Additions for Cash, Jewellery, and Cheques Deleted as Explained

Additions for Cash, Jewellery, and Cheques Deleted as Explained, While Section 147 Proceedings Are Upheld

Issue

Validity of Section 147 Reassessment: Whether reopening under Section 147 is procedurally valid when assets are seized by the Anti-Corruption Bureau (ACB) without any formal action under Section 132 or requisition under Section 132A.
Addition for Cash (Section 69A): Whether cash of ₹67,37,500 seized during ACB inquiry can be added under Section 69A as unexplained money when backed by an agreement to sell (Banakhat) and subsequent registered sale deeds.
Addition for Jewellery & Silver (Section 69A): Whether gold jewellery (174.25 gms of assessee and 304.58 gms of wife) and 6 kg silver utensils seized by ACB can be added under Section 69A without extending the spirit of CBDT Instruction No. 1916.
Addition for Cheque Receipts (Section 69A): Whether bank receipts of ₹5,00,000 received via cheques from land purchasers at the time of executing the sale deed can be added under Section 69A.

Facts

ACB Search & Seizure: The Anti-Corruption Bureau (ACB) conducted an inquiry on the assessee, finding ₹67,37,500 in cash, gold biscuits, jewellery, and 6 kg of silver utensils.
Explanation for Cash: The assessee explained that ₹67,37,500 represented advance cash consideration received against an agreement to sell (Banakhat) for agricultural land, which was subsequently executed via two registered sale deeds.
Jewellery Breakdown:
- Jewellery in locker was accepted as belonging to the assessee’s married daughter and returned.
- ACB identified 478.83 gms of gold as undisclosed (304.58 gms belonging to the wife and 174.25 gms to the assessee).
- AO added the value of the gold jewellery along with 6 kg of silver utensils under Section 69A.
Cheque Payment: The AO also treated ₹5,00,000 received by the assessee via bank cheques from buyers in November 2009 (when executing the sale deed) as unexplained money under Section 69A.
Reassessment Procedure: Reassessment proceedings were initiated under Section 147. The assessee challenged this on the ground that proceedings ought to have been initiated under Section 153A/132A instead.

Decision

Section 147 Validity Upheld: Section 153A applies exclusively when a search under Section 132 or a requisition under Section 132A is executed by the Income Tax Department. Since no search or requisition was initiated under Section 132/132A, reassessment under Section 147 suffered from no procedural defect. (In favour of Revenue)
Deletion of Cash Addition: The agreement to sell (Banakhat) was substantiated by subsequent registered sale deeds and statements given during the ACB inquiry. The source of cash stood adequately explained, rendering the Section 69A addition unsustainable. (In favour of Assessee)
Applicability of CBDT Instruction No. 1916: CBDT Instruction No. 1916 reflects Indian socio-cultural customs of acquiring family gold over time. Even outside formal Section 132 searches, its spirit applies. Since the total jewellery held by the married assessee and his wife fell within reasonable customary limits, additions for gold jewellery and silver utensils were deleted. (In favour of Assessee)
Deletion of Cheque Addition: Amounts received via normal banking channels (cheques) from buyers upon execution of a registered sale deed cannot be treated as unexplained money under Section 69A without any adverse evidence. (In favour of Assessee)

Key Takeaways

Triggering Section 153A vs. 147: Action by external law enforcement agencies (such as ACB) does not automatically trigger Section 153A/132A unless the Income Tax Department formally issues a requisition under Section 132A. In its absence, Section 147 is the proper reassessment mechanism.
Spirit of CBDT Instruction No. 1916: The limits prescribed in CBDT Instruction No. 1916 (500g for married ladies, 250g for unmarried females, 100g for males) embody underlying cultural realities and can be extended in spirit to non-search proceedings or third-party seizures.
Substance in Land Agreements: An unregistered agreement to sell (Banakhat) coupled with actual cash receipt provides a valid source explanation under Section 69A if followed by executed, registered sale deeds.

IN THE ITAT AHMEDABAD BENCH ‘A’

Janaksinh Jayvantsinh Sarvaiya

Income-tax Officer

Tapas Ram Misra, Judicial Member
and Narendra Prasad Sinha, Accountant Member

IT Appeal No. 2575 (Ahd) of 2025
[Assessment year 2010-11]

SEPTEMBER 21, 2026

Virat Bhavsar, CA for the Appellant. Amit Pratap Singh, Sr. D.R. for the Respondent.

ORDER

Tapas Ram Misra, Judicial Member. – The present appeal has been filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”), dated 27.10.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2010-11.

2. The assessee has raised the following grounds of appeal:

“All the grounds of appeal in this appeal are mutually exclusive and without prejudice to each other

Validity of the proceeding u/s 147 of the ITA

1) That on the facts and in the circumstances of the case and in law, the reassessment proceedings initiated under section 147 of the Income-tax Act, 1961 are bad in law and void ab-initio, as the notice under section 148 has been issued without obtaining valid and mandatory prior approval of the prescribed higher authority as required under section 151 of the Act. Consequently, the entire reassessment order deserves to be quashed.

2) That on the facts and in the circumstances of the case and in law, in view of the provisions of section 132A(1) (c) of the Act, where the alleged assets are seized by other authority (Anti-Corruption Bureau), the only statutory course of action ‘available to the Assessing Officer is to initiate proceedings under section 132A read with 153A of the Act and not under section 147. Therefore, the reassessment proceedings Initiated under section 147 are without jurisdiction and the impugned order is non-est in law.

3) eat on the facts and in the circumstances of the case and in law, the learned Assessing Officer and the learned CIT(A)/NFAC erred in drawing adverse inferences and making/confirming additions against the appellant on the basis of the search and seizure conducted by the Anti-Corruption Bureau (ACB), despite the fact that the legality and validity of the said search and consequential proceedings are sub-judice and pending adjudication before the competent Court.

Unexplained money u/s 69A of Rs.67,60,500/-

4) That the learned CIT(A)/NFAC erred in law and on facts in confirming the addition of 167,60,500 made by the Assessing Officer as unexplained cash under section 69A of the Act, without appreciating the facts of the case in their proper perspective and without bringing any cogent material on record to justify the said addition.

5) That the learned authorities below failed to appreciate that the appellant had duly explained the source of cash deposits as arising from sale of land, and such receipt of cash is clearly recorded and reflected in the registered sale deeds. Once the source of cash is explained and supported by documentary evidence, the Assessing Officer ought to have accepted the explanation and deleted the addition.

6) That the Assessing Officer as well as the learned CIT(A)/NFAC erred in rejecting the appellant’s explanation on grounds which are wholly irrelevant and immaterial to the issue under consideration. Once the receipt of cash is duly mentioned in the registered sale deed, the appellant had discharged the onus cast upon him under section 69A, and no further addition could have been made.

7) The inability or failure of the buyer to explain his source cannot be a valid basis for making an addition in the hands of the appellant, and therefore the action of the AO and CIT(A) is unjustified and contrary to law.

That the learned CIT(A)/NFAC erred in placing reliance on the decision of the Hon’ble Supreme Court in Suraj Lamps & Industries Pvt. Ltd. v. State of Haryana , as the said judgment deals with the validity of transfer of immovable property through GPA/agreements and not with the issue of explanation of source of cash deposits under the Income-Tax Act. The validity of the mode of transfer is not relevant for determining the source of cash once the receipt is evidenced in the registered sale deed.

9) That the impugned order is contrary to law, facts and principles of natural justice and is therefore liable to be set aside.

Unexplained jewellery worth of Rs.2,80,000/- & Rs.3,83,000/-(Ornament & Silver)

10) That the Assessing Officer as well as the learned CIT(A)/NFAC failed to consider and appreciate the binding CBDT Circular prescribing permissible limits for jewellery possession, which is equally applicable during assessment proceedings. The appellant was entitled to credit for the permissible quantity/value of jewellery, and therefore no addition on this count could have been made.

11) That the quantity of jewellery found is well within/otherwise reasonable considering the number of family members, their marital status, age, social standing and customary practices, and hence no adverse inference or addition is called for.

12) That the impugned order is contrary to law, facts and principles of natural justice and Is therefore liable to be set aside.

Unexplained money of Rs.5,00,000/-

13) That on the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in confirming the addition of Rs.5,00,000 made under section 69A of the Income-tax Act, 1961 by treating the same as unexplained money, despite the fact that the appellant had duly explained the legitimate and bona fide source of the cash deposit with supporting facts and evidence. The addition so sustained is arbitrary, contrary to law, and liable to be deleted.

14) That the impugned order is contrary to law, facts and principles of natural justice and is therefore liable to be set aside.

15) The appellant craves leave to add, amend, alter or withdraw any of the above grounds of appeal at or before the time of hearing. “

3. The grounds of appeal are taken up issue-wise and disposed of accordingly.

4. Regarding Ground Nos. 1, 2 and 3 validity of proceeding u/s 147 of the Act:

5. In Ground of appeal No. 1 the assessee has challenged the validity of the reassessment order on the ground that valid and mandatory prior approval of the prescribed authority was not obtained. In the course of hearing, the Ld. Sr. DR filed the approval letter dated 10-03-2017 passed by PCIT-4, Vadodara. This ground of appeal is dismissed.

6. In Grounds of appeal Nos. 2 & 3 the assessee has challenged the proceedings u/s 147 on the grounds; (i) that where assets were seized by the Anti-corruption Bureau, the only option available with the Assessing Officer was to initiate proceedings u/s 153A r.w. s. 132A and not u/s 147 of the Act;

(ii) the authorities below erred in drawing adverse inference from the search and seizure by the ACB despite the fact that the legality and validity of the search and consequential proceedings were sub-judice before the competent court.

7. The Ld. A.R. drew our attention to the reasons recorded by the A.O. for reopening, filed in the paper book. The Ld. A.R. also relied on the decision of the Supreme Court in Asstt. CIT v. Tungabhadra Minerals (P.) Ltd. (SC). In the case before the Hon’ble Supreme Court, the A.O. had reopened assessment on the basis of some observations of Justice M.B. Shah Commission’s Report regarding underinvoicing of exports, and on a decision of the Supreme Court declaring activities of mining in Goa after 22-1 1-2007 as illegal as the mining leases expired on that date. There, the Supreme Court held, were insufficient for reopening in the absence of any independent material.

8. In the case before us, the A.O. had received information about discovery of unaccounted cash and assets and formed an opinion that the undisclosed income of the assessee had escaped assessment. On this basis the process of reassessment was initiated. In our view, therefore, decision of the Hon’ble Supreme Court in Tungabhadra Minerals (P.) Ltd. (supra) does not help the assessee’s position.

9. The issue of reopening based on a report of the investigation wing was examined by the Hon’ble Gujarat High Court in the case of Yogendrakumar Gupta v. ITO 366 ITR 186 (Gujarat). The Hon’ble High Court, while upholding the reopening, held as under:

“20. From a combined review of the judgments of this Court, it follows that an Income tax Officer acquires jurisdiction to reopen assessment under Section 147(a) read with Section 148 of the Income Tax 1961 only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons which he must record, to believe that by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profit or gains chargeable to income tax has escaped assessment. He may start reassessment proceedings either because some fresh facts come to light which where not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since, the belief is that of the Income tax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and nonspecific information. To that limited extent, the Court may look into the conclusion arrived at by the Income tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. It would be immaterial whether the Income tax Officer at the time of making the original assessment could or, could not have found by further enquiry or investigation, whether the transaction was genuine or not, if one the basis of subsequent information, the Income tax Officer arrives at a conclusion, after satisfying the twin conditions prescribed in Section 147(a) of the Act, that the assessee had not made a full and true disclosure of the material facts at the time of original assessment and therefore income chargeable to tax had escaped assessment. The High Courts which have interpreted Burlop Dealer’s case (supra) as laying down law to the contrary fell in error and did not appreciate the import of that judgment correctly.

21. We are not persuaded to accept the argument of Mr. Sharma that the question regarding truthfulness or falsehood of the transactions reflected in the return can only be examined during the original assessment proceedings and not at any stage subsequent thereto. The argument is too broad and general in nature and does violence to the plain phraseology of Sections 147(a) and 148 of the Act and is against the settled law by this Court. We have to look to the purpose and intent of the provisions. One of the purposes of Section 147, appears to us to be, to ensure that a party cannot get away by wilfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say “you accepted my lie, now your hands are tied and you can do nothing”. It would be travesty of justice to allow the assessee that latitude.

22. In our opinion, therefore, in the facts of the present case the Income tax Officer, Azamgarh rightly initiated the reassessment proceedings on the basis of subsequent information, which was specific relevant and reliable, and after recording the reasons for formation of his own belief that in the original assessment proceedings, the assessee had not disclosed the material facts truly and fully and therefore income chargeable to tax had escaped assessment. He, therefore, correctly invoked the provisions of Sections 147(a) and 148 of the Act. The High Court was, thus, perfectly justified in dismissing the writ petition. There is no merit in this appeal which fails and is dismissed but with no order as to costs.”

