NAGURAO MALKU GADGE, MUMBAI v. ITO WD 21(3)(4), MUMBAI

ITA 1902/MUM/2009 | 2002-2003
Pronouncement Date: 19-01-2011 | Result: Dismissed

Appeal Details

RSA Number 190219914 RSA 2009
Assessee PAN ADZPG0550H
Bench Mumbai
Appeal Number ITA 1902/MUM/2009
Duration Of Justice 1 year(s) 9 month(s) 23 day(s)
Appellant NAGURAO MALKU GADGE, MUMBAI
Respondent ITO WD 21(3)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-01-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 19-01-2011
Date Of Final Hearing 20-10-2010
Next Hearing Date 20-10-2010
Assessment Year 2002-2003
Appeal Filed On 26-03-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE SHRI D.MANMOHAN (VP) AND SHRI RAJENDRA SING H(AM) ITA NO.1902/M/2009 ASSESSMENT YEAR 2002-03 SHRI NAGURAO MALKU GADGE THE INCOMETAX OFFICER W ARD 21(3)(4) 4 MAKADWALA COMPOUND MUMBAI NAGURAO GADGE CHAWL HALAV POOL MUMBAI 400 070. PAN : ADZPG0550H APPELLANT RESPONDENT ASSESSEE BY : SHRI RAKESH JOSHI/SHARAD SHAH REVENUE BY : SHRI R.S.SRIVASTAVA O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 28.1.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 2002-03 . THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING ADDITION OF RS.80 57 68 0/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH FOUND IN THE POSSESSION OF THE ASSESSEE. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE WHO WAS A CLASS IV EMPLOYEE OF BOMBAY MUNICIPAL CORPORATION WAS RAI DED BY THE POLICE ON 19.5.2001 ON GETTING INFORMATION THAT THE ASSESSEE BELONGED TO CHHOTA SHAKEEL GANG AND WAS POSSESSING FAKE CURRENCY WHICH WAS LIKELY TO BE TRANSFERRED TO SOME OTHER PLACE. DURING THE COURSE OF SEARCH CASH OF RS.80 57 650/- AND GOLD ORNAMENTS WORTH RS.2.90 LAC S WERE FOUND FROM HIS HOUSE AND WERE SEIZED. THE ASSESSEE WAS CHARGED IN THE COURT OF ADDITIONAL 2 CHIEF METROPOLITAN MAGISTRATE UNDER SECTION 124 OF BOMBAY POLICE ACT WHICH IS REPRODUCED BELOW AS A READY REFERENCE: WHOEVER HAS IN HIS POSSESSION OR CONVEYS IN ANY MA NNER OR OFFERS FOR SALE OF PAWN ANYTHING WHICH THERE IS REASON TO BEL IEVE IS STOLEN PROPERTY OR PROPERTY FRAUDULENTLY OBTAINED SHALL IF HE FAIL ED TO ACCOUNT FOR SUCH POSSESSION OR TO ACT TO THE SATISFACTION OF THE MAG ISTRATE ON CONVICTION BE PUNISHED WITH IMPRISONMENT FOR A TERM (WHICH MAY EXTENDED TO ONE YEAR BUT SHALL NOT EXCEPT FOR REASONS TO BE RECORD ED IN WRITING BE LESS THAN ONE MONTH) AND ALSO LIABLE TO FINE WHICH MAY E XTEND TO (FIVE THOUSAND RUPEES). 3. THE ASSESSEE EXPLAINED BEFORE THE COURT THAT THE CASH BELONGED TO 35 PERSONS INCLUDING THE ASSESSEE WHICH HAD BEEN COLLE CTED FOR CONSTRUCTING A COMMUNITY HALL AT KURLA IN THE NAME OF SHAHPUR SADA N AS ALL THE PERSONS BELONGED TO THE ASSESSEES NATIVE DISTRICT. THE ASS ESSEE PRODUCED ALL THE 34 PERSONS WHOSE STATEMENTS WERE RECORDED AND THEY WER E ALSO SUBJECTED TO CROSS EXAMINATION BY PUBLIC PROSECUTOR. AFTER CONSI DERING THE EVIDENCE PRODUCED THE MAGISTRATE ACQUITTED THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD EXPLAINED HIS POSSESSION OVER THE MONE Y AND THE COURT WAS NOT CONCERNED WITH THE SOURCE OF INCOME OF THE DEFENSE WITNESSES. ACCORDINGLY THE MONEY SEIZED FROM THE ASSESSEE WAS RETURNED BACK TO HIM BY THE COURT. 