G.S. Pannu, A.M. - (1.) THIS is an appeal by the assessee against the order of the CIT(A) No. ITA 50/CC.III/CIT(A) II/71993-94, dt. 19th Aug., 1993, pertaining to the asst. yr. 1990-91. The assessee has taken the following grounds of appeal: The CIT(A) was aware of the unassailable fact that cash of Rs. 5 lakhs was discovered on 8th Sept., 1989, when a search was conducted. THIS date being relevant to the asst. yr. 1990-91, the appellant disclosed Rs. 4 lakhs as income from other sources. Regarding the balance of Rs. 1 lakh, its source was traced to withdrawals from M/s Devi Silks, a firm on which the appellant is a partner. The AO has strangely disbelieved this said amount and brought this addition of Rs. 1 lakh under Section 69 of the Act and this the CIT(A) ought not to have confirmed. The CIT(A) was convinced with the said withdrawals and even after ascertaining from the AO that there existed no evidence to show that the said withdrawals was utilised for any other purpose pronounced openly that she would delete the addition of Rs. 1 lakh but strangely misdirected herself and confirmed the addition on grounds irrelevant to the facts of the case and hence the challenge. Having found that the entire amount was found on the date of search on 8th Sept., 1989 the CIT(A) should have noticed that it is wholly relevant to the asst. yr. 1990-91. Otherwise there was no legal necessity to declare the entire amount for assessment for the asst. yr. 1990-91. The CIT(A) misdirected herself and observations of para 3.3 of the order in the process she ignored the fact that if the cash was available prior to 31st March, 1988, the entire amount of Rs. 5 lakhs; Rs. 4 lakhs returned by the assessee not to speak of the further addition of Rs. 1 lakh made under Section 69 by the assessee called for total deletion for the asst. yr. 1990-91 with a direction to consider the entire sum of Rs. 5 lakhs either for 1988-89 or 1989-90 assessment. The CIT(A) in having confirmed the addition of Rs. 1 lakh under Section 69 for the asst- yr. 1990-91 consciously failed to delete the addition when its origin and source has been proved by way of withdrawal from the firm of M/s Devi Silks which the CIT(A) accepted by her.
(2.) Shri G. Laxminarasimhan, Advocate appeared on behalf of the appellant-assessee and Shri U. Anjaneyalu, the learned Departmental Representative, appeared on behalf of the respondent Department. Both the parties have been heard. Briefly the facts are that there was a search conducted by the Central excise authorities at the premises of one Shri Dinesh Chandra Mehta on 6th Sept., 1989. During the course of search an almirah was found at the above said place of Shri Mehta. On being asked to explain, it was contended by Shri Mehta that the almirah and its key belonged to Shri C. Govindappa, the assessee before us. Therefore, the said assessee was brought to the residence of the said Shri. Mehta and the almirah was opened with the key provided by the appellant. It was found that there were certain papers and cash of Rs. 5 lakhs belonging to the appellant. Consequently, information was sent to the IT authorities who reached the scene and a statement under Section 132(4) was recorded from the appellant. The appellant admitted to the ownership of the cash of Rs. 5 lakhs found therein. During the course of his statement under Section 132(4) on 6th Sept., 1989, the assessee offered for taxation cash of Rs. 5 lakhs. Subsequently also, on 11th Sept., 1989 and 20th Dec., 1989, statements were recorded from the assessee. Subsequent to the initial statement under Section 132(4) on 6th Sept., 1989, it was stated by the assessee that out of the sum of Rs. 5 lakhs, an amount of Rs. 1 lakh represented withdrawals made from M/s Devi Silks (in which he was a partner) and the balance of Rs. 4 lakhs represented his unaccounted income. During the course of the assessment proceedings under Section 143(3), the AO also carried out verification of the books of the firm M/s Devi Silks and found the following withdrawals ; JUDGEMENT_7479_TLIT0_20010.htm On the pleading of the assessee that Rs. 1 lakh withdrawal shown above was included in the cash found of Rs. 5 lakhs, the AO rejected the same. According to the AO, there was a time gap of 3 months from the date of withdrawal and that the said amount could not be part of the cash found in the almirah on 6th Sept., 1989. Therefore, the AO brought to tax the entire amount of Rs. 5 lakhs as unaccounted income for the year under appeal as against Rs. 4 lakhs returned by the assessee. Aggrieved by the order of the AO, the matter was carried in appeal before the CIT(A) who sustained the addition. Hence, the appeal of the assessee before us.
(3.) THE learned counsel appearing on behalf of the assessee contended that the learned authorities have failed to appreciate the facts on a proper perspective. According to the learned authorised representative, the dispute was only in relation to Rs. 1 lakh and it is represented that the withdrawals from the partnership firm a few days before the search should be accepted as genuine. According to the learned authorised representative, the appellant was an illiterate weaver and having made a declaration of Rs. 4 lakhs would not have hesitated to offer the balance of Rs. 1 lakh but for the genuine fact that the said sum was comprised of the withdrawals made from the firm. According to him, it is an admitted fact that the withdrawals have been made by the assessee from the firm which cumulatively came to Rs. 1 lakh before the date of search. According to the learned authorised representative, the argument of the lower authorities that the cash was kept in the almirah after his father's death which took place on 11th March, 1988, does not lead ipso facto to the conclusion that the unaccounted cash of the appellant pertained to period much earlier than the dates of withdrawal from the firm. He, therefore, argued that it is not open to the authorities to accept the submissions of the assessee in part and reject the other part for which there exists factual support.;