeping in view that

the cash book of the family members were not found to be up-

to-date, the AO treated the cash of Rs.3,88,500/- as

unexplained cash and added the same to the income of the

assessee. On appeal, the Ld.CIT(A) while aggreeing with the

views of the AO confirmed the addition made by the AO.

9. At the time of hearing, the Ld. Counsel for the assessee

while referring to the relevant questions and answers to

statement of the assessee appearing at pages 34 and 35 of

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the assessee’s paper book, details of cash balances appearing

belonging to various family members appearing at page 75 of

the assessee’s paper book, Schedule-“F” of the Audit Report

of M/s Bell Computronics for the period ended 31.3.2005

showing amount of cash seized by the department

Rs.4,44,061/- appearing at page 125 of the assessee’s paper

book submits that in view of the entries recorded in the

respective books of account of the family members, the cash

found at the time of search may be treated as fully explained

and the addition made by the AO and sustained by the

Ld.CIT(A) be deleted. The reliance was also placed on the

decisions in (a) Amar Natvarlal Shah V/s ACIT (1997) 60 ITD

560(Ahd) and (b) Ms. Aishwarya K.Rai V/s DCIT (2007) 104

ITD 166 (Mum)( TM)

10. On the other hand, the Ld.DR supports the order of the
AO and the Ld.CIT(A).

11. We have carefully considered the submissions of the rival

parties and perused the material available on record. We find
that there is no dispute that in the statement recorded at the
time of search, the AO specifically asked about the cash of
Rs.3,88,500/- vide question No.8 as under :

“Q.No.8 : Cash of Rs.3,88,500/- was found from your

bedroom. Do you confirm that the same
belongs to you only.
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Ans : It is combined cash of family”

We further find that during the course of assessment

proceedings the assessee vide letter dated 13.10.2006 has
stated as under :

“Regarding seizure of Rs.5,00,000/- I want to state that

during the course of search in my statement I stated
that this cash belongs to us and our family members. All
our family members are income tax payer since last so
many years. In every case we are filling balance sheet
and paying income tax regularly. I have to married sons
and we all three are also filing return in HUF capacity.
Whatever cash was found it was accounted and explained
and it was …

Details of cash balances

S. Date Name cash Source Seized Returned

No.
1 8.9.2004 Bharat Jethani

(M/s Bell 4,44,061 As per 4,44,061 ..

Computers) books

2 8.9.2004 Bharat Jethani 22,669 As per 18,129

4,540
(HUF) books

3 8.9.2004 Kailash Jethani 54,440 As per … 54,440

books

39,837
….
4 8.9.2004 Kailash Jethani 39,837 As per
(HUF) books

5 8.9.2004 Hemraj K Jethani 54,000 As per ….

(Office) 54,000
books

11,562 As per 11,562 …

6 8.9.2004 Hemraj K Jethani
(HUF) books

10,500.
[[[

7. 8.9.2004 Ritu, Rashi, Rhea 10,500 Gift on

(Minor birthday &
Daughters) different
occasions
6,37,069 5,00,000 1,37,069
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We further find that in support the assessee has also filed

audit report of M/s Bell Computronics for the assessment year

2005-06 interalia mentioning in Schedule-“F” under the head

“Loans and Advances” income tax department Rs.4,44,061/-.

Merely because the books of accounts were not found to be

up-to-date and the cash balances were not struck off does not

mean that the assessee has no explanation about the cash

found at the time of search or the explanation submitted by

the assessee during the course of assessment proceedings

supported by the books of account is not believable

particularly when the concerned books of accounts have not

been rejected by the AO. In this view of the matter and

keeping in view the ratio of decisions relied on by the Ld.

Counsel for the assessee, the addition of Rs.3,88,500/- made

by the AO and sustained by the Ld. CIT(A) as unexplained

cash is deleted. The ground taken by the assessee is,

therefore, allowed.

12. Ground No.4 is against the sustenance of addition of

Rs.3,80,374/- as unexplained investments in diamond

jewellery.

