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Judgment
PER M. BALAGANESH, A. M.:
These appeals of the assessee arises out of the orders passed by the Commissioner of Income Tax (Appeals), Delhi-28 [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal Nos. 6809/Del/2025, 7599/Del/2025 and 7622/Del/2025 for A.Ys. 2018-19 and 2021-22 dated 02.09.2025, 30.09.2025 and 24.09.2025 which in turn arises out of the order passed by the Assessing Officer, Asstt/DCIT, Central Circle 25 & 29, Delhi (hereinafter referred to as ‘ld. AO’) passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 26.12.2019, 10.08.2022 and 29.12.2029. Identical issue is involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience…..
Neelam Aggarwal– ITA No. 6809/Del/2025 – Asst Year 2018-19- Assessee Appeal
The second limb of Ground No.1 on the issue of non-approval under section 153D of the Act, was stated to be not pressed by the Learned AR at the time of hearing. The same is reckoned as a statement made from the Bar and accordingly the second limb of Ground No. 1 is hereby dismissed as not pressed.
The first limb of Ground No.1 is challenging the action of the Learned CITA in confirming the addition of Rs 8,83,150 under section 69A of the Act on account of cash found during the course of search.
We have heard the rival submissions and perused the materials available on record. The assessee filed her return of income for the assessment year 2018-19 on 9-3-2018 declaring total income of Rs. 12,50,210. A search and seizure operation under Section 132 of the Act was carried out on 25-10-2017 and during the course of search, cash of Rs. 8,83,150 was found from the locker which was jointly in the name of assessee and Smt Kaushalya Devi, who is the mother-in-law of the assessee. The source of such cash was submitted by the assessee as under:-
Rs. 6,33,150 belonged to the assessee and
cash of Rs. 2,50,000 belonged to Smt Sulochana Devi, mother of assessee.
In support of this, an affidavit of Smt Sulochana Devi was filed and cash account of the assessee for the financial year 2018-19 was filed. The assessee in her statement at the time of search recorded under Section 132(4) of the Act dated 25-10-2017, in reply to question number 13 had stated that cash of Rs. 8,83,150 found in the locker was received as gift from relatives on festivals and social occasion and also from past savings and stridhan. The Learned AO noted that there is contradiction between the two versions given by the assessee at two different times. The Learned AO noted that even SMt Sulochana Devi in her affidavit had claimed the cash of Rs. 2,50,000 belonging to herself and nothing is mentioned about any gift given by her to the assessee. Accordingly the Learned AO did not heed to the contentions of the assessee and proceeded to treat the entire cash found in the locker of Rs. 8,83,150 as unexplained money under Section 69A of the Act and completed the assessment. This action of the Learned AO was upheld by the Learned CITA.
At the outset, we find that the breakup of cash found in the sum of Rs. 8,83,150 in the joint locker was explained as belonging to assessee to the extent of Rs. 6,33,150 and belonging to Smt Sulochana Devi, mother of the assessee to the extent of Rs. 2,50,000. We find that Smt Sulochana Devi had indeed filed an affidavit dated 22-11-2019 duly sworn before the notary public that the said sum of Rs. 2,50,000 was out of her past savings and the same had been kept in the locker number 191 maintained with the HDFC Bank by her daughter Neelam Agarwal for safekeeping. This goes to prove that she has owned up the cash of Rs. 2,50,000 and had also sought to explain the source of such cash as emanating out of her past savings over the period of years. When the affidavit was given, Smt Sulochana Devi was 66 years old. Hence, she having a past savings of Rs. 2,50,000 need to be believed and the same cannot be ignored. Further, the assessee had indeed filed the affidavit of Smt Sulochana Devi on record. No examination was sought to be carried out by the learned AO on that affidavit and that the affidavit placed on record was not put to test. Hence, the contents given in the affidavit had to be construed as true and correct when the same was not sought to be tested in the eyes of law. Reliance in this regard is placed on the celebrated decision of Hon’ble Supreme Court in the case of Mehta Parikh reported in 30 ITR 181 (SC). Hence, we have no hesitation to give credit to the extent of cash owned up by the mother of the assessee Smt Sulochana Devi in the sum of Rs. 2,50,000.