10. The Ld. A.R. emphasized on the issue that the A.O. should have invoked Section 153A in this case instead of Section 147. He stated that the non obstante provision in Section 153A ousted jurisdiction of Section 147 automatically. We notice that Section 153A is applicable where there is a search u/s 132 or a requisition of documents or assets u/s 132A on the assessee. Nothing has been placed on record to show that there was a search action u/s 132 of the Act conducted in the case of the assessee or any requisition of documents or assets u/s 132A of the Act. The A.O. has received information from the ACB and formed an opinion on the basis thereof that income has escaped assessment. In the absence of any action initiated by the Department u/s 132 or 132A of the Act, there cannot be any question of initiating proceeding u/s 153A of the Act. The issue, that A.O. can in such circumstances initiate reassessment u/s 147 of the Act, is no longer res integra in view of the decision of the Supreme Court in Pr. CIT v. Abhisar Buildwell (P.) Ltd. 454 ITR 212 (SC). The Hon’ble Supreme Court held as under:

“14. In view of the above and for the reasons stated above, it is concluded as under:

(i)

that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A;

(ii)

all pending assessments/reassessments shall stand abated;

(iii)

in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and

(iv)

in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.”

11. The assessee does not appear to have raised this issue of jurisdiction with reference to Section 153A at the stage of assessment or CIT(A). Grounds of appeal before CIT(A) do not challenge the assessment on this ground. The legality of the search carried out by the ACB has no bearing on the reassessment proceedings in this case. As a result of the search and discovery of cash and assets beyond the assessee’s known sources of income, the ACB had informed the Income Tax Department. Upon receipt of this information the AO has formed an opinion about income escaping assessment and issued notice u/s 148 of the Act after obtaining approval from the Principal CIT. The initiation of reassessment, in view of judicial precedents cited above, suffers from no procedural irregularity. Assessee’s ground of appeal nos. 2 & 3 are dismissed.

12. Regarding Ground Nos. 4 to 9: Unexplained money addition u/s 69A:

12.1. The facts relating to this issue as stated by the assessee before the CIT(A), are as under:

“Facts of the ground of appeal-1:

The Search proceeding pursuant to corruption proceeding carried out by Anti-corruption bureau (ACB) against the appellant on dated 09th April, 2009 found cash in possession with appellant amounting to Rs. 67,60,500/-, Out of such cash found, Rs. 23,000/- was treated as an explained money and balance amounting to Rs. 67,37,500/- was treated as unexplained. While making the addition, the A.O put forth following arguments.

(i)

The assessee has contended that he has executed one agreement for sale of his agriculture land on 11.02.2009 on a stamp paper of Rs.500 bearing no.B 1666393 dated 11.02.2009 purchased by Chhotuba Jashwantsinh Sarvaiya from stamp vendor.N. Gohil bearing Licence No.40/97.Howeveras per inquiries made by ACB authorities with Treasure officer Vallibhpur Dist Bhavnagar, the said stamp paper was actually sold on 13.02.2009.

(ii)

Further as per power attorney executed on a stamp paper of Rs.100 purchased on 23.03.008 in favour of Chhotuba Jaywantsinh Sarvalya was actually sold on 19.05.2009.

Under the circumstances it was not possible for the appellant to acquire stamp paper of Rs.500 on 11.02.2009 & stamp paper of Rs.100 on 23.03. 2008. The A.O is having letter of the treasury officer dated 15.07.2009 to support his contention received from ACB authorities.

Appellant’s Contention

(a) With regards to the same, we would like to elucidate that POA holder of the appellant has purchased stamp paper amounting to Rs. 500 for executing Banakhat on 11th February 2009. Further POA holder of the appellant has made valid entry in the register maintained by the stamp vendor by hand written signature.

The stamp vendor has to deposit the stamp sale and stock register to the office of Mamlatdar. The office of Mamlatdar has duly Issued certificate to the effect that stamp vendor has deposited the stamp register in the office of Mamlatdar. Copy of the certificate is enclosed as Annexure-1 for your ready reference. The learned income tax officer has questioned about the validity of certificate issued by the office of Mamlatdar. With regards to the same we would like to state that the appellant is having no role in taking such certificate. It is up to the office of the Mamlatdar who has issued the certificate.

Moreover it should be noted that agreement for the sale l.e. Banakhat made on 11th February 2009, was duly notarized. The learned income tax officer has not question with regards to ownership of the agriculture land. The appellant and his family member were owner of the agriculture land sold by them since long and there is no question with respect to the any additional amount received from the purchaser over and above the amount which was mentioned in the Banakhat and the sale deed. The learned income tax officer has only questioned the validity of stamp paper in which appellant or POA of the appellant is having no role. It is the stamp vendor who has to issue the stamp paper and has to maintained the register for the same. Hence the appellant strongly believe that the transaction is clear and genuine.