13. The brief facts of the above issue are that during the

course of search at the residential premises of the assessee

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the total jewellery including the gold and diamond jewellery of

Rs.28,79,018/- was found. On being asked, the assessee filed

a chart showing the details of jewellery owned by the assessee

and his family members supported by VDIS certificate, copy of

Wealth tax returns, assessment orders and copy of ‘Will’ of

Smt.Lachmi Ukarmal Mangtani. The assessee also relied on

CBDT circular. However, the AO accepted the assessee’s

explanation partly. In the case of the assessee, the AO

observed that the diamond jewellery of the value of

Rs.4,20,374/- was found. The description of the diamond

jewellery declared under VDIS does not match with the

diamond jewellery found at the time of search. Therefore, the

AO did not accept the assessee’s explanation that the diamond

jewellery was disclosed in VDIS. The AO after taking into

account the age of the assessee, past savings, business etc.

considered that the jewellery of the value of Rs.40,000/- as

explained and treated the balance investment in diamond

jewellery Rs.3,80,374/- (420374-40000) as unexplained

investment out of undisclosed source and added the same to

the total income of the assessee. Regarding gold jewellery, the

AO treated the same as explained and hence he did not make

any addition. On appeal, the Ld.CIT(A) while observing that in

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the absence of any convincing evidence, confirmed the

addition made by the AO.

14. At the time of hearing, the Ld. Counsel for the assessee

placed on record the following chart:

JETHANI FAMILY
DIAMOND JHEWELLERY CHART
S. Name of Qty.in Value Source of Remarks Page No.
No. the GMS/ Rs. acquisition as per
person Carats paper book
to
whom
dia-
mond
jewe-
llery
belongs
1 Nirmal 339.800 6,53,340 218.800- Diamond 79-87
Hemraj Declared in Jewellery 96-97
Jethani VDIS found and (Hemraj)
valued
127.000- 190.500
Declared in gms/crt at
Wealth Rs.4,20,374/-
Tax Return AO has
allowed
339.800 –Total jewellery
worth
Rs.40,000/-
2 Aashna 90.000 1,73,045 90.00– Diamond
Bharat Gifts jewellery
Jethani received found and
during valued
marriage 309.550
and other gms/crt at
occasions Rs.4,86,865/-
AO has
allowed
jewellery
worth
Rs.30,000/-
3 Darshna 270.050 5,19,231 184.100-Will Diamond 65-68
K jewellery (Darshana)
Jethani 85.950- found and
Gift valued
Received 202.150
gms/crt at
270.050-Total Rs.4,38,377/-
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AO has
allowed
jewellery
worth Rs.NIL.
Total 699.850 13,45,616 Total
Jewellery
allowed by
AO is of
Rs.70,000

In support of the above chart he also refers VDIS certificate of

Smt. Nirmala Hemraj along with valuation report, copy of

return of income of Smt.Nirmala Hemraj, copy of wealth tax

return of Shri Hemraj K.Jethani, copy of wealth tax return of

Smt. Nirmala H.Jethani, copy of ‘Will’ of Smt.Lachmi Ukarmal

Mangtani and copy of bills of jewellery purchased appearing at

pages 79 to 104 of the assessee’s paper book. The reliance

was also placed on the decisions cited supra and in DCIT V/s

Arjun Dass Kalwani (2006) 101 ITD 337 (Jd). He, therefore

submits that the addition made by the AO and sustained by the

Ld.CIT(A) be deleted.

15. On the other hand, the Ld.DR while relying on the order

of the AO and Ld.CIT(A) further submits that the diamond

jewellery declared under VDIS does not match with the

diamond jewellery found at the time of search, therefore, the

addition made by the AO and sustained by the Ld. CIT(A) be

upheld.
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16. We have carefully considered the submissions of the rival

parties and perused the material available on record. We find

that the assessee has explained that his wife Smt.Nirmala

Hemraj Jethani has disclosed the diamond jewellery 339.800

Grm. valued at Rs.6,53,340/- under VDIS and by filing

wealth tax return as mentioned in the table reproduced in

paragraph 14 of this order. In support the assessee has filed

copy of VDIS disclosure along with the certificate and copy of

wealth tax return of Smt. Nirmala Hemraj Jethani. It was not

accepted by the AO on the ground that the jewellery disclosed

under VDIS does not match with the jewellery found at the

time of search. Merely because the jewellery disclosed under

VDIS did not match with the jewellery found at the time of

search does not mean that the jewellery found at the time of

search is unexplained jewellery inasmuch as it is not the case

of the Revenue that the jewellery which was disclosed by the

assessee’s wife under VDIS and in the return of wealth tax was

over and above found at the time of search. Since no other

jewellery was found during the course of search and keeping in

view that the AO has accepted the gold jewellery in toto and

diamond jewellery valued at Rs.40,000/- we are of the view

that the addition of the remaining amount of diamond

jewellery of Rs.3,80,374/- is not sustainable and accordingly

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the same is deleted. The ground taken by the assessee is,

therefore, allowed.