4. IN THE ORIGINAL ASSESSMENT MADE BY THE AO UNDER SECTION 143(3) ON 18.3.2005 THE CASH SEIZED FROM THE ASSESSEE HAD BEE N TREATED AS HIS UNDISCLOSED INCOME. THIS WAS DISPUTED BY THE ASSESS EE WHO ARGUED THAT CASH COULD NOT BE ADDED IN CASE OF THE ASSESSEE IN VIEW OF THE JUDGMENT OF LD 3 ADDITIONAL CHIEF METROPOLITAN MAGISTRATE ACQUITTING THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD SATISFACTORILY EXPLAINED THE POSSESSION OF CASH. THE TRIBUNAL HOWEVER DID NOT ACCEPT THE PLEA AND OBSERV ED THAT UNDER THE PROVISIONS OF SECTION 124 OF BOMBAY POLICE ACT THE ONLY ASPECT WHICH WAS REQUIRED TO BE SEEN WAS WHETHER THE CASH WAS A STOL EN PROPERTY OR HAD BEEN FRAUDULENTLY OBTAINED. THE COURT WAS NOT CONCERNED WITH THE SOURCE OF CASH. HOWEVER FOR THE PURPOSES OF SECTION 69A OF THE I.T. ACT IN CASE A PERSON WAS FOUND TO BE OWNER OF ANY MONEY ETC. AND FAILED TO E XPLAIN THE NATURE AND SOURCE OF ACQUISITION OR THE EXPLANATION OFFERED IS NOT FOUND SATISFACTORY BY THE AO THE MONEY CAN BE TREATED AS INCOME OF THE ASSESS EE. THE SECTION 124 OF BOMBAY POLICE ACT AND SECTION 69A OF THE INCOME-TAX ACT OPERATED IN DIFFERENT FIELDS. THE TRIBUNAL THEREFORE DID NOT ACCEPT THE P LEA OF THE ASSESSEE ON MERIT. HOWEVER THE TRIBUNAL ACCEPTED THE ALTERNATE PLEA OF THE ASSESSEE THAT HE HAD NOT BEEN PROVIDED SUFFICIENT OPPORTUNITY OF HEARING BEFORE THE AO FOR PRODUCING THE 34 PERSONS OR FOR EXPLAINING HIS POSSESSION WIT H REGARD TO CASH FOUND. THE TRIBUNAL ACCORDINGLY SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO THE FILE OF AO FOR FRESH ORDER AFTER EXAMINATION AND AF TER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. DURING THE FRESH ASSESSMENT PROCEEDINGS THE ASSE SSEE SUBMITTED THAT OUT OF 34 PERSONS TWO PERSONS HAD EXPIRED. THE ASSE SSEE HOWEVER PRODUCED THE REMAINING 32 PERSONS BEFORE THE AO FOR EXAMINAT ION. AO AFTER EXAMINATION OF THE PARTIES PRODUCED RECORDED THE POSITION REGAR DING THEIR NATURAL SOURCE OF INCOME DATE AND MODE OF PAYMENT INCOME TAX ASSESSM ENT POSITION AS UNDER: 4 S.NO NAME & ADDRESS SOURCE OF INCOME OCCUPATION ASSESSED TO TAX MODE OR PAYMENT & DATE AMOUNT 1 SHIVAJI KANKATE AGRICULTURE AGRICULTURE NO CASH 24.4.01 250000 2 HANUMANT S. CHINTAIWAR -DO- -DO- -DO- -DO- 14.4.01 300000 3 HANMANLU G SURKANTE -DO- -DO- -DO- -DO- 21.4.01 200000 4 HANMANLU R SURKANTE -DO- -DO- -DO- -DO- 21.4.01 250000 5 YELREDDY G KOTTAWAR -DO- -DO- -DO- -DO- 21.4.01 200000 6 PRATAP D BHUPATWAR -DO- -DO- -DO- -DO- 21.4.01 200000 7 HANUMANTRAO M PATIL -DO- -DO- -DO- -DO- 14.4.01 250000 8 BASALIREDDY C YELLAPPA -DO- -DO- -DO- -DO- 21.4.01 150000 9 MANGALSINGH R DESHMUKH -DO- -DO- -DO- -DO- 14.4.01 200000 10 RAJENDRA V DHANDOD -DO- -DO- -DO- -DO- 21.4.01 200000 11 SAYABU B DHANSAR -DO- -DO- -DO- -DO- 21.4.01 400000 12 HANMANT RGR SHESHANGAR -DO- -DO- -DO- -DO- 21.4.01 200000 13 BHRAMANAND RS YELLAVA -DO- -DO- -DO- -DO- 21.4.01 300000 14 GOVINDREDDY KOTTAWAR -DO- -DO- -DO- -DO- 21.4.01 200000 15 RAJENDRA R. VENGURAVER -DO- -DO- -DO- -DO- 21.4.01 200000 16 BABURAO D PATIL -DO- -DO- -DO- -DO- 21.4.01 200000 17 MARUTIRAO R PATIL -DO- -DO- -DO- -DO- 21.4.01 350000 18 ERVANTRAO S TANSURE -DO- -DO- -DO- -DO- 21.4.01 300000 19 VEDBHUSAN S DESHMUKH -DO- -DO- -DO- -DO- 300000 20 MARUTIRAO N PARBATE -DO- -DO- -DO- -DO- 21.4.01 200000 21 GANGA R S SHESHANGAR -DO- -DO- -DO- -DO- 10.5.01 200000 22 SHESHRAO R BAMNE -DO- -DO- -DO- -DO- 10.5.01 200000 23 ASHOK D CHINTALVAR -DO- -DO- -DO- -DO- 10.5.01 200000 24 GANGAREDDY S GURKUNTE -DO- -DO- -DO- -DO- 10.5.01 150000 25 YELLUBAI S GADGE BUSINESS MONEY YES 17.4.01 300000 5 LENDING 26 SAIYABAI N GAADGE -DO- -DO- -DO- -DO- 17.4.01 250000 27 SAYBU M GADGE - - - 18.4.01 200000 28 