L N MEHTA Vs. ASSTT CIT

JUDGEMENT

(1.) This is an appeal by assessee for assessment year 1988-89 directed against the order of Commissioner (Appeals), Jodhpur, dated 28-10-1993.

(2.) We have heard the arguments of both the sides and also perused the records including the w/s of learned authorised representative of assessee placed on record. Ground No. 1 disputes the addition of Rs. 49,071 on account of unexplained cash found during search. The learned authorised representative of assessee has contended that the assessee has submitted complete explanation of cash found and that there was no unexplained cash. He has contended that the assessee made addition by making cash flow statement according to his own assumptions which are not correct. It has been contended that the assessing officer has the not considered the cash of Rs. 15,000 as belonging to Smt. Gulab Mehta, assessee's wife while preparing cash flow statement and working out unexplained cash. It has been contended that Smt. Gulab Mehta confirmed there statement recorded during search on 8-12-1987 (p. 1 of paper book), that she had cash of Rs. 15,000. It has been contended that this statement is verifiable from her balance sheet as on 8-12-1987 and 31-3-1988 (pp. 36 and 37 of paper book). It has been contended that estimation of household expenses by assessing officer had been very high, whereas the same come to Rs. 3,000 (Rs. 2,500 + 500) per month, i.e., Rs. 24,000 for the period of 8 months, i.e., upto 8-12-1987. It has also been contended that other members of the family contribute about Rs. 5,000 for the whole year and the proportionate contribution for the period come to Rs. 4,000 for the period upto the date of search. He has contended that accordingly the maximum outgoing on this count can be of Rs. 20,000 (24,000 minus 4,000) which includes education expenses also. It has been contended that the assessing officer has taken the interest income at Rs. 6,000 but he has not considered the same while making cash flow statement, and thus there is a cash flow of proportionate amount of Rs. 4,000. It has been contended that the assessing officer has taken the opening cash balance at nil. It has been contended that the assessee is residing in the border area of Jaipur, and the banking habits are not developed there. It has been contended that the assessee is in the habit of maintaining cash balance with him and so the assessee's claim for opening cash balance on 1-4-1987 is quite high. It has been contended that the assessing officer, has exhausted cash balance in the earlier years by high estimation of household expenses and accordingly taken the cash balance as on 1-4-1987 at nil, which is never possible.

(3.) It has been contended that the income of assessee's HUF for assessment years 1984-85 to 1988-89 has been estimated by assessing officer, and the assessee, as Karta of HUF, had agreed to the high estimation income in order to obviate litigation and buy peace and so no appeal was filed by assessee against high estimation of income of LNM, HUF in these years. It has been contended that the estimated cash as calculated as per income-tax assessment order for earlier years must be treated as sufficient explanation of the cash found. It has been contended that the assessing officer has taken just Rs. 15,000 as cash belonging to the HUF, which was not justified. It has been contended that the addition on account of unexplained cash is also not justified in view of the direction given by Deputy Commissioner (Range), Jodhpur as is referred to by the assessing officer in the assessment order of assessee for assessment year 1979-80 dated 22-3-1990 (p. 130 paper book). As against this, the learned Departmental Representative of revenue has referred to pp. 4 to 7 of the assessment order. He has contended that the assessee has not maintained any books of accounts. He has contended that the opening balance is not verifiable He has contended that as regards to Smt. Gulab, Devi, as per Panchnama, the cash of Rs. 692 only was found with Smt. Gulab Devi. He has contended that the assessee declared household expenses at Rs. 6,300 whereas the assessing officer has estimated the same at Rs. 44,000 and so the unexplained cash found was rightly added by assessing officer. He has relied on the orders of assessing officer and Commissioner (Appeals).