17. Ground No.5 is against the levy of interest u/s 234A,234B

and 234C.

18. After hearing rival parties and perusing the material

available on record and in the absence of any plea, we direct

the AO to allow consequential relief in respect of levy of

interest charged u/s 234A, 234B and 234C of the Act. The

ground taken by the assessee is, therefore, partly allowed.

ITA No.4631/Mum/2008 (by Mr.Bharat Hemraj Je thani)

19. Ground No.1 is against the validity of the order passed

by the AO and Ground No.2 is the general ground.

20. At the time of hearing, the Ld. Counsel for the assessee

did not press the above grounds which was not objected to by

the Ld.DR.

21. That being so and in the absence of any other supporting

materials placed on record by the ld. Counsel for the assessee,

the Ground Nos.1 and 2 taken by the assessee are, therefore,

rejected being not pressed.

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22. Ground No.3 is against the sustenance of addition of

unexplained investments in diamond jewellery Rs.4,86,865/-.

23. The brief facts of the above issue are that the diamond

jewellery of the value of Rs.4,86,865/- was found during the

course of search. The AO after taking into account the status

of the family, past savings and marriage gifts etc. accepted

the diamond jewellery of the value of Rs.30,000/- as

explained investment by the assessee and treated the balance

investment in diamond jewellery Rs.4,56,865/- (486865-

30000) as unexplained investment out of undisclosed sources.

On appeal, the Ld. CIT(A) while agreeing with the views of the

AO confirmed the addition made by the AO.

24. At the time of hearing, both the parties have agreed that

the plea taken by them in the appeal of Shri Hemraj K Jethani

(supra) may be considered while deciding the above ground of

appeal.

25. We have carefully considered the submissions of the rival

parties and perused the material available on record. We find

that in the chart reproduced in paragraph 14 of this order it

was stated by the Ld. Counsel for the assessee that the wife of

the assessee Smt.Aashna B Jethani received 90 Grm.

diamond jewellery valued at Rs.1,73,045/- out of 699.850 gr.

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Jewellery found at the time of search. It was also further

explained that the above diamond jewellery was received by

her at the time of marriage and other occasions. Considering

the totality of the facts and circumstances of the case and

keeping in view that the assessee’s wife has received diamond

jewellery at the time of her marriage and on other occasions

which was not controverted by the Revenue, we are of the view

that the addition made by the AO Rs.4,56,865/- and sustained

by the Ld.CIT(A) is not sustainable and accordingly the same is

deleted. The ground taken by the assessee is, therefore,

allowed.

26. Ground No.4 is against the levy of interest u/s 234A,234B

and 234C.

27. After hearing rival parties and perusing the material

available on record and in the absence of any plea, we direct

the AO to allow consequential relief in respect of levy of

interest charged u/s 234A, 234B and 234C of the Act. The

ground taken by the assessee is, therefore, partly allowed.

ITA No.4632/Mum/2008 (By.Mrs.Darshna K.Jethani)

28. Ground No.1 is against the validity of the order passed b

by the AO and Ground No.2 is the general ground.

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29. At the time of hearing, the Ld. Counsel for the assessee

did not press the above grounds which was not objected to by

the Ld.DR.

30. That being so and in the absence of any other supporting

materials placed on record by the ld. Counsel for the assessee,

the Ground Nos.1 and 2 taken by the assessee are, therefore,

rejected being not pressed.

31. Ground No.3 is against the sustenance of addition of

diamond and Gold jewellery of Rs.5,61,000/-.

32. Brief facts of the above issue are that the AO observed

that the diamond jewellery of Rs.4,38,377/- was found. The

assessee has no satisfactory explanation about the nature and

source of acquisition of the diamond jewellery. While explaining

the source of diamond/gold jewellery, Shri Hemraj explained

that part of the jewellery found is by way of will of late Smt.

