DCIT Vs Miraj Digvijay Shah (ITAT Kolkata)
Ancestral Jewellery Cannot Be Taxed Merely Because Found During Search: Old Valuation Reports and Family Affidavit Rebut Statutory Presumption—Kolkata ITAT
Summary: The Kolkata Bench of the Income Tax Appellate Tribunal has upheld the deletion of additions relating to ancestral jewellery worth ₹1.57 crore and explained cash of ₹40 lakh found during a search.
The Tribunal held that jewellery found in family lockers could not automