Disclosed Opening Balances and Wealth-Tax Records

Disclosed Opening Balances and Wealth-Tax Records Fully Explain Cash and Jewellery Found During Search

Issue

Whether cash and jewellery seized during a search under Section 132 can be treated as unexplained under Section 69A when supported by accepted opening cash balances, filed returns, past Wealth-tax declarations, and purchase invoices, despite the assessee’s inability to establish item-wise identity of every ornament or trace daily cash usage.

Facts

Cash Seizure & Explanation: During a search under Section 132 for A.Y. 2023-24, cash of Rs. 12,58,000 was found at the assessee’s residence, and Rs. 8,50,000 was seized. The assessee explained that the source comprised opening cash balances and withdrawals of himself, his son, and his wife, along with his proprietorship’s cash balance.
AO’s Stand on Cash: The AO rejected the explanation, assuming the cash must have been spent during the intervening period, and added Rs. 8,50,000 under Section 69A.
Jewellery Seizure & Explanation: Jewellery weighing 5,699.13 grams was found during the search. The assessee proved prior disclosure of joint family jewellery via Wealth-tax returns filed years earlier, alongside purchase invoices and bank statements for 1,800 grams of gold bullion, establishing documented total ownership of 5,948 grams (exceeding the quantity found).
AO’s Stand on Jewellery: The AO made an addition under Section 69A because the assessee could not match every individual ornament item-by-item to the older Wealth-tax returns.

Decision

Rejection of Presumptive Cash Disallowance: Once opening cash balances disclosed in returns are accepted as genuine by the Revenue, the explanation cannot be discarded on the mere assumption that the cash was exhausted. In the absence of dispute over the return authenticity, the source of cash stands satisfactorily explained.
Substance Over Item-Wise Jewellery Matching: When an assessee provides undisputed documentary evidence (Wealth-tax returns and invoices) showing aggregate legal holding exceeding the seized quantity, the evidence cannot be rejected simply due to a lack of item-wise correlation.
Burden on Revenue: The department cannot treat disclosed jewellery as unexplained unless it brings positive material showing that the past disclosed assets were disposed of or that the seized items represent fresh undisclosed acquisitions.
Verdict: Decided in favor of the assessee on both grounds; additions under Section 69A for cash and jewellery were deleted.

Key Takeaways

Evidentiary Weight of Accepted Returns: Opening cash balances reflected in past accepted income tax returns provide a valid legal defense against Section 69A additions for cash found during search operations.
Aggregate Holding vs. Item-Wise Correlation: For legacy family jewellery, producing cumulative documentary proof (Wealth-tax filings and purchase bills) covering the total weight satisfies the onus under Section 69A; perfect item-by-item tagging is not mandatory.
Revenue’s Onus to Rebut: The Tax Department cannot arbitrarily ignore past statutory disclosures without bringing concrete evidence of asset sales or undisclosed income streams.

IN THE ITAT MUMBAI BENCH ‘G’

Goutham Kumar Pukhraj Jain

Deputy Commissioner of Income-tax

Pawan Singh, Judicial Member
and Om Prakash Kant, Accountant Member

IT Appeal Nos. 4716 and 5258 (MUM) OF 2026
[Assessment years 2023-24]

AUGUST 10, 2026

Mani Jain and Prateek Jain, CAs for the Appellant. Basavaraj Hiremath, CIT DR and Rajgopal Parthasarathi, SR DR for the Respondent.

ORDER

Om Prakash Kant, Accountant Member. – These cross appeals by the assessee and Revenue are directed against order dated 24/02/2026, passed by the learned Commissioner of Income- Tax (Appeals)- 47, Mumbai [in short the Ld. CIT(A)] for Assessment Year (in short ‘A.Y’), 2023-24. Since both the appeals arise out of the same appellate order and involve interconnected issues emanating from a common search assessment, same were heard together and disposed by way of thus consolidate order for sake of convenience.

2. The grounds raised by the assessee are reproduced as under: –

“1. On the facts and circumstances of the appellant’s case and in law the Ld. CIT(A) erred in confirming the action of the ld. AO in making addition of Rs. 8,50,000/- on account of cash found during search by treating the same as unexplained u/s 69A of the Act, for the reason stated in the impugned order and otherwise.”

2.1 The grounds raised by the Revenue are reproduced as under: –

“Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.1,35,42,400 made under section 69A ()f t.he Inc()me tax Act,1961 on account of unexplained jewellery found during search, by accepting the assessee s explanation on the basis of aggregate reconciliation of jewellery with wealth tax returns and bullion purchases and considering joint family ownership, without establishing item wise identity, continued possession or adequate corroborative evidence, and thereby h()1ding that the onus cast upon the assessee stood discharged.”

3. Briefly stated facts of the case are that that the assessee filed his return of income declaring a total income of Rs. 3,80,06,080/-. Subsequently, a search and seizure action under section 132 of the Income Tax Act, 1961 [in short the Act], simultaneously accompanied by survey proceedings under section 133A, was conducted on 31.01.2023 in the cases pertaining to the Cipla Group and its connected entities. Since the assessee also fell within the sweep of the said search action, following the CBDT guidelines, his case was selected for compulsory scrutiny and assessment proceedings under section 143(3) of the Act were initiated. Statutory notices issued during the course of assessment were duly complied with by the assessee.

3.1 The ld AO noted that in the course of search proceeding, cash aggregating to Rs.12,58,000/- and jewellary weighing 5,699.13 grams were found at the residential premises of the assessee, out of which, cash of Rs.8,50,000/- and jewellary weighing 2,300 grams valued at Rs.1,35,42,400/- were seized. The ld AO in the assessment order passed u/s 143(3) of the Act dated 07.08.2024, held the both cash of Rs.8,50,000/- and jewellary of Rs.1,35,42,400/- as unexplained and made addition. On further appeal, the Ld. CIT(A) sustained the addition of the unexplained cash of Rs. 8,50,000/- but deleted the addition in respect of the jewellary seized valued at Rs.1,35,42,400/-. Aggrieved, both the assessee and the Revenue are in appeal before the Tribunal by way of raising grounds as reproduced above.

4. Firstly, we take up the grounds of the assessee regarding the addition of cash of Rs.8,50,000/-.

4.1 Facts in brief qua the issue in dispute are that during the search action cash amounting to Rs.12,58,000/- was found which included cash of Rs.3,00,000/- found from the locker of the assessee. During the course of the search while recording the statement the assessee explained the Act cash found in the locker was belonging to grandson which was received by him on various occasions as “shagun”. The said cash found from locker was returned back. Further out of the cash balance of Rs.9,58,000/-, the search officials returned the cash of Rs.1,08,000/- and the balance cash of Rs.8,50,000/- was seized.

4.2 During the course of search action in response to question No.22 the assessee explained that cash found of Rs.9,58,000/- was out of the cash withdrawal from respective bank accounts by himself and his family members. During the course of assessment proceeding the assessee explained that assessee and his son Shri Abhishek Jain had cash balance of aggregating to Rs.14,07,933/-, which was sufficient enough to explain the cash of Rs.9,58,000/-found in search. The availability of the cash explained by the assessee is reproduced as under:-

Sr. No.	Particulars	Amount (Goutham Kumar Jain)	Amount (Abhishek Kumar Jain)	Total
1	Opening Balance as on 01.04.2022	6,19,733	4,38,200	10,57,933
2	Add: Cash Withdrawal from bank account for the year (before date of search i.e., before 31.01.2023)	2,00,000	1,50,000	4,61,236
3	Closing balance as on 31.01.2023 i.e. as on date of search	8,19,733	5,88,200	14,07,933

4.3 The Assessing Officer, however, did not find the explanation satisfactory. According to him, while preparing the statement of cash availability, the assessee had merely aggregated the opening cash balances and cash withdrawn from the bank accounts without accounting for the normal household expenditure that would ordinarily have been incurred during the intervening period. The assessee explained that household expenses were incurred out of the cash withdrawal by his wife M/s Sangeeta Jain out of her bank account. Regarding the withdrawal of the cash by the Sangeeta Jain, the AO was of the view that despite availability of the cash with the assessee and his son more than Rs.10,57,933/-, further withdrawal by his wife was not justified. However, the assessee said that depending of the requirement of the cash there was no bar on withdrawal of the money from the bank despite availability of the cash in hand. The Assessing Officer was of the view that the explanation proceeded on the unrealistic assumption that the entire cash withdrawn from the banks continued to remain physically available till the date of search. He further noticed certain discrepancies between the opening cash balance claimed during the assessment proceedings and the figures reflected in the return of income and also questioned the inclusion of the cash balance pertaining to the proprietary concern while explaining the personal cash found during search. These circumstances, according to him, rendered the explanation unreliable, resulting in the addition of Rs. 8,50,000/- under section 69A.

4.4 Before the learned CIT(A), the assessee reiterated that the Assessing Officer had proceeded on an erroneous premise that no household expenditure had been incurred during the year. It was explained that the household expenses of the family were substantially met by withdrawals made by the assessee’s wife, Smt. Sangeeta Jain, from her own disclosed bank account and, therefore, there was no occasion for the assessee or his son to utilise the cash available with them for domestic expenditure. It was further submitted that both the personal cash balance and the cash pertaining to the proprietary concern stood duly reflected in the respective returns of income and financial statements and, therefore, there was no justification for doubting the availability of the cash on the date of search. The assessee also sought to reconcile the figures appearing in the return of income with those reflected in the balance sheet of the proprietary concern by explaining that the latter separately disclosed the business cash, whereas the return reflected only the personal cash component. It was explained that M/s Mahavir Drugs plus is a sole proprietorship concern of the assessee and the financials for the said business are separately prepared. It was submitted that as per balance sheet of M/s. Mahavir Drugs Plus as on 31.03.2023, a cash and bank balance of Rs.1,49,74,307/- had been reflected and out of the same cash balance was of Rs.2,20,991/-. With the help of the return of income the assessee further explained the position of the availability of the cash in hand as on the date of the search as under:-

Sr. No.	Particulars	Amount (Goutham Kumar Jain)	Amount (Abhishek Kumar Jain)	Total
1	Total Opening Balance as on 01.04.2022 of personal	6,19,733	4,38,200	10,57,933
	Total opening balance as on 01.04.2022 of proprietorship cash	2,79,470	0	2,79,470
2	Cash Withdrawal	2,00,000	1,50,000	4,61,236
3	Cash balance as on date of search	10,19,733	5,88,200	16,87,403