With regard to the remaining sum of Rs. 6,33,150, the assessee had placed on record the cash account containing the opening cash balance, cash withdrawals, income earned in cash, gift received from various people and after reducing the outgoings and personal expenses, there was sufficient cash balance left with the assessee to explain the cash found in the locker at the time of search. Considering the social standing and the status of the assessee, it could be safely construed that a plausible explanation had indeed been given by the assessee. It cannot be denied that assessee for the year under consideration itself had declared taxable income of Rs. 12,52,010. The assessee has been regularly assessed to income tax in the past and had been reasonably declaring good amount of income. Hence, considering the social status of the assessee, the explanation given by the assessee need to be construed as a plausible explanation to explain the paltry sum of cash of Rs. 6,33,150. There is no contrary evidence brought on record by the revenue to disprove the cash account furnished by the assessee which is also reproduced in page 4 of the appellate order . From the perusal of the said cash account, we find that assessee had an opening cash balance of Rs. 6,68,564 as on 1-4-2017 and had made withdrawal of Rs. 90,000 from the bank apart from having other income in cash of Rs. 60,000. The assessee had received gift of Rs. 11,000 from her mother and Rs. 9,000 each from Amit Singla, Pradeep Singla and Sandeep Singla. After reducing the cash balance on account of school fees and drawings, the assessee was left with sufficient cash balance which itself explains the cash seized at the time of search in the sum of Rs. 6,33,150. Hence, considering the totality of the circumstances of the case including the social standing of the assessee together with the income disclosed by her in the returns, we hold that the cash found in the locker has been properly explained and there could be no addition that could be made in the hands of the assessee for the same. Hence, the addition made on account of unexplained money under Section 69A of the Act is hereby directed to be deleted.
In the result, the appeal of the assessee is partly allowed.
Anil Hada– ITA No. 7599/Del/2025 – Asst Year 2021-22- Assessee Appeal
The second limb of Ground No.1 on the issue of non-approval under section 153D of the Act, was stated to be not pressed by the Learned AR at the time of hearing. The same is reckoned as a statement made from the Bar and accordingly the second limb of Ground No. 1 is hereby dismissed as not pressed.
The first limb of Ground No.1 is challenging the action of the Learned CITA in confirming the addition of Rs 9,17,030 under section 69A of the Act on account of cash found during the course of search.
We have heard the rival submissions and perused the materials available on record. The assessee filed her return of income for the assessment year 2021-22 on 24-12-2021 declaring taxable income of Rs 12,00,930. During the year under consideration, the Learned AO noted that assessee had earned income from business or profession, capital gains and income from other sources. A search and seizure operation under Section 132 of the Act was carried out on 14-10-2020 in the case of Manoj Kumar Singh. The premises / locker of the assessee was also covered during the search operations. During the course of search, cash of Rs. 12,75,430 was found along with 475.10 grams (belongs to Pooja Hada) and 1316.50 grams (Belongs to Poonam Hada) (including 1kg Bar) of Gold were found. The assessee submitted that only a sum of Rs 9,17,030 belongs to her and remaining cash of Rs 3,58,400 belongs to Shri Manish Hada. This explanation was accepted by the revenue. The assessee was directed to explain the source of cash found at the time of search in the sum of Rs 9,17,030. The assessee explained in the statement under section 132(4) of the Act at the time of search that cash found at the residential premises represent Rs 2,50,000 mandir money found from house mandir ; Rs 2,80,000 belongs to wife (Mrs Poonam Hada) represent shagun envelopes received as gifts from friends and relatives by his wife ; and Rs 4,20,000 represent gifts received from mother. It was submitted that a sum of Rs 8,00,000 was given as gift by his mother in 2018 for performing her death rituals and out of that, a sum of Rs 3,80,000 was spent by the assessee and balance Rs 4,20,000 was remaining with the assessee out of the monies received as gift. It was also submitted that assessee had shown miscellaneous income of Rs 1,37,790 in Assessment Year 2018-19 and Rs 2,55,500 in Assessment Year 2019-20 in the returns which includes such shagun money received. The Learned AO however considered the aforesaid reply to be unsatisfactory and proceeded to treat the seized cash of Rs 9,17,030 as unexplained money under section 69A read with section 115BBE of the Act in the hands of the assessee and added the same to the total income of the assessee for the Assessment Year 2021-22. This action of the Learned AO was upheld by the Learned CITA.
We find that the assessee with regard to the cash found of Rs. 9,17,030 had sought to explain the source by stating as under: -
A sum of Rs. 2,50,000 was found from the House Mandir at the time of search. The assessee had said that he has been investing Rs. 10,000 by earmarking the funds for temple purposes every month which was kept separately in the house Mandir and the cash of Rs. 2,50,000 also was seized only from that house Mandir by the search team. Considering the social status of the assessee, earmarking Rs. 10,000 per month in cash towards Mandir purposes could be easily explained and becomes a plausible explanation and hence we hold that the said cash to the extent of Rs. 2,50,000 stands explained. Hence, no addition could be made in the hands of the assessee for the same.
The assessee had said that Rs. 2,80,000 belongs to his wife Mrs. Poonam Hada, who had kept the Shagun monies received from friends and relatives on various auspicious occasions. In fact, it is an admitted fact that the said cash of Rs. 2,80,000 was also seized only from the Shagun envelopes at the time of search. Hence, the explanation given by the assessee becomes a plausible explanation to the extent of Rs. 2,80,000 cash found which is stated to be belonging to the wife. Hence, no addition could be made in the hands of the assessee for the same.
The assessee had stated that his mother had given Rs. 8,00,000 in cash as a gift in the year 2018 for performing her death rituals. The assessee stated at the time of search that after spending Rs. 3,80,000 from that sums towards the death rituals, the balance amount of Rs. 4,20,000 was retained in the house which was found at the time of search. It is a fact that the assessee's mother was not alive at the time of search. It is a normal practice prevailing in the country for the elders to earmark funds either in the will or assign the responsibility to one trusted / loyal family member by giving their personal funds to that concerned family member for meeting the death rituals. This is being practiced in the larger interest and harmony of the family. Majority of the elders in the country resort to this practice. Hence, the explanation given by the assessee need to be considered as a plausible explanation in this regard. Further, we also find that given the social standing and the income declared by the assessee in the income tax returns for the year and earlier years, the cash found in the sum of Rs. 4,20,000 in this regard could be very easily explained and had to be construed as a very plausible explanation. Hence, no addition could be made in the hands of the assessee for the same.
In view of the aforesaid observations, we hold that there is no case made out by the revenue for sustaining the addition of Rs 9,17,030 in the hands of the assessee on account of seized cash and assessee had given plausible explanation for the same. Hence, the addition made on account of unexplained money under Section 69A of the Act is hereby directed to be deleted.
In the result, the appeal of the assessee is partly allowed.
The second limb of Ground No.1 on the issue of non-approval under section 153D of the Act, was stated to be not pressed by the Learned AR at the time of hearing. The same is reckoned as a statement made from the Bar and accordingly the second limb of Ground No. 1 is hereby dismissed as not pressed.
The first limb of Ground No.1 is challenging the action of the Learned CITA in confirming the addition of Rs 45,95,000 under section 69A of the Act on account of jewellery found during the course of search.
We have heard the rival submissions and perused the materials available on record. The assessee filed her return of income for the assessment year 2018-19 under section 139 of the Act on 20-8-2018 declaring total income of Rs Nil. A search and seizure of action under section 132 of the Act was carried out in the case of the assessee on 05-10-2017 at the residence of the assessee situated at 352, Kohat Enclave, Pitampura, Delhi, where the assessee was residing with her joint family. At the time of search at the residence on 5-10-2017, it came to the notice that Locker No. 223 with HDFC Bank was held in the joint name of Smt Sunaina Agarwal and her brother Shri Kunal Gulati. Therefore, after Prohibitory Order under Section 132(3) of the Act was issued to the Bank in respect of the said Locker No. 223. Subsequently, search was also conducted on 30-11-2017 in respect of bank locker no. 223 maintained with HDFC bank, Tagore Garden, New Delhi. This Locker was operated under Section 132 of the Act on 30-11-2017. Statements of Smt Sunaina Agarwal were also recorded under Section 132(4) of the Act on 30-11-2017 wherein she admitted that she had authorized her brother Shri Kunal Gulati to operate the said Locker. She had also admitted that certain jewellery items were taken away by Shri Kunal Gulati on the day of search. The assessee also submitted with reference to query regarding Locker No. 223 with HDFC Bank which was jointly maintained with Shri Kunal Gulati and in the said Locker, jewellery were found during search. The assessee submitted that the said Locker was operated by Shri Kunal Gulati on 5-10-2017. The said information was made available to the personnel of the Investigation Wing during the course of search and as such, the personnel of the Investigation Wing directed Shri Kunal Gulati to come to the residence of assessee and hand over all the jewellery kept in the Locker at HDFC Bank. On the instruction of the personnel of the Investigation Wing, Shri Kunal Gulati came to the residence of the assessee and handed over all jewellery kept in the Locker at the time of search. As such, all the jewellery in the Locker at HDFC Bank were made part of the valuation report forming part of Panchanama in the case of assessee and Smt Shashi Agarwal. The valuation report of the jewellery dated 5-10-2017 is enclosed in pages 8 and 9 of the paper book. The said valuation report contains various items in respect of 1019.54 grams of gold valued at Rs.38,10,098 and 306.80 grams of gold valued at Rs.19,44,369 totalling to 1326.34 grams of gold valued at Rs 57,54,467.
The learned AO considered the aforesaid explanation to be untenable on the ground that the description of jewellery items given by assessee in her statements dated 30-11-2017 was not matching with the inventory of jewellery prepared at the residence. Thereafter, the learned AO listed out the various items and made an estimated addition of Rs. 45,95,000 and treated the same as an unexplained money under section 69A read with section 115BBE of the Act and completed the assessment. This action of the learned AO was upheld by the learned CITA.
At the outset, we find that the entire addition on account of jewellery has been made by the learned AO on an estimated basis by completely ignoring the valuation report dated 5-10-2017 prepared at the time of search by the Income Tax Department approved valuer. There is absolutely no reason for the learned AO to ignore the valuation report at the time of search prepared by the Income Tax Department's own valuer. As per the valuation report, the total jewellery found was 1326.34 grams. In this regard, the family tree of the assessee would be relevant to be considered. The learned AO had admitted in the assessment order that the assessee was staying with her joint family at the time of search. The family members of the assessee are as under:-
Mr. Vikas Agarwal , aged 44 years - husband of assessee
Ms. Mairaa Agarwal, aged 15 years - daughter of assessee
Mr. Amit Agarwal, aged 48 years – brother of Mr. Vikal Agarwal
Mrs. Neeti Agarwal, aged 46 years – wife of Amit Agarwal
Mrs, Shashi Agarwal, aged 70 years - mother of Vikal Agarwal
Mr. Anil Agarwal, aged 71 years - father of Vikal Agarwal
It would be relevant to rely on the CBDT Instruction No. dated 11-05-1994, which provides the limit up to which jewellery shall not be seized at the time of search. The same provides for 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family need not be seized at the time of search.Even though the said instruction of CBDT speaks only about non-seizure of the jewellery at the time of search, various courts had held that to the extent of such jewellery, the source shall be treated as explained by the assessee. In this regard, we find that the Learned AR had rightly placed reliance on the decision of Hon’ble Rajasthan High Court in the case of CIT vs Satya Narain Patni reported in 366 ITR 325 (Raj), where it was held that where jewellery found in possession of assessee's family was personal wearing of ladies and same was within permissible limits stipulated by CBDT Instruction No. 1916 dated 11-05-1994, then no addition could be made on account of jewellery as the entire jewellery should be treated as explained by the assessee. Considering the above family tree, the total jewellery found of 1326.34 grams which is mentioned in the valuation report falls within the permissible limits of the CBDT Instruction referred supra and respectively following the decision of Hon’ble Rajasthan High Court, we hold that the entire jewellery that are subject matter of valuation report of 1326.34 grams stands properly explained and no addition could be made on account of jewellery in the hands of the assessee herein. Accordingly, the first limb of Ground No. 1 and full Ground No. 2 raised by the assessee are hereby allowed.
In the result, the appeal of the assessee is partly allowed.
To sum up, all the appeals of the assessee are partly allowed.