(b) with regards to the source of the cash found, during the course of assessment proceedings, appellant has already explained sources of such cash found as have been received from sale of agriculture land, agriculture income and commission income either by appellant himself or appellant wife. The details of the same is tabulated as below:

Sr. No.	Particulars	Amount (In Rs.)
1	Cash received from sale of agriculture land	58,30,156/-
2	Cash received towards agriculture income	9,32,116/-
3	commission income	19,500/-
Total		67,81,772/-

The appellant had received cash from the sale of agriculture land and as per the said agreement for the sale, the appellant had received 28,00,000/- and 30,00,000/- in cash from the buyer of the land on 11th February, 2009 and 28th March, 2009 respectively. The said fact is further corroborated in the sale deed executed on 10th November 2009 as detailed below.

Sr. No.	Prayer	Amount of receipt (In Rs.)	Mode
1	Haresh V Dave	10,85,000/-	Cash
2	Rameshbhai Korat and Jitendra Korat	10,85,000/-	Cash
3	Haresh V Dave	2,50,000/-	Cheque (Ch No-613669)
4	Rameshbhai Korat and Jitendra Korat	2,50,000/-	Cheque (Ch No-527307)
5	Haresh V dave	18,15,000/-	Cash
6	Ramesh korat and Jitendra Korat	18,15,000/-	Cash
7	Haresh V Dave	2,50,000/-	Cheque (Ch No-613670)
8	Ramesh Korat and Jitendra Korat	2,50,000/-	Cheque (Ch No-527306)
9		156/-	Cash
Total		68,00,156/-	Cash

The copy of the two sale deed is enclosed as per Annexure-2 for your ready reference.

(c) In addition, we would like to draw your kind attention to the observations of the session court of the Vadodara, they are worth noting:

(a)

The Inspecting officer (ACB), while examining matter of cash received from locker, has contended that the agreements & Power of attorney are fake. However, the officer is not in possession of any panchnama stating whether the appellant has furnished those agreements.

(b)

The allegations of inspecting officer are purely based on copy of agreements and has not verified originals.

(c)

The appellant has not made any hand written back dated corrections on those agreements.

(d)

Inspecting officer has merely alleged that non-judicial stamp papers are back dated. The appellant has not made any back dated entries on those stamp papers, which are supposed to be entered and dated by the stamp vendor.

(e)

It is the duty of stamp vendor to make the entries in register and to mention date on the stamp paper. It is not concluded that the appellant has made such entries on the stamp paper.

(f)

The sale of properties via agreements & the receipt of cash on sale of such lands being deposited in lockers of the appellant definitely to be before the investigation of the case against the appellant.

(g)

The stamp papers were purchased in the town of Bhavnagar, stamp vendor is located in the town of Bhavnagar, the alleged crime, if any committed by the appellant is within Jurisdiction of Bhavnagar, inspite of the same, the crime was registered in Vadodara. The complaint, instead of getting lodged to any other officer, was lodged with ACB officer only.

(h)

The ACB officer also, has not clarified before lodging of complaint of fake agreements, whether the alleged original agreements, were verified by him or not.

(i)

The inspecting officer has not clarified as to who had produced the agreements and from whom explanation relating to said agreements were obtained by the officer.

(j)

The complaint has been lodged without production & verification of original agreements.

(k)

In those agreements on non-judicial stamp papers, any hand written scriptures or back dated entries or back dated execution of agreements on those stamp papers are not made by appellant in order to divert the Investigation proceedings in favour of the appellant.

(l)

Considering the above facts, it is seen that the matter is sub judice and it is not yet proved in the Court of Law whether the power of attorney and Banakhat are fake or not.

13. The A.O. noted the assessee’s contention that he had executed an agreement for sale (Banakhat) on 11-02-2009 for sale of his agricultural land. At the time of agreement he received Rs. 28,00,000/- is cash whereas balance amount of Rs.30,00,000/- was receivable within one and a half months. The A.O. also noted that two sale deeds were executed on 10-1 1-2009 and the land was sold as agreed. The A.O. also noted that the land in question was located at village Mota Surka, Sihor, Bhavnagar, owned jointly or individually in the names of the assessee, his wife, son and daughter.

14. The A.O. further referred to inquiries made by the ACB with the Stamp Vendor, Notary and the Prant Officer/Mamlatdar. The ACB had noted inconsistencies in the date of the stamp paper. The A.O. held that despite confirmations by the Stamp Vendor, Notary and the Mamlatdar About the execution and notarization of the Banakhat, the stamp paper had to be treated as nonexistent. The A.O. further recorded as under:

“The representative of the assessee has also relied upon in his submission dated 06.12.2017 the observations of the Court of Sessions, Vadodara. At this juncture of time, the case is sub-judice and the observations made by a judicial authority in an inconclusive proceedings, with due respect, cannot be considered as judicial announcement. Secondly, the Assessing officer is a quasijudicial authority and therefore, in computation of income rely both on evidences as are admissible under the Indian Evidence Act as well as material available on record, which may not be admissible under the Evidence Act or before the Court of Law. Therefore, such observations as relied upon by the assessee of Hon’ble Court in a sub-judice matter hardly helps the assessee in the present reassessment proceedings which are based on material available on record of this office.

As regards the claim of agricultural income of the assessee, it is pertinent to mention here that no agricultural income has been shown in the return of income, delivered in response to notice u/s. 148. Secondly, the assessee has also used such claim of agricultural income in explaining other assets found by the ACB authorities. Accordingly, such claim of agricultural income is rejected. “

15. On the basis of the aforesaid observation, the A.O. held that the sum of Rs.67,37,500/- found in possession of the assessee was unexplained money and made an addition u/s 69A of the Act.

16. Before the Ld. CIT(A) the assessee reiterated his contentions as raised before the A.O. The Ld. CIT(A), after considering the facts, concluded as under:

“5.31 Therefore, considering the above-mentioned facts brought out by the Anticorruption Bureau as a result of detailed investigation and field enquiries following facts emerges-

Stamp paper of Rs.500/-bearing No.B-166393 purchased by Shri Chhotubha Jaywantsinh Sarvaiya, Power of Attorney Holder of assesse was allegedly purchased on 11.09.2009

It is found that the vendor Shri G N Gohil could not prove that such stamp paper was actually sold on 11.09.2009

The investigations with the Stamp authorities revealed that such stamp paper of Rs.500/-bearing No.B-166393 was sold on 13.09.2009. Therefore, it may be appreciated that it is impossible to enter into any transaction under stamp paper not issued/sold on 11.09.2009.

Other two co-purchaser Shri Ramesh Korat & Harish Dave has admitted to have been purchased the above land and agreement however, for sources of cash of Rs. 58 Lakhs, however, they could not submit any documentary evidence with respect to the credit worthiness and genuineness of the source of such huge amount along with explanation and documentary evidence.

During such investigation it is explained that Shri Jitendra (Jitubhai) Dhirubhai Korat [one of the purchasers) was unable to explain anything about the purchase of land including its Cost, Payment towards purchase cost etc. He was also unable to identify the nature of document on which he has signed. It is admitted by him that he has acted/ signed on some of the paper only on advice of his uncle Shri Rameshbhal Korat.

The ACB also found the mismatch in the signature on document duly notarized & the signature found in register which maintained to enter the notarized document.

5.32 Therefore, considering the facts and circumstance of the case, submission of the assessee, findings of the assessing officer and findings of the field enquiries carried out by the Anticorruption Bureau, it is found that the documentary evidence submitted by the assessee in the form of agreement to sell the agriculture land through its power of attorney holder CJ Sarvaiya was not registered document and therefore did not transfer any rights in the land in the light of decision of Hon’ble Supreme Court in the case of Suraj Lamps (supra). Further, it may be appreciated that one of the purchaser, Shri Jitendra (Jitubhai) Dhirubhai Korat did not know anything about the transaction and consideration payable. The stamp paper on which the banakhat was entered into was not issued/sold as on 11.09.2009. Therefore, such stamp paper was not existing on the date of alleged agreement to sale (banakhat). Further, the ACB also found the mismatch in the signature on document duly notarized & the signature found in register which maintained to enter the notarized document.

Therefore, it may be safely inferred that the alleged agreement to sell the agriculture land was a colourable devise and not a genuine transaction in telling transfer of any rights in the land.

5.33 Therefore, considering the facts and circumstance of the case, submission of the assessee, material available on record, findings of the Anticorruption Bureau and findings of the assessing officer, grounds of appeal contested by the assessee at serial No. 1 is dismissed. “

17. Challenging the decision of the Ld. CIT(A), Shri Virat Bhavsar, CA, AR of the assessee has reiterated the submissions made before the authorities below and drew our attention to the evidence filed in two sets of paper book, one dated 16-03-2026 and one dated 21-04-2026.

18. The Ld. A.R. drew our attention to the English translation of the statement of Shri Jitendrabhai Viratbhai Korat. In this statement, Jitendrabhai Korat had stated that Rameshbhai Korat was his father’ s younger brother, that they owned land jointly, that while Jitendrabhai Managed farming operations, his uncle Rameshbhai handled all financial transactions. He stated that receipts from cotton sales came into his bank account and all major payments are made out of that account. He also stated that he had visited Umrada, signed a document and a book and stopped at an office where they purchased stamp. While he stated to be unfamiliar with the assessee, he confirmed that the photograph on the document was his.

19. Ld. A.R. also drew our attention to the English translation of the statement of Rameshbhai Korat. He had admitted to the purchase of land and to knowing the assessee’s younger brother even though he did not know the assessee personally. He also admitted to making payment of Rs.28,00,000/- on 10-02-2009 and subsequently another Rs.30,00,000/- for the land transactions. For the second payment of Rs.30,00,000/-Rameshbhai Korat stated to have contributed Rs.15,00,000/- and the balance Rs.15,00,000/- was given by Harishbhai. The total consideration for the land was Rs.78,00,000/-, it was purchased in partnership, with 50% being paid by Harishbhai Dave and the remaining 50% by Rameshbhai and his nephew, Jitubhai (Jitendrabhai).

20. With regard to the A.O’s observation about agricultural income, the Ld. A.R. was drew our attention to two statements showing particulars of income of the assessee and his wife. While the assessee has shown agricultural income in Financial Years 2006-07, 2007-08 and 2008-09, his wife had shown agricultural income from Financial Years 2002-03 to 2008-09.

21. The Ld. A.R. also produced English translation of the two sale deeds executed on 10-1 1-2009 in favour of Jitendrabhai Korat, Rameshbhai Korat and Harishbhai Dave with the sales amount mentioned as Rs.26,70,000/- and Rs. 41,30,156/-respectively. The description of the land is the same as in the Banakhat and also as admitted by the buyers in their statements given to the ACB in the course of their inquiry.

22. We have given careful consideration to the facts and the conclusions drawn by the CIT(A). The Ld. CIT(A) has laid emphasis on the fact that the agreement to sell, executed by the assessee through his power of attorney holder C J Sarvaiya, did not transfer any rights in the land as the said agreement (Banakhat) was not a registered document. The Ld. CIT(A) also founded his decision on the fact that Jitendrabhai Korat, one of the purchasers, stated not to know anything about the transaction.

23. We note that the unregistered agreement to sell loses significance in view of the subsequent sale deed for the land. The agreement to sell merely noted the land under the transaction and the advance paid in cash for the intended purchase. Nontransfer of title in the land under the agreement is not relevant for the purpose of identifying the source of cash available with the assessee, who was the seller of the land, especially when the land was sold to the same buyers named in the agreement.

24. Further, we note that Jitendrabhai Korat had admitted in his statement that there was some land transaction which was handled by his uncle who managed the finances in their family. He had also admitted to visiting Umrada and signing documents. His statement, read along with the statement of his uncle Rameshbhai Korat, appears to be credible support for the transaction of purchase of land. In our view the Banakhat, supported by the eventual sale deed, and the statements recorded at the time of ACB inquiry, appear to provide adequate explanation for the cash found in the possession of the assessee. the addition made under section 69A cannot be sustained and the same is directed to be deleted. Grounds of Appeal No. 4 to 9 are allowed.

25. Regarding Grounds of appeal No. 10, 1 1 & 12: Unexplained jewellery

26. At the time of search, the ACB found two gold biscuits valued at Rs.2,80,000/-. In addition, gold ornaments and Jewellery were found. Out of this, jewellery valued at Rs.9,54,269/- found in the locker admittedly pertained to the assessee’s daughter and the same was returned. However, gold/jewellery weighing 478.83 gms. was included by the ACB in the undisclosed assets. The Assessing Officer held that a perusal of details relating to the jewellery reveals that 304.58 gms. of jewellery belonged to the assessee’s wife and 174.25 gms. was related to the assessee. While no addition was made in respect of jewellery belonging to the assessee’s wife, the assessee’s jewellery of 174.25 gms. valued at Rs.2,33,500/- was added as unaccounted investment. In addition, the assessing officer also valued 6 kg of silver utensils at Rs.1,49,500/- and added the same to the assessee’s income.