4.5 The learned CIT(A), however, was not persuaded by the aforesaid explanation. He observed that although the assessee had furnished an arithmetical statement indicating availability of sufficient cash, no contemporaneous material had been produced to establish that the cash claimed to be available had actually remained unutilized till the date of search. According to him, the explanation that all household expenditure had been met exclusively from withdrawals made by the assessee’s wife was unsupported by any contemporaneous cash records or other corroborative evidence. He further observed that the inconsistency between the opening cash claimed during the assessment proceedings and the cash reflected in the return of income remained inadequately explained. He was also of the opinion that the assessee had merely demonstrated a theoretical availability of cash without establishing a live nexus between the cash balances claimed and the physical cash found during the course of search. Proceeding on this reasoning, the learned CIT(A) upheld the addition of Rs. 8,50,000/- made under section 69A. The relevant finding of ld CIT(A) is reproduced as under:

” …….The AO further found inconsistency between the personal cash reported in the ITR for AY 2022-23 (Rs.2,20,991/-) and the higher opening cash balance of Rs.6,19,733/- claimed during assessment proceedings, indicating excess cash in hand beyond what was disclosed in records.

8.3 Further, the explanation that the spouse had withdrawn Rs.2,00,000/- for household expenses was rejected on the ground that no ledger or documentary evidence of actual cash expenditure was furnished. The AO also questioned the necessity of such withdrawals when substantial cash was already claimed to be available with the assessee and his son. It was held that business cash of M/s Mahaveer Drugs Plus could not be treated as personal cash without proper reconciliation. In view of these discrepancies and non-reconciliation, the AO concluded that the source of Rs.8,50,000/- seized cash remained unexplained and added the same u/s 69A of the Act.

8.4 In the appellate proceeding, the appellant submitted that during search cash of Rs.12,58,000/- was found, out of which Rs.3,00,000/- belonged to his grandson and was returned, Rs.1,08,000/- was released by the department and only Rs.8,50,000/- was seized. It was explained in the statement recorded during search and subsequently before the AO that the seized cash was sourced from disclosed bank withdrawals of the appellant and his son, whose combined cash balances aggregated to Rs.14,07,933/- as on the date of search, duly supported by ITRs and bank statements. The relevant sheet produced is shown below:

8.5 It was further contended that household expenses were met from withdrawals made by the appellant’s wife, Smt. Sangeeta Jain, whose bank statements and ITR were furnished. The appellant argued that it is a common family practice for spouses to bear household expenses and therefore absence of cash drawings in the appellant’s own account cannot justify adverse inference. It was also submitted that maintaining detailed household cash records is not mandatory and the AO cannot question the purpose of cash withdrawals once reflected in bank statements.

8.6 The appellant also clarified that personal cash and business cash of his proprietorship concern, M/s Mahaveer Drugs Plus, were separately disclosed in the ITR and together with withdrawals of himself and his son, total explained cash availability worked out to Rs.16,87,403/- far exceeding the seized amount. It was further contended that the seized cash was duly covered by opening balances and withdrawals reflected in the respective bank accounts and returns of income.

8.7 The Assessing Officer, however, observed that the appellant failed to reconcile the cash found on the date of search with the books of account and cash balances disclosed in the returns of income. It was specifically noted that during the entire year there were only cash withdrawals but no corresponding cash expenses reflected, which was considered unrealistic for a household. The appellant argued that household expenses were met from withdrawals made by his wife and therefore neither the appellant nor his son incurred cash expenses. This explanation was examined by the AO and found unsatisfactory, as no contemporaneous household cash records or ledger of Smt. Sangeeta Jain were produced to substantiate actual utilization of such withdrawals. The AO also questioned the necessity of withdrawal by Smt. Sangeeta Jain when, as per appellant’s own submission, the appellant and his son were already having cash balance aggregating to Rs.10,57,933/-. The appellant failed to provide any satisfactory explanation for maintaining such large idle cash balances while simultaneously withdrawing further cash. The contention of the appellant was that it is was a normal family practice for spouses to meet household expenses is general in nature.

8.8 In the present case, I have carefully considered the assessment order, material placed on record and the submissions made by the appellant. It is an admitted fact that during the course of search action conducted on 31.01.2023, cash amounting to Rs.12,58,000/- was found from the residential premises of the appellant, out of which Rs.8,50,000/- was seized by the Investigation Wing. The appellant claimed that the said cash was fully explained out of opening balances, cash available in his proprietary concern M/s Mahaveer Drugs Plus, cash balances of his son Shri Abhishek Jain and withdrawals made from bank accounts, including withdrawal of Rs.2,00,000/- from the bank account of his wife, Smt. Sangeeta Jain.

8.9 The appellant furnished a working showing aggregate cash availability of Rs.16,87,403/- as on the date of search, comprising personal opening cash balance of Rs.6,19,733/-, son’s opening cash balance of Rs.4,38,200/-, proprietorship cash balance of Rs.2,79,470/- and bank withdrawals of both the appellant and his son, aggregating to Rs.3,50,000/-(Rs.2,00,000/- + 1,50,000/). However, on perusal of the assessment order, it was mentioned that the Income-tax Return for A.Y. 2022-23 and the balance sheet of M/s Mahaveer Drugs Plus, the total cash and bank balance as per ITR is Rs.1,51,95,298/-, whereas as per the balance sheet of the proprietary concern it stands at Rs.1,49,74,307/-, resulting in a difference of Rs.2,20,991/-. The Assessing Officer has rightly observed that this Rs.2,20,991/- represents the personal cash component of the appellant, whereas the appellant has claimed an opening personal cash balance of Rs.6,19,733/-, thereby clearly demonstrating that the cash claimed by the appellant is substantially higher than what is reflected in the return of income. This material inconsistency remains unreconciled. The relevant sheet is reproduced as below:

8.10 Further, it is also evident from the assessment record that during the entire year, except for cash withdrawals, no drawings or household expenses have been reflected by either the appellant or his son, which is wholly unrealistic. The explanation that all household expenses were met exclusively from withdrawals made by Smt. Sangeeta Jain is not supported by any contemporaneous cash book, ledger or expenditure details. Merely producing bank statements showing withdrawals does not establish utilisation of cash for household purposes. More importantly, the appellant himself admits availability of substantial cash balances of Rs.10,57,933/- as early as 01.04.2022. In such circumstances, the necessity of subsequent withdrawal of Rs.2,00,000/- on 23.12.2022 from the wife’s bank account is not explained.

8.11 The Assessing Officer has also noted that no books of account or cash flow statement were produced to demonstrate day-to-day utilisation of cash, and no evidence of drawings or personal expenditure was furnished. The appellant’s explanation thus remains confined to arithmetical aggregation of opening balances and withdrawals without establishing actual availability of physical cash on the date of search. Section 69A requires not merely a theoretical explanation but satisfactory evidence of ownership and source of the money found. In the present case, the appellant has failed to reconcile the seized cash with recorded balances and has also failed to explain the pattern of withdrawals and absence of expenses.

8.12 It is further observed that the explanation advanced is internally contradictory: on one hand, the appellant asserts excess cash availability since the beginning of the year; on the other hand, he justifies fresh withdrawals for household expenditure. Such conduct seriously impairs the credibility of the explanation. The difference between the ITR figures and proprietary balance sheet, absence of drawings, lack of expenditure records, and unexplained bank withdrawals collectively establish that the appellant has not discharged the burden cast upon him under section 69A of the Act. The explanation regarding withdrawals by the son Shri Abhishek Jain also suffers from similar infirmities, as no evidence was produced to show that such withdrawn cash remained unutilized and available till the date of search. The appellant has tried to explain cash recovered during search on the basis of opening balance as on 01.04.2022 as per the returns of income filed for AY 2022-23, including cash available in his personal capacity as well as his son amounting to Rs. 10,57,933/-. Further, credit for opening balance of cash held in proprietary concern of Rs. 2,79,470/- is also claimed. The appellant’s claim of opening balance of cash in hand as on 01.04.2022 to explain cash recovered as on 30.01.2023 is not a plausible explanation because of the remote nexus of cash-in-hand with cash recovered after a temporal period of 10 months. Further, cash withdrawal claim during the financial year is to the extent of Rs. 3,50,000/-. The cash withdrawal cannot be considered as source for the cash found during search because the appellant has not provided the details of source of personal expenses and drawings during financial year 2022-23 up to the date off search.

8.13 Section 69A of the Act clearly provides that where any money is found in the possession of the assessee and the assessee offers no satisfactory explanation about the nature and source thereof, the same may be deemed to be income of the assessee. The relevant section is reproduced as under:

“69A. Where in any financial year the assessee is found to be the owner of anymoney, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.”

8.14 In the present case, the appellant has failed to discharge this onus. The explanations offered are largely inferential and based on post-search reconstruction of balances rather than contemporaneous records maintained in the normal course of affairs. The AO has also rightly observed that merely submitting ITRs and bank statements does not establish physical availability of cash, especially when discrepancies exist between declared balances and claimed availability. The explanation regarding withdrawals by the son Shri Abhishek Jain also suffers from similar infirmities, as no evidence was produced to show that such withdrawn cash remained unutilized and available till the date of search. Thus, the cumulative effect of (i) absence of household drawings, (ii) inconsistency in reported cash balances, (iii) lack of contemporaneous cash book, and (iv) failure to establish nexus between withdrawals and seized cash, clearly supports the AO’s conclusion.

8.15 In view of the above factual inconsistencies, absence of reconciliation, and failure to substantiate utilisation of cash, I am in agreement with the Assessing Officer that the appellant has not satisfactorily explained the source of cash seized during search. Accordingly, the addition of Rs.8,50,000/- made under section 69A of the Act is found to be justified and is hereby confirmed. The ground raised by the appellant on this issue is therefore dismissed.