Lachmi Ukarmal Mangtani. The AO further observed that

neither will is registered nor it is notarised and the same

was not found during the search. Further in the statement the

assessee has not stated that part of the jewellery found is by

way of will. Thus, according to the AO it is after thought and

not reliable and hence the AO treated the diamond jewellery of

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Rs.4,38,377/- as unexplained investment. Beside this, the AO

also treated gold jewellery of Rs.1,22,580/- as unexplained

investment out of gold jewellery Rs.6,38,107/- found at the

time of search and added the same to the total income of the

assessee. Thus the total unexplained jewellery was added at

Rs.5,61,000/-. On appeal, the Ld.CIT(A) in the absence of any

convincing reasons upheld the addition made by the AO.

33. At the time of hearing the Ld. Counsel for the assessee

while referring to the chart filed in the case of Shri Hemraj

K.Jethani submits that out of total diamond of jewellery found

weighing 699.850 Grm., the jewellery 270.050 belongs to

Smt. Darshana K. Jethani. It was further explained by the

assessee that 184.100 Grm. was received by way of ‘Will’

(supra), jewellery 85.950 Grm. was received as a gift on

different occasions. He further submits that the copy of the will

of late Smt. Lachmi Ukarmal Mangtani is appearing at pages

65 to 68 of the assessee’s paper book. He, therefore, submits

that the addition made by the AO and sustained by the Ld.

CIT(A) be deleted.

34. On the other hand, the Ld.DR supports the order of the

AO and the Ld. CIT(A).

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35. We have carefully considered the submissions of the rival

parties and perused the material available on record. We find

that there is no dispute that during the course of assessment

proceedings the assessee while explaining the source of

jewellery interalia stated that Mrs. Darshana K. Jethani has

received jewellery of gold and diamond by way of ‘Will’ of

Smt.Lachmi Ukarmal Mangtani, her grandmother. In support,

he also placed on record the copy of the said will for

verification and also stated that the said will was executed in

the presence of Dr.Murli M. Ratnani (PAN- address). It was

further stated that the said doctor is a income tax payee and

practicing in Thane City itself and ready to visit your office for

a statement to prove the genuineness of the said will. It was

also stated that the true copy of the will was not found at the

time of search as it was lying with the executors of the will. It

was, therefore, submitted that the jewellery found at the time

of search be treated as explained. However, the AO merely

on the ground that neither the will is registered nor it is

notarised, the same was not found at the time of search and

nothing was stated in the statement recorded u/s 132(4)

rejected the plea of the assessee that it is after thought. Since

the assessee has filed the copy of the will with an explanation

that the same was lying with the executors of the will and the
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assessee was ready to produce one of the executors i.e.

Dr.Murli M. Ratnani, therefore, we are of the view that the AO

was not justified in rejecting the valid document of ‘Will’ filed

by the assessee without recording any statement of Dr.Murli

M.Ratnani. In this view of the matter and keeping in view that

the AO has accepted part of the jewellery as explained and no

contrary material has been placed on record by the Revenue to

show that the part of the explanation given by the assessee

was found to be false and untrue, we are of the view that the

addition made by the AO and sustained by the Ld.CIT(A) is not

sustainable and accordingly the same is deleted.

36. Ground No.4 is against the levy of interest u/s 234A,234B

and 234C.

37. After hearing rival parties and perusing the material

available on record and in the absence of any plea, we direct

the AO to allow consequential relief in respect of levy of

interest charged u/s 234A, 234B and 234C of the Act. The

ground taken by the assessee is, therefore, partly allowed.

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38. In the result, all the appeals are partly allowed.

Order pronounced in the open court on 18th April, 2012.

sd sd

(B.RAMAKOTAIAH) (DINESH KUMAR AGARWAL)

ACCOUNTANT MEMBER JUDICIAL M EMBER

Mumbai, 18th April, 2012

SRL:

Copy to:
1. Appellant
2. Respondent
3. CIT Co ncerned
4. CIT(A) concerned
5. DR conce rned Bench
6. Guard file.
BY ORDER
true copy
ASSTT. REGISTRAR,
ITAT, MUMBAI