27. The Ld. CIT(A) upheld the addition with the following observations:

“7.5 I have considered facts and circumstance of the case, submission of the assessee, material available on record and findings of the assessing officer it is found that the gold ornaments weighing 1 74.25 grams valued at Rs 2,33,500/- and silver utensils weighing 6 Kg valued at Rs 1,49,500/- as on 09/04/2009 belonging appellant. It may be appreciated that the Appellant has sought the deduction of gold and jewellery as per the Instruction No. 1916 dated 11th May, 1994 issued by CBDT. However, it may be appreciated that in the matter of seizure of jewellery, the Central Board of Direct Taxes (‘CBDT’) has issued guidelines vide Instruction No. 1916 dated 11th May, 1994. As per the said guidelines, CBDT has laid down instances as to when jewellery found need not be seized. It may be appreciated that gold ornaments weighing 1 74.25 grams valued at Rs 2,33,500/- and silver utensils weighing 6 Kg valued at Rs 1,49,500/- as on 09/04/2009 were found belonging appellant. It is not disputed that these gold and silver articles were not explained for the purpose of Income Tax Act.

Further, it may be appreciated that the provisions of the Instruction No. 1916 dated 11th May, 1994 are applicable in the cases where the search and seizure operations are carried out by the Income Tax Department under section 132 of the IT Act. However, such instructions are not applicable where the search and seizure is carried out By the Anticorruption Bureau. “

28. Aggrieved by the decision of the Ld. CIT(A), the assessee is in appeal before us. We note that the assessee has placed reliance on Instruction No. 1916 dated 1 1/05/1994 issued by the CBDT. In the said Instruction, issued for the guidance in the cases of Search and Seizure by Income Tax Authorities, the Board had directed that in the case of Wealth Tax assessee, gold, jewellery and ornaments found in excess of the gross weigh declared in the Wealth Tax return only need to be seized. In case of a person not assessed to Wealth Tax gold, jewellery and ornaments to the extent of 500 gms. per married lady, 250 gms. per unmarried lady and 100 gms. per male member of the family need not be seized. The ld. CIT(A) held that since the search in the case of the assessee was carried out by ACB and not by the Income Tax Department, the Instruction issued by CBDT would lose its significance and cannot be applied to provide relief to the assessee. We are unable to agree the decision of the CIT(A). The Instruction is founded on the Indian culture of accumulating gold, jewellery over the life time. Families buy gold jewellery on various occasions right from a child’s birth, at the time of wedding and on other occasions. The use of buying jewellery or gift of jewellery is not limited to women only and men are also beneficiaries of such gifts. They may also buy jewellery occasionally for themselves. Being conscious of these facts, the CBDT had clarified that every family is expected to have jewellery in its possession and therefore laid down reasonable limits within which jewellery found in the possession of an assessee need not be seized. The instruction is also triggered by the fact that considering the manner in which jewellery is purchased, acquired and retained over a long period of time, it may not always be possible for assessees to retain bills or invoices for purchase. Since the instructions were issued in that context, it has to be followed in spirit if not in letter.

29. Considering the fact that the assessee is a married man with a married daughter and he can reasonably be expected to have some jewellery belonging to himself or his wife and the limits set out in CBDT Instruction No. 1916 could be used as a guideline of the reasonable quantity expected to be with the assessee. If the total jewellery is found to be within that limit then no addition as unexplained investment is called for. The addition made on this account is directed to be deleted. Grounds of appeal Nos. 10, 11 and 12 are allowed.

30. Ground of Appeal No. 13 challenges in the decision of the Ld. CIT(A) confirming the addition of Rs.5,00,000/- u/s 69A of the Act. The amount in question was deposited vide two cheques of Rs. 2,50,000/- each on 21-1 1-2009. The assessee had submitted that this amount was received towards the sale of agreement land from Harishbhai Dave, Ramesh Korat and Jitendra Korat. While the receipt and source of this cheques has not been doubted by the Ld. CIT(A), the addition on that account was confirmed on the ground that the agreement for sale on which the assessee has claimed to receive the amount was decided to be a sham transaction while deciding ground of appeal no. 1 in the same appeal.

31. We have already discussed and dealt with the transaction of sale of land and noted that pursuant to the agreement for sale dated 1 1-02-2009, there were two sale deeds executed on 10-1 12009 and on that basis we have already taken a view the land transaction appeared genuine. These two payments of Rs. 2,50,000/- each have come from the buyers of the said land in November 2009 when the sale deed was executed. There is, therefore no basis to treat this sum of Rs.5,00,000/- as unexplained money u/s 69A of the act. This addition is deleted. Ground of appeal No. 13 is allowed.

32. In the result, the appeal of the assessee is partly allowed.fta