GANGADHAR M GADGE BMC EMPLOYEE SALARY YES -DO- 19.4.01 200000 29 GANGADHAR M GADGE HUF KARTA AGRI & OTHER SOURCE 19.4.01 200000 30 SAYBU M GADGE (HUF) (SAYBU EXPIRED) -DO- 26.4.01 200000 31 GANGUBAI M GADGE BUSINESS MONEY LENDING YES -DO- 26.4.01 300000 32 KRISHNA M DHANALA -DO- LIC AGENT & TAILORING YES 27.4.01 150000 33 SUNKAPPA Y GADGE(EXPIRED -DO- 27.4.01 300000 34 NAGURAO M GADGE HUF KARTA AGRI & OTHER SOURCE YES -DO- 25.4.01 150000 5.1 THE AO NOTED THAT ALL HAD GIVEN IDENTICAL EXPLA NATION REGARDING SOURCE THAT THEY WERE ALL AGRICULTURISTS WHO HAD RECEIVED INCOME IN CASH FROM MANDAL AND LOCAL DEALER. ALL THE PERSONS WERE HAVING BANK ACCOUNT BUT NONE OF THEM HAD CONTRIBUTED MONEY BY CHEQUE. NONE OF THEM WERE ASSESSED TO TAX AS MOST OF THEM WERE ENGAGED IN AGRICULTURAL ACTIVITIES AND SOME OF THEM THOUGH IN EMPLOYMENT WERE RECEIVING LOW SALARY. THE AO THEREF ORE CONCLUDED THAT THE PARTIES HAD MADE TUTORED STATEMENTS AND NONE OF THE M HAD CREDITWORTHINESS TO CONTRIBUTE LARGE AMOUNTS IN CASH. THEIR STATEMENTS IN WHICH THEY CONFIRMED THE CONTRIBUTIONS WAS FOUND BY THE AO AS NOT RELIABLE. THOUGH THE PARTIES HAD GIVEN THE OWNERSHIP OF AGRICULTURAL LAND BUT NO PROOF OF DAY TO DAY AGRICULTURAL ACTIVITIES WERE GIVEN. THEY SUBMITTED ONLY KATCHA R ECEIPTS AGAINST SALES OF AGRICULTURAL PRODUCTS WHICH WERE FOUND NOT RELIABLE . THE AO ALSO EXAMINED THE ASSESSEE UNDER SECTION 131 OF THE INCOME-TAX ACT. T HE AO NOTED THE ASSESSEE WAS MAINLY DOING MONEY LENDING BUSINESS. HE ALSO NO TED THAT DURING THE COURSE OF SEARCH CERTAIN BILLS OF ACCOUNT AND DOCUMENTS C ONTAINING ENTRIES REGARDING 6 MONEY LENDING BUSINESS WERE FOUND. BLANK AGREEMENTS AS WELL AS CERTAIN BANK ACCOUNTS PASSPORTS AND IDENTITY CARDS OF DIFFERENT PERSONS WHICH WERE KEPT BY THE ASSESSEE AGAINST DISBURSEMENT OF LOAN WERE ALSO FOUND. ALL THESE FACTS CLEARLY SHOWED THAT THE ASSESSEE AND HIS FAMILY MEM BERS WERE ENGAGED IN THE BUSINESS OF MONEY LENDING. THUS THE ASSESSEE WAS HA VING ACTIVITIES FROM WHICH CASH COULD BE GENERATED. THE STATEMENT OF PARTIES A S HELD EARLIER WAS NOT RELIABLE AS THEIR CREDITWORTHINESS WAS NOT ESTABLIS HED AND THEIR STATEMENT WAS TUTORED. AO OBSERVED THAT MERE FILING OF AFFIDAVIT OR GIVING EVIDENCE OF LAND OWNERSHIP WAS NOT ENOUGH WHEN THERE WAS NO PROPER E VIDENCE OF EARNING OF AGRICULTURAL INCOME BY THEM. HE THEREFORE HELD THAT THE SOURCE OF CASH WAS NOT EXPLAINED SATISFACTORILY AND ADDED THE AMOUNT AGAIN AS INCOME OF THE ASSESSEE. 6. IN APPEAL THE ASSESSEE REITERATED EARLIER SUBMIS SION THAT IN VIEW OF THE JUDGMENT OF ADDITIONAL CHIEF METROPOLITAN MAGISTRAT E NO ADDITION COULD BE MADE IN CASE OF THE ASSESSEE. CIT(A) OBSERVED THAT THESE ASPECTS HAD ALREADY BEEN CONSIDERED BY THE TRIBUNAL AND HELD THAT SECTI ON 124 OF BOMBAY POLICE ACT AND SECTION 69A OF INCOME-TAX ACT OPERATE IN DIFFER ENT FIELDS AND ONLY ON THE BASIS OF ORDER UNDER SECTION 124 OF BOMBAY POLICE A CT RELIEF COULD NOT BE ALLOWED UNDER INCOME-TAX ACT IN WHICH REQUIREMENT W AS DIFFERENT. THE TRIBUNAL HAD SET ASIDE THE ORDER ONLY FOR THE PURPOSE OF ALL OWING FURTHER OPPORTUNITIES TO ASSESSEE FOR EXAMINATION OF PARTIES. THE AO HAD ALR EADY EXAMINED THE SAID PARTIES AND NOTICED THAT THE SOURCE OF THEIR INCOME WAS MOSTLY AGRICULTURAL WHICH WAS NOT SUPPORTED BY PROPER BILLS. THEY GAVE SIMILAR CONFIRMATION AND SIMILAR ANSWERS DURING EXAMINATION. NONE OF THEM HA D CONTRIBUTED MONEY BY CHEQUE THOUGH THEY WERE HAVING BANK ACCOUNTS. ON TH E OTHER HAND THE ASSESSEE WAS HAVING MONEY LENDING BUSINESS AND WAS IN POSSESSION OF HUGE CASH OF RS.80.50 LACS. THE CASH HAD BEEN EXPLAINED AS MONEY COLLECTED FROM 7 DIFFERENT PARTIES FOR CONSTRUCTION OF A COMMUNITY H ALL. BUT NO EVIDENCE HAD BEEN PRODUCED REGARDING PURCHASE OF LAND. THERE WER E NO DOCUMENTS PRODUCED REGARDING FORMATION OF TRUST OR FOUNDATION AND THE MONEY HAD BEEN KEPT IN CASH WHEN THERE WAS NO IMMEDIATE REQUIREMENT FOR CA SH PAYMENT FOR THE PURPOSE OF COMMUNITY HALL. CIT(A) THEREFORE HELD TH AT ORDER OF AO HOLDING THE CASH AS NOT EXPLAINED SATISFACTORILY WAS JUSTIFIED. HE THUS UPHELD THE ADDITION MADE BY THE AO AGGRIEVED BY WHICH THE ASSESSEE IS I N APPEAL BEFORE THE TRIBUNAL. 7. BEFORE US THE LEARNED AR FOR THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES. IT WAS POINTED OUT T HAT ALL THE 34 PERSONS HAD COME TOGETHER FOR CONSTRUCTION OF A COMMUNITY HALL AS SUGGESTED BY THE ASSESSEE WHO CAME FROM THEIR NATIVE PLACE. THEY HAD GIVEN THE MONEY IN CASH AS THEY HAD TRUST IN HIM. IT WAS ALSO POINTED OUT T HAT MONEY GIVEN WAS NOT DONATION AS PERCEIVED BY AO BUT MONEY HAD BEEN CONT RIBUTED WITH THE EXPECTATION THAT THEY WOULD EARN SOME INCOME. HE RE FERRED TO THE STATEMENT OF THE PARTIES KEPT IN THE PAPER BOOK IN WHICH SOME OF THEM HAD STATED THAT INVESTMENT WAS MADE IN THE UNDERSTANDING THAT INCOM E WOULD BE DISTRIBUTED AND ONE OF THE EXPECTED RETURN OF 30 TO 40%. THE PA RTIES HAD ALSO EXPLAINED AS TO WHY THEY HAD GIVEN MONEY IN CASH. THE EXPLANATIO N GIVEN WAS THAT THEY DID NOT HAVE FULL/ COMPLETE BANKING HABIT. THE LEARNED AR ALSO FILED ADDITIONAL EVIDENCE IN THE FORM OF AFFIDAVIT CUM RECEIPT OF 31 PARTIES DATED MAY/ JUNE 2010 IN WHICH IT HAS BEEN STATED THAT ON RELEASE OF MONEY BY COURT THEY HAD RECEIVED BACK THE CONTRIBUTION ALONG WITH INTEREST. IT WAS CLARIFIED THAT THE RECEIPT WAS IN CASH. IT WAS REQUESTED THAT THE ADDI TIONAL EVIDENCE MAY BE ADMITTED AS THEY CAME INTO POSSESSION AFTER PASSING OF THE ORDERS BY THE AUTHORITIES BELOW. THE LEARNED AR ARGUED THAT IN VI EW OF THE STATEMENTS OF THE 8 PARTIES CONFIRMING THE CONTRIBUTION AND THE RETURN OF MONEY BY THEM NO ADDITION COULD BE MADE. THE LEARNED AR PLACED RELIA NCE ON THE FOLLOWING JUDGMENTS IN SUPPORT OF THE CASE. I. 237 ITR 570 (SC) IN CASE OF CIT VS P.K.NOORJAHAN II. 300 ITR 372 (RAJ) IN CASE OF MANGILAL AGARWAL VS AC IT III. 252 ITR 596 (DELHI) IN CASE OF CIT VS MOHD. MASOOM IV. 266 ITR 388 (P & H) IN CASE OF CIT VS SOMANI PILKI NGTONS LTD. V. 28 ITD 386 ITO VS NAGARDAS JASHRAJ 8. THE LEARNED DR ON THE OTHER HAND STRONGLY SUPPOR TED THE ORDERS OF THE AUTHORITIES BELOW. IT WAS SUBMITTED THAT THE CONTRI BUTIONS HAD BEEN RECEIVED IN CASH FROM DIFFERENT PARTIES WHO DID NOT HAVE PROPER EVIDENCE OF CREDITWORTHINESS. THEY PAID HUGE AMOUNTS IN CASH WH EN THEY WERE HAVING BANK ACCOUNTS. HE ALSO REFERRED TO THE RECEIPTS OF CONTR IBUTION ISSUED BY THE ASSESSEE COPIES OF WHICH HAVE PLACED IN THE PAPER B OOK TO POINT OUT THAT THESE DID NOT BEAR THE SIGNATURE OF THE PARTIES WHICH SHO WED THAT THESE WERE UNILATERAL RECEIPTS PREPARED BY THE ASSESSEE. IT WA S ALSO POINTED OUT THAT THE AFFIDAVITS FILED BY THE PARTIES SHOWED THAT THE STA MPS WERE PURCHASED FROM THE SAME VENDOR ON THE SAME DAY AND THEY WERE NOTORISED ON THE SAME DATE WHICH ALSO SHOWED CLEARLY THAT AFFIDAVITS WERE ARRANGED A ND WERE TUTORED. CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES THE FINDING OF THE AUTHORITIES BELOW THAT CASH WAS NOT EXPLAINED SATIS FACTORILY WAS JUSTIFIED AND THE AMOUNT HAD BEEN RIGHTLY ADDED AS INCOME OF THE ASSESSEE. 9. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ADDITION OF RS. 80 57 650/- ON ACCOUNT OF 9 CASH FOUND FROM THE POSSESSION OF THE ASSESSEE AT T HE TIME OF SEARCH ON 19.5.2001 BY THE POLICE. THE ASSESSEE HAD BEEN CHAR GED UNDER THE PROVISIONS OF SECTION 124 OF THE BOMBAY POLICE ACT AS PER WHIC H A PERSON FOUND IN POSSESSION OF A STOLEN PROPERTY OR A PROPERTY FRAUD ULENTLY OBTAINED WAS PUNISHABLE WITH IMPRISONMENT AND ALSO LIABLE TO FIN E. THE ASSESSEE HAD EXPLAINED BEFORE THE MAGISTRATE THAT THE CASH BELON GED TO 35 PERSONS INCLUDING THE ASSESSEE WHO HAD JOINED TOGETHER TO CONSTRUCT A COMMUNITY HALL IN THE NAME OF SHAHPUR SADAN. IT WAS ALSO EXPLAINED THAT T HE REMAINING 34 PERSONS CAME FROM HIS NATIVE PLACE AND HAD CONTRIBUTED THE MONEY IN CASH. ALL THE 34 PERSONS WERE PRODUCED WHOSE STATEMENTS WERE RECORDE D AND THEY WERE ALSO CROSS EXAMINED BY THE PUBLIC PROSECUTOR. THE LEARNE D MAGISTRATE ON CONSIDERATION OF THE MATERIAL ON RECORD ACQUITTED T HE ASSESSEE ON THE GROUND THAT THE POSSESSION OF CASH WAS EXPLAINED. THE MAGI STRATE ALSO OBSERVED THAT HE WAS NOT CONCERNED WITH THE SOURCE OF INCOME DEFE NSE WITNESSES I.T. THE 34 PERSONS PRODUCED BY THE ASSESSEE. BASED ON THE MATE RIAL FOUND DURING POLICE RAID ADDITION HAD BEEN MADE IN CASE OF THE ASSESSEE UNDER SECTION 143(3) IN WHICH AO HELD THAT THE SOURCE OF CASH WAS NOT EXPLA INED SATISFACTORILY AND THUS ADDED THE CASH FOUND TO THE TOTAL INCOME UNDER SECT ION 69A OF THE INCOME-TAX ACT. THE ASSESSEE HAD DISPUTED THE DECISION OF THE AO AND ARGUED BEFORE THE TRIBUNAL IN THE EARLIER ROUND OF APPEAL THAT IN VIE W OF THE ORDER OF THE MAGISTRATE ACQUITTING THE ASSESSEE NO ADDITION COULD BE MADE U NDER THE INCOME-TAX ACT. THE SAID ARGUMENT WAS NOT ACCEPTED BY THE TRIBUNAL WHO OBSERVED THAT SECTION 124 OF BOMBAY POLICE ACT AND SECTION 69A OF THE INC OME-TAX ACT OPERATED IN DIFFERENT FIELDS. UNDER SECTION 124 OF THE BOMBAY P OLICE ACT THE ONLY ASPECT WHICH WAS REQUIRED TO SEEN WAS WHETHER CASH WAS A S TOLEN PROPERTY AND HAD BEEN FRAUDULENTLY OBTAINED AND WHEREAS UNDER SECTIO N 69A OF THE INCOME-TAX ACT A PERSON WAS REQUIRED TO EXPLAIN THE SOURCE OF CASH FOUND IN HIS 10 POSSESSION AND IN CASE EXPLANATION IS NOT FOUND SAT ISFACTORY THE CASH WOULD BE TREATED AS INCOME OF THE PERSON. THE TRIBUNAL THERE FORE DID NOT ACCEPT THE PLEA THAT MERELY BECAUSE THE ASSESSEE WAS ACQUITTED UNDE R SECTION 124 NO ADDITION COULD BE MADE UNDER SECTION 69A OF THE INCOME-TAX A CT. THE ASSESSEE HAD NOT APPEALED AGAINST THE ORDER OF THE TRIBUNAL AND THER EFORE THE SAID ORDER OF THE TRIBUNAL HAS BECOME FINAL. THE TRIBUNAL HAD HOWEVER RESTORED THE MATTER TO THE FILE OF AO FOR PROVIDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE FOR PRODUCING 34 PERSONS AND THEIR EXAMINATION AND FOR PASSING A FRE SH ORDER. THE AO IN THE FRESH ASSESSMENT AFTER EXAMINING THE 32 PERSONS WHO WERE PRODUCED (THE REMAINING TWO HAD DIED) HAS HELD THAT THEIR EXPLANA TION REGARDING CONTRIBUTION OF CASH WAS NOT SATISFACTORY AND ACCORDINGLY HAS TR EATED THE AMOUNT AS HIS INCOME AFTER CONSIDERING THE FACTS AND CIRCUMSTANCE S OF THE CASE AS MENTIONED IN PARA 5 EARLIER AND THE ADDITION HAS BEEN CONFIRM ED BY THE CIT(A). 10. ON CAREFUL CONSIDERATION OF THE VARIOUS FACTS A ND CIRCUMSTANCES OF THE CASE AS MENTIONED EARLIER WE FIND NO INFIRMITY IN T HE ORDERS OF THE AUTHORITIES BELOW HOLDING THAT THE SOURCE OF CASH WAS NOT EXPLA INED BY THE ASSESSEE SATISFACTORILY. ALL THE PERSONS HAD CONTRIBUTED SUB STANTIAL MONEY IN CASH VARYING FROM RS.1.50 LACS TO RS.3 LACS. THERE IS NO EVIDENCE THAT THE MONEY HAD COME FROM THEIR ACCOUNTS. ONE HAS THEREFORE TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO ARRIVE AT A CONCLUSION WHETHER THE PERSONS HAD REALLY CONTRIBUTED THE MONEY IN CASH TO THE ASSESSEE. IT I S A SETTLED LEGAL POSITION AS HELD BY HONBLE SUPREME COURT IN CASE OF DURGA PRAS AD MORE (82 ITR 540) THAT FOR GIVING A FINDING ABOUT A FACTUAL SITUATION THE AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES AND APPLY THE TE ST OF HUMAN PROBABILITIES. THE SAID PRINCIPLES HAD BEEN APPLIED BY THE HONBLE SUPREME COURT IN CASE OF SUMATI DAYAL (214 ITR 801). IN THAT CASE THE ASSES SEE HAD SHOWN INCOME 11 FROM WINNING JACKPOTS IN HORSE RACES IN CONSECUTIVE YEARS. THE RACE CLUBS HAD CONFIRMED THAT PAYMENTS HAD BEEN MADE ON PRESENTATI ON OF WINNING TICKETS. BUT CONSIDERING THE SURROUNDING CIRCUMSTANCES THAT THE ASSESSEE HAD NO EXPERIENCE IN HORSE RACING; SHE WAS ALWAYS WINNING AND NOT LOSING; THERE WAS NO EVIDENCE OF ANY EXPENDITURE INCURRED FOR PARTICI PATING IN DIFFERENT RACE COURSE THE SETTLEMENT COMMISSION HELD THAT THE CLA IM OF INCOME FROM HORCE RACES WAS NOT GENUINE AND THE AMOUNT WAS TREATED AS INCOME. THE HONBLE SUPREME COURT UPHELD THE FINDING OF THE SETTLEMENT COMMISSION. 11. THE SURROUNDING CIRCUMSTANCES DO NOT SUPPORT TH E CASE OF THE ASSESSEE THAT THE CASH BELONGED TO OTHER PERSONS. ALL THE P ERSONS WERE HAVING BANK ACCOUNTS AND YET THEY HAD CONTRIBUTED THE MONEY IN CASH. IT DOES NOT CONFORM TO NORMAL HUMAN BEHAVIOR THAT SOME ONE HAVING BANK ACCOUNT WILL KEEP THE MONEY IDLE IN CASH AND NOT EARN INTEREST INCOME. MO ST OF THE PERSONS WERE NOT ASSESSED TO TAX AND EVEN IN A FEW CASES WHICH CLAIM ED TO HAVE BEEN ASSESSED NO EVIDENCE HAS BEEN PRODUCED THAT THEIR CASES HAD BEEN EXAMINED AND SOURCE OF CASH HAS BEEN FOUND SATISFACTORY IN THEIR CASE. MOST OF THEM HAD EXPLAINED THE SOURCE OF CASH AS AGRICULTURAL ACTIVITIES BUT N O PROPER EVIDENCE HAS BEEN PRODUCED REGARDING EARNING OF AGRICULTURAL INCOME F ROM WHICH SUBSTANTIAL CASH COULD BE ACCUMULATED. THERE IS NO EVIDENCE THAT THE PARTIES WERE IN POSSESSION OF THE CASH ON THE DATE OF CONTRIBUTION. MERE OWNER SHIP OF AGRICULTURAL LAND IN THE ABSENCE OF PROPER EVIDENCE THAT THEY HAD ENOUGH SAVINGS FROM AGRICULTURAL INCOME IS NOT ENOUGH. THE ASSESSEE HAS EXPLAINED TH AT THE CASH HAD BEEN CONTRIBUTED BY DIFFERENT PERSONS TOWARDS CONSTRUCTI ON OF A COMMUNITY CENTRE. BUT NO DOCUMENTS HAS BEEN PRODUCED REGARDING FORMAT ION OF ANY JOINT VENTURE OR ANY AGREEMENT UNDER WHICH THE CASH HAD BEEN CONT RIBUTED. THERE IS ALSO NO MATERIAL TO SHOW THAT CASH WAS URGENTLY REQUIRED FO R PURCHASE OF LAND NOR ANY 12 LAND WAS PURCHASED. IT IS HIGHLY IMPROBABLE THAT SO MEBODY WILL CONTRIBUTE SUBSTANTIAL CASH WITHOUT BEING SATISFIED ABOUT THE DOCUMENTS/PAPERS PARTICULARLY WHEN THEY EXPECTED TO EARN DECENT INCO ME FROM SUCH VENTURE AS WAS POINTED OUT BY THE LEARNED AR FROM READING OF T HE SOME OF THE STATEMENTS OF THE PARTIES. ALL THE PERSONS HAD GIVEN IDENTICAL CONFIRMATION AND IDENTICAL EXPLANATION ABOUT THE SOURCE OF CASH. MERE FILING O F CONFIRMATION OR EXPLANATION IS NOT ENOUGH. IT IS REQUIRED TO BE SEEN THAT WHETH ER PERSONS HAD THE CAPACITY TO CONTRIBUTE SUBSTANTIAL CASH FOR WHICH THERE IS N O PROPER EVIDENCE. IT IS ALSO TO BE NOTED THAT ALL THE STAMPS WERE PURCHASED FROM THE SAME VENDOR ON THE SAME DAY AND ALSO NOTARISED ON THE SAME DAY. CONSID ERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES WE AGREE WITH THE FINDINGS OF THE AUTHORITIES BELOW THAT THE STATEMENTS AND CONFIRMATIONS FILED BY THE PARTIES W ERE ARRANGED AND TUTORED AND THE CLAIM OF THE ASSESSEE THAT CASH BELONGED TO THEM IS NOT GENUINE. 12. THE LEARNED AR FOR THE ASSESSEE HAS ALSO FILED ADDITIONAL EVIDENCE IN THE FORM OF AFFIDAVIT CUM RECEIPT FROM ALL THE PERSONS IN WHICH THEY HAVE STATED THAT THEY HAVE RECEIVED THE MONEY BACK WITH INTERES T IN CASH. AGAIN THE MONEY HAS NOT BEEN RETURNED BY CHEQUE WHEN THE PARTIES WE RE HAVING BANK ACCOUNT. HERE ALSO IDENTICAL AFFIDAVIT-CUM-RECEIPTS HAVE BEE N PREPARED WHICH HAVE BEEN SIGNED BY THE PARTIES. WHEN THE ORIGINAL STATEMENTS / CONFIRMATIONS OF THE PARTIES STATING THAT THEY HAD CONTRIBUTED CASH TOWA RDS CONSTRUCTION OF A COMMUNITY CENTRE HAVE BEEN FOUND TO BE TUTORED BY T HE AUTHORITIES BELOW WITH WHICH WE AGREE SUCH AFFIDAVITS CUM RECEIPT WHICH IS ON SIMILAR LINE IS OF NO HELP TO THE ASSESSEE. ON THE CONTRARY WE FIND THAT THE ASSESSEE WAS ENGAGED IN THE MONEY LENDING BUSINESS IN WHICH SUBSTANTIAL MOVEMEN T OF CASH IS EXPECTED. DURING THE COURSE OF SEARCH CERTAIN BILLS OF ACCOUN TS AND DOCUMENTS CONTAINING ENTRIES REGARDING MONEY LENDING BUSINESS WERE FOUND . BLANK AGREEMENTS AS 13 WELL AS CERTAIN BANK ACCOUNTS PASSPORTS IDENTITY CARDS ETC WERE FOUND TO BE KEPT BY THE ASSESSEE AGAINST DISBURSEMENT OF LOANS. IT IS THUS CLEAR THAT THE ASSESSEE WAS IN MONEY LENDING BUSINESS HAVING SUBST ANTIAL ACTIVITIES FROM WHICH GENERATION OF CASH IS EXPECTED. CONSIDERING T HE SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBAB ILITY WE ARE CONVINCED THAT THE FINDINGS GIVEN BY THE AUTHORITIES BELOW TH AT THE CASH FOUND IN POSSESSION OF THE ASSESSEE BELONGED TO THE ASSESSEE AND THAT THE EXPLANATION THAT THE SAME BELONGED TO OTHER PARTIES HAD RIGHTLY BEEN REJECTED AS NOT SATISFACTORY. 13. BEFORE PARTING WE HAVE TO DEAL WITH THE JUDGMEN TS CITED BY THE LEARNED AR IN SUPPORT OF THE CASE OF THE ASSESSEE AS MENTIO NED IN PARA 7 EARLIER. ALL THE JUDGMENTS IN OUR VIEW ARE DISTINGUISHABLE AND ARE O F NO HELP TO THE ASSESSEE. THE LEARNED AR HAS RELIED ON THE JUDGMENT OF HONBL E SUPREME COURT IN CASE OF CIT VS P.K. NOORJAHAN (SUPRA) FOR THE PROPOSITIO N THAT IT IS NOT MANDATORY TO MAKE ADDITION UNDER SECTION 69 IN ALL CASES WHERE T HE PERSON WAS FOUND TO BE IN POSSESSION OF MONEY ETC. THERE CANNOT BE ANY DIS PUTE ABOUT THAT PROPOSITION THAT ADDITION IS NOT MANDATORY. ADDITION CAN ONLY B E MADE ONLY WHEN THE SOURCE HAS NOT EXPLAINED SATISFACTORILY. IT WILL DE PEND UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IN THIS CASE CONSIDERIN G THE FACTS AND CIRCUMSTANCES OF THE CASE WE HAVE HELD THAT EXPLAN ATION REGARDING SOURCE GIVEN BY THE ASSESSEE WAS NOT SATISFACTORY AND THER EFORE ADDITION HAS TO BE UPHELD. RELIANCE HAS ALSO BEEN PLACED ON THE JUDGME NT OF HONBLE HIGH COURT OF RAJASTHAN IN CASE OF MANGILAL AGARWAL VS ACIT (SUPR A). IN THAT CASE THERE WAS SEIZURE OF GOLD BY CUSTOM AUTHORITIES AND CEGAT HAD GIVEN A FINDING THAT THE ASSESSEE WAS NOT THE OWNER. THEREFORE IN THE ABSENC E OF ANY FURTHER MATERIAL SHOWING THAT THE ASSESSEE WAS THE OWNER THE ADDITI ON MADE IN CASE OF THE ASSESSEE UNDER THE INCOME-TAX ACT WAS NOT UPHELD. T HE CASE IS OBVIOUSLY 14 DISTINGUISHABLE AS IN THAT CASE THERE WAS FINDING B Y CEGAT THAT THE ASSESSEE WAS NOT THE OWNER. IN THIS CASE THERE IS NO FINDING OF THE MAGISTRATE THAT THE ASSESSEE WAS NOT THE OWNER. THE ASSESSEE HAD BEEN C HARGED UNDER SECTION 124 OF BOMBAY POLICE ACT WHICH WAS CONCERNED WITH STOLE N PROPERTY OR PROPERTY OBTAINED FRAUDULENTLY. THE MAGISTRATE HAD FOUND THE POSSESSION OF CASH EXPLAINED FOR THE PURPOSE OF THE SAID SECTION. ONCE THE ASSESSEE WAS FOUND TO BE IN POSSESSION OF CASH THE ASSESSEE WAS PRESUMED TO BE OWNER AND ONUS OF PROVING THAT THE ASSESSEE WAS NOT THE OWNER WAS ON THE ASSESSEE. THIS VIEW IS SUPPORTED BY THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF CHUHARMAL (172 ITR 250). THE ASSESSEE EXPLAINED THAT CASH BEL ONGED TO OTHER PERSONS BUT SUCH EXPLANATION WAS NOT FOUND SATISFACTORY AFTER E XAMINATION OF THE PARTIES CONCERNED. THE ADDITION HAS THEREFORE TO BE MADE IN CASE OF THE ASSESSEE. THE JUDGMENT OF HONBLE HIGH COURT OF DELHI IN CASE OF CIT VS MOHD. MASOOM (SUPRA) RELIED UPON BY THE ASSESSEE IS SIMILAR AND FOR THE REASONS GIVEN ABOVE THIS HAS TO BE REJECTED AS NOT APPLICABLE. 14. THE JUDGMENT OF HONBLE HIGH COURT OF P & H IN CASE OF CIT VS SOMANI PILKINGTONS LTD (SUPRA) IS ALSO DISTINGUISHABLE. I N THAT CASE THE INCOME-TAX PROCEEDINGS HAD BEEN INITIATED IN CASE OF THE ASSES SEE ON THE BASIS OF SHOW- CAUSE NOTICE ISSUED BY THE CENTRAL EXCISE AUTHORITI ES ALLEGING CHARGE OF EXTRA MONEY BY THE ASSESSEE. THE SAID SHOW CAUSE NOTICE W AS SUBSEQUENTLY SET ASIDE BY THE HIGH COURT. AS THE VERY BASIS ON WHICH THE I NCOME-TAX PROCEEDINGS WERE INITIATED NO LONGER EXISTED THE ADDITION MADE WAS DELETED. THE CASE IS OBVIOUSLY DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE LEARNED AR HAS ALSO RELIED ON THE DECISION OF A HMEDABAD BENCH OF THE TRIBUNAL IN CASE OF ITO VS NAGARDAS JASHRAJ (SUPRA) . IN THAT CASE THE TRIBUNAL HELD THAT FOR MAKING ADDITION UNDER SECTION 69A OF THE INCOME-TAX ACT AO WAS 15 REQUIRED TO PROVE THAT THE ASSESSEE WAS FOUND TO BE OWNER OF THE ARTICLE OR THING AND MERE POSSESSION WAS NOT ENOUGH. WE MAY PO INT OUT HERE THAT AS POINTED OUT EARLIER WHEN A PERSON IS FOUND TO BE IN POSSESSION OF ANY ARTICLE OR THING ONUS OF PROVING THAT HE WAS NOT THE OWNER IS ON THAT PERSON. THE PERSON IS PRESUMED TO BE OWNER UNLESS PROVED OTHERWISE. TH IS VIEW IS SUPPORTED BY THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF CH UHARMAL (SUPRA). IN THIS CASE THE ASSESSEE WAS FOUND TO BE IN POSSESSION OF THE CASH. THE ASSESSEE EXPLAINED THAT CASH BELONGED TO SOME OTHER PERSONS BUT THE EXPLANATION CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON EXAMINATION OF THOSE PARTIES WAS NOT FOUND TO BE SATISFACTORY. THE REFORE THE ASSESSEE HAS TO BE HELD AS OWNER AND ADDITION IS REQUIRED TO BE MAD E IN HIS CASE UNDER SECTION 69A. 15. IN VIEW OF THE FOREGOING DISCUSSION AND FOR THE REASONS GIVEN HEREINABOVE WE UPHOLD THE ORDER OF CIT(A) CONFIRMIN G THE ADDITION OF RS.80 57 650/- IN CASE OF THE ASSESSEE. 16. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DIS MISSED. 17. THE ORDER WAS PRONOUNCED IN OPEN COURT ON 19.01 .2011. SD/- SD/- ( D. MANMOHAN) (RAJENDR A SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATE : 19.01.2011 AT :MUMBAI COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) MUMBAI CONCERNED 4. THE CIT MUMBAI CITY CONCERNED 16 5. THE DR B BENCH ITAT MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI ALK