4.6. Before us, the learned counsel for the assesee invited our attention to a revised reconciliation statement incorporating not only the personal cash balances of the assessee and his son but also the cash available with the assessee’s wife as reflected in her return of income. same chart is reproduced as under: –

Sr. No.	Particulars	Amount (Goutham Kumar Jain)	Amount (Abhishek Jain	Amount (Sangeetha Jain)	Total	Remarks
1	Total opening balance as on 01.04.2022 of personal cash as reflected in ITR filed on 28.10.2022 by Goutham Jain and 27.07.2022 by Abhishek Jain and 04.11.2022 by Sangeeta Jain	6,19,733	4,38,200	4,26,106	14,84,039	As per page no.63 and 105 and 115 of PB
2.	Total opening balance as on 01.04.2022 of proprietorship cash as reflected in ITR filed on 28.10.2022 by Goutham Jain	2,79,470	0	0	2,79,470	As per page no.6 of PB
3.	Cash Withdrawal during FY 2022-23 prior to search	2,00,000	1,50,000	2,00,000	5,50,000	As per page no. 73 and 113 and 114 of PB
4	Cash balance available as on date of search on 31.01.2013	10,99,203	5,88,200	6,26,106	23,13,509

4.7 The assessee before us referred to the return of income filed by the assessee, his son and his wife, wherein the opening cash balance in the personal hand of the assessee, his son, wife found reconciling with the income tax return. Similarly, the opening cash balance reported in the proprietorship concern was also reconciled with the income-tax return. It was submitted that the opening cash balances disclosed in the returns of income of all the family members were never disputed by the Department. Learned counsel submitted that even if the entire cash withdrawn during the relevant period is ignored or presumed to have been utilised towards household expenditure, the opening cash balances of Rs.17,63,509, would sufficiently explain the cash of Rs. 9,58,000/-found during the search. According to him, the authorities below erred in rejecting documentary evidence disclosed in the returns of income merely on assumptions regarding the probable utilisation of cash.

4.8 The learned Departmental Representative, on the other hand, strongly supported the orders of the authorities below. It was contended that the assessee had failed to establish continuous physical availability of the cash till the date of search and that the explanation furnished was based merely upon mathematical aggregation of opening balances and withdrawals without any contemporaneous evidence demonstrating retention of the cash. According to the learned Departmental Representative, the findings recorded by the learned CIT(A) call for no interference.

4.9 We have given our thoughtful consideration to the rival submissions and have carefully perused the orders of the authorities below as well as the material placed before us. The controversy before us lies within a narrow compass. The issue is not whether the cash was found from the possession of the assessee during the course of search, nor is there any dispute regarding the quantum of cash found or seized. The real controversy is whether, on the facts brought on record, the assessee has been able to satisfactorily explain the nature and source of the cash so found within the meaning of section 69A of the Act.

4.10 Before adverting to the factual aspects, it would be appropriate to briefly notice the scheme of section 69A. The provision empowers the Assessing Officer to treat any money found in the ownership or possession of an assessee as income where such money is either not recorded in the books of account, if any, maintained by the assessee or where the explanation offered regarding its nature and source is found to be unsatisfactory. Thus, the statutory requirement is that the explanation furnished by the assessee should be examined on the touchstone of human probabilities, surrounding circumstances and the contemporaneous material placed on record. Equally, where the explanation is founded upon documentary evidence already forming part of the record and no material is brought by the Revenue to dislodge such evidence, the explanation cannot be rejected merely on conjectures or surmises.

4.11 In the present case, the foundation of the addition rests upon the premise that the assessee failed to establish the physical availability of the cash found during the search. According to the Assessing Officer, the opening cash balances and the cash withdrawn from the bank could not be accepted at their face value because the assessee had not demonstrated the utilisation of cash towards household expenditure during the relevant period. The learned CIT(A) substantially affirmed this reasoning by observing that the assessee had only shown a theoretical availability of cash without establishing a live nexus between the opening balances and the cash physically found on the date of search.

4.12 Having examined the material placed before us, we find that the assessee has furnished the returns of income of himself, his son and his wife, wherein the respective opening cash balances stand disclosed. The opening cash balance pertaining to the proprietary concern also stands reflected in the financial statements accompanying the return of income. The Revenue has not disputed the authenticity of these returns or the correctness of the opening cash balances disclosed therein. In fact, before us, the learned Authorised Representative has furnished a consolidated reconciliation demonstrating the cash availability by taking into consideration the disclosed opening balances of all the family members together with the opening cash balance of the proprietary concern.

4.13 It is significant to note that even if one were to exclude from consideration the cash withdrawals effected during the previous year—which constitute the principal basis for the adverse inference drawn by the authorities below, the opening cash balances disclosed in the returns of income continue to constitute a substantial source available with the family. The learned Authorised Representative has specifically demonstrated that, independent of the subsequent cash withdrawals, the opening cash itself was sufficient to explain the cash of Rs. 9,58,000/- found during the course of search. This factual assertion has not been controverted by the Revenue by pointing out any error in the computation or by bringing any contrary material on record.

4.14 In our considered opinion, once the opening cash balances disclosed in the returns of income are accepted as genuine, the explanation offered by the assessee cannot be discarded merely on the assumption that such cash must necessarily have been exhausted during the intervening period. No material has been brought on record by the Assessing Officer to demonstrate that the opening cash had actually been utilised elsewhere or had ceased to remain available with the assessee prior to the date of search. Likewise, no evidence has been brought on record to establish that the cash found represented income derived from any undisclosed source. The addition has essentially been sustained on the basis of presumptions regarding probable household expenditure rather than on any positive material indicating that the explanation furnished by the assessee is false.

4.15 We also find merit in the contention advanced on behalf of the assessee that the explanation regarding household expenditure has assumed significance only because the authorities below proceeded on the footing that the cash withdrawals effected during the year alone constituted the source of the cash found. Once it is found that the disclosed opening cash balances themselves sufficiently explain the cash recovered during the search, the debate regarding the utilisation of subsequent withdrawals for household expenditure loses much of its relevance. Whether the household expenses were incurred out of withdrawals made by the assessee, his wife or otherwise would not materially affect the availability of the opening cash balance which admittedly stood disclosed in the returns of income much before the date of search.

4.16 The learned CIT(A) has also observed that the assessee failed to establish a live nexus between the opening cash and the cash found during search. We are unable to subscribe to this line of reasoning. Cash, unlike an identifiable capital asset, is inherently fungible. Once its existence is evidenced through contemporaneous records maintained in the ordinary course and the Revenue is unable to establish that the disclosed cash stood exhausted or otherwise ceased to exist, it would be wholly unrealistic to insist upon the assessee proving the identity of each currency note found during the search with the opening cash balance disclosed several months earlier. The law requires a satisfactory explanation regarding the source of the money and not an impossible demonstration of physical continuity of every currency note.

4.17 It is equally relevant that the Revenue has not disputed the genuineness of the returns of income, the opening cash balances reflected therein or the cash balance appearing in the books of the proprietary concern. In the absence of any material suggesting that these disclosed balances were fictitious or that the cash stood diverted elsewhere before the date of search, the explanation furnished by the assessee cannot be rejected merely because the Assessing Officer considers the retention of substantial cash over a period of time to be improbable. Suspicion, however strong, cannot substitute evidence.

4.18 On a cumulative consideration of the entire material on record, we are satisfied that the assessee has satisfactorily explained the source of the cash found during the course of search. The documentary evidence produced by the assessee establishes that sufficient disclosed cash was available with the family even without taking into account the subsequent withdrawals relied upon by the authorities below. Consequently, the addition sustained under section 69A cannot be allowed to survive.

4.19 We, accordingly, set aside the order of the learned CIT(A) on this issue and direct the Assessing Officer to delete the addition of Rs. 8,50,000/- made under section 69A of the Act. The ground raised by the assessee is allowed.

5. We shall now advert to the Revenue’s grievance challenging the deletion of addition of Rs. 1,35,42,400/- made under section 69A on account of jewellery found during the course of search.

5.1 Brief facts qua the issue in dispute are that during the course of search conducted at the residential premises of the assessee, jewellery weighing 5,699.13 grams was found, out of which jewellery weighing 3,399.13 grams was released by the search party, whereas jewellery weighing 2,300 grams valued at Rs. 1,35,42,400/- was seized. In the course of assessment proceedings, the assessee explained that the jewellery found during search did not exclusively belong to him but represented the cumulative holdings of the family members residing together. In support thereof, the assessee furnished copies of the Wealth-tax Returns filed by himself, his wife, his son and daughter-in-law, wherein jewellery aggregating to 4,148 grams had already been disclosed much prior to the date of search. It was further explained that apart from the jewellery so declared, gold bullion weighing 1,800 grams had been purchased during April, 2019 by Abhishek Kumar Jain (HUF), duly supported by purchase invoices (Mahaveer bullions & Pratibha Jewellers) and bank statements (Axis Bank) of transactions dated 04.04.2019 & 05.04.2019. On the basis of these documents, the assessee prepared a reconciliation demonstrating that the aggregate quantity of jewellery and bullion available with the family exceeded the quantity found during the course of search, as under:

Sr. No.	Particulars	Total Weight of Jewellery Found/ Found & Seized
1.	Total Weight of Total jewelry Found/Found and Seized	5,699.13 grams
2.	Less: Weight of Total Jewellery as per latest Wealth Tax Return filed by the assessee Shri Goutham Kumar Jain for FY 2012-13	768.00 grams
3.	Less: Weight of Total Jewellery as per latest Wealth Tax Return filed by spouse of assessee Smt. Sangeeta Jain for FY 2012-13	1112.00 grams
4.	Less: Weight of Total Jewellery as per latest Wealth Tax Return filed by son of assessee Shri Abhishek Kumar Jain for FY 2011-12	1148.00 grams
5.	Less: Weight of Total Jewellery as per latest Wealth Tax Return filed by daughter-in-law of assessee Smt. Sonal Jain for FY 2011-12	1120.00 grams
6.	Less: Weight of gold bullion purchased by HUF of son of the assessee i.e., Abhishek Kumar Jain HUF (1,000 grams on 04.04.2019 and 800 grams on 05.04.2019)	1800.00 grams
Excess weight of Jewellery (if any)		Nil

5.2 The Assessing Officer, however, was not satisfied with the explanation. According to him, the Wealth-tax Returns had been filed more than a decade prior to the search and the assessee had failed to establish that the jewellery found during search was the very same jewellery which had been declared therein. He also observed that no item-wise inventory correlating the jewellery found with the jewellery disclosed in the Wealth-tax Returns had been produced. The explanation that the jewellery had undergone remodelling over a period of time was rejected for want of supporting evidence such as labour bills or remaking charges. Proceeding on these premises, the Assessing Officer concluded that the assessee had failed to establish the identity of the jewellery found during search with the jewellery earlier disclosed and accordingly treated the value of the seized jewellery as unexplained money under section 69A of the Act.

5.3 In appeal, the learned CIT(A) examined the documentary evidence produced by the assessee, including the acknowledged Wealth-tax Returns of the family members, the purchase invoices of gold bullion and the corresponding bank statements evidencing payment. Upon appreciation of the material placed before him, he recorded a finding that the aggregate quantity of jewellery and bullion disclosed through the aforesaid documentary evidence exceeded the quantity of jewellery found during the course of search. He further observed that the Assessing Officer had neither disputed the authenticity of the Wealth-tax Returns nor brought any material on record to establish that the jewellery declared therein had been alienated or otherwise ceased to remain available with the family prior to the date of search. Holding that insistence upon one-to-one identification of each ornament declared more than a decade earlier imposed an impracticable burden upon the assessee, the learned CIT(A) accepted the explanation and deleted the addition. The relevant finding of ld CIT(A) is reproduced s under:

” 10.5 I have also perused the documentary evidence submitted by the appellant, viz. copies of acknowledged Wealth Tax Returns filed by himself and other family members, namely Shri Goutham Kumar Jain, Smt. Sangeeta Jain, Shri Abhishek Kumar Jain and Smt. Sonal Jain, wherein jewellery aggregating to 4,148 grams was declared much prior to the date of search. I consider that the claim that the jewellery found was fully covered by the explained sources.

10.6 I have also perused the documentary evidence of the purchase of gold bullion aggregating to 1,800 grams made in April 2019 by Abhishek Kumar Jain HUF, along with copies of purchase invoices and corresponding bank statements of Axis Bank, evidencing payment for the said bullion. It was submitted that cumulatively, the jewellery disclosed in wealth tax returns together with the bullion purchases aggregated to 5,948 grams, which exceeded the total jewellery found during the search of 5,699.13 grams. The appellant’s contention that since the family resides jointly, the jewellery found at the premises represents cumulative holdings of family members and not of the appellant alone.

10.7 These factual figures are not disputed by the Assessing Officer. The only objection raised is that the wealth-tax returns pertain to earlier years and that item-wise malching of jewellery was not produced. However, it is noted that the Assessing Officer has not brought on record any material to show that the jewellery declared in wealth-tax returns had been disposed of or was otherwise unavailable. Once disclosed holdings exceed the quantity found, the presumption that the seized jewellery represents unexplained investment does not survive.

10.8 It is also relevant that the appellant resides in a joint family, and the jewellery found at the premises represents the cumulative holding of all family members. The Assessing Officer has proceeded on the assumption that the entire jewellery belongs to the appellant alone, without rebutting the family-wise reconciliation furnished. The objection regarding the absence of item-wise identification and labour charges for remaking is also not sustainable. It is a matter of common custom and behaviour of families that jewellery is frequently remodelled, exchanged or redesigned over time due to social customs, marriages and changing preferences. Expecting one-to-one matching of jewellery items with decade-old wealth-tax returns places an impossible burden on the assessee.

10.9 Once the appellant has placed on record the wealth-tax returns of family members along with documentary evidence of bullion purchases und has reconciled the jewellery found on a gross weight basis, the insistence of the Assessing Officer on individual identification of each ornament and production of separate purchase or remoulding bills is not practical. In the Indian social milieu, jewellery is not treated as a static asset; it is roulinely exchanged, redesigned, remade or converted into new forms over a period of time owing to marriages, family functions, streedhan, and changing preferences. Therefore, expecting an assessee to establish one-to-one correspondence between jewellery found during a search and ornaments declared in wealth-tax returns filed more than a decade earlier imposes an unrealistic and impossible burden of proof. What is material for the purposes of section 69A is the reconciliation of quantity and ownership, both of which stand duly demonstrated in the present case through wealth-tax disclosures and supporting purchase documents. In the absence of any material brought on record by the Assessing Officer to show that the jewellery declared earlier had been disposed of or that the jewellery found represents a fresh, unexplained acquisition, the explanation furnished by the appellant cannot be rejected merely on technical grounds of item-wise identification or non-production of remoulding invoices.

10.10 The appellant relied upon various judgements in the case of Krishan Kumar Modi v. ACIT (ITA No. 2894/Del/2017), Rajkumar B. Agarwal v. DCIT (ITA No. 1648 & 1649/pUN/15) & Raj Kumar Saraogi (ITA No. 1779/Kol/2012 dated 01.09.2015). The Hon’ble tribunal in the case of Rajkumar B. Agarwal v. DCIT (ITA No. 1648 & 1649/pUN/15) held that jewellery found during search, when explained as belonging to family members and within reasonable limits considering social status and customary Indian practices, cannot be treated as unexplained merely due to the absence of purchase bills. It was emphasised that jewellery accumulated over long years through gifts, marriages, and family traditions deserves acceptance unless the Department brings specific contrary evidence. Accordingly, an addition to presumptions was deleted.

10.11 I further find that the Assessing Officer has not relied upon any incriminating material found during the search to demonstrate the acquisition of jewellery from undisclosed sources. The addition has been made merely on technical objections regarding identification and age of wealth-tax returns, despite the fact that disclosed jewellery plus bullion purchases exceed the quantity found.

10.12 In view of the above, I hold that the appellant has discharged the onus cast upon him by producing wealth-tax returns and purchase documents, establishing that the jewellery found during the search was fully covered by the explained sources. Once the availability of jewellery exceeding the quantity found is demonstrated, no addition under section 69A can be sustained. Accordingly, the addition of Rs. 1,35,42,400/- made on account of jewellery is deleted. This ground of appeal is allowed.”

5.4 The learned Departmental Representative supported the assessment order and submitted that the learned CIT(A) erred in accepting a broad reconciliation based upon aggregate weight without there being any item-wise identification of the jewellery. It was contended that in the absence of such correlation, the assessee failed to discharge the onus cast upon him under section 69A.

5.5 Per contra, the learned Counsel for the assessee submitted that the assessee had discharged the initial burden by producing contemporaneous documentary evidence in the form of Wealth-tax Returns filed much before the search and documentary evidence evidencing subsequent purchase of bullion. It was argued that once the aggregate quantity of jewellery and bullion disclosed through these documents exceeded the quantity found during search, the burden shifted upon the Revenue to establish that the jewellery earlier disclosed had either been disposed of or that the jewellery found represented fresh acquisition from undisclosed sources. No such evidence, according to the learned counsel, has been brought on record by the Department.

5.6 We have carefully considered the rival submissions and examined the material available on record. The controversy before us is considerably narrower than projected by the Revenue. There is no dispute regarding the quantity of jewellery found during the search. Equally, the genuineness of the Wealth-tax Returns filed by the assessee and his family members, or the documentary evidence relating to purchase of gold bullion, has not been doubted by the Department. The real controversy is whether, in the facts of the present case, the assessee can be denied the benefit of such documentary evidence merely because he was unable to establish item-wise identity of every ornament found during search with the jewellery declared in the Wealth-tax Returns filed several years earlier.

5.7 Section 69A casts an obligation upon the assessee to offer a satisfactory explanation regarding the nature and source of the money, bullion, jewellery or other valuable article found in his possession. The explanation has to be evaluated on the basis of the surrounding circumstances and the evidence brought on record. Once the assessee produces contemporaneous documentary evidence establishing prior ownership of jewellery and the Department does not dispute the authenticity of such evidence, the explanation cannot ordinarily be rejected unless the Revenue brings positive material demonstrating that the jewellery so disclosed had ceased to remain available or that the jewellery found represented an independent acquisition from undisclosed sources.

5.8 In the present case, the assessee has produced acknowledged Wealth-tax Returns filed by himself and his family members much before the search, evidencing jewellery aggregating to 4,148 grams. In addition thereto, documentary evidence in the form of purchase invoices and bank statements evidencing acquisition of 1,800 grams of gold bullion has also been placed on record. Collectively, these documents establish availability of jewellery and bullion aggregating to 5,948 grams, which exceeds the quantity of 5,699.13 grams found during the search. Significantly, neither the authenticity of these documents nor the quantities reflected therein have been disputed by the Revenue.

5.9 The sole objection of the Assessing Officer is that the assessee failed to produce an item-wise reconciliation of the jewellery found with the jewellery declared in the Wealth-tax Returns. In our considered opinion, such an objection, by itself, cannot constitute a valid basis for invoking section 69A. Jewellery is not a static asset. Over a period of time, ornaments are frequently remodelled, exchanged, converted into new designs or re-fashioned to suit family requirements, social customs and changing preferences. In such circumstances, to insist upon one-to-one identification of every ornament with the jewellery declared many years earlier would be to cast an impossible burden upon the assessee, which the law does not contemplate.

5.10 More importantly, the Revenue has not brought any material on record to show that the jewellery disclosed in the Wealth-tax Returns had been sold, transferred or otherwise ceased to remain available with the family before the date of search. Likewise, there is no evidence suggesting that the jewellery found represented any fresh acquisition from undisclosed sources. In the absence of any such contrary material, the documentary evidence produced by the assessee cannot be discarded merely because item-wise correlation is not forthcoming.

5.11 We also find ourselves in agreement with the learned CIT(A) that where the aggregate quantity of jewellery supported by contemporaneous documentary evidence exceeds the quantity found during search, the initial burden resting upon the assessee stands duly discharged. Once such burden is discharged, the onus shifts upon the Revenue to rebut the explanation by bringing cogent material on record. The assessment order, however, proceeds only on suspicion arising from absence of item-wise identification and not on any positive evidence indicating that the jewellery found represented unexplained investment.

5.12 Having regard to the entirety of the facts and circumstances, we are satisfied that the learned CIT(A) has correctly appreciated the documentary evidence and rightly concluded that the assessee had satisfactorily explained the source of the jewellery found during search. We, therefore, find no infirmity in the impugned order warranting interference. Consequently, the ground raised by the Revenue is dismissed.

6. In the result, appeal of the assessee is allowed whereas the appeal by the Revenue is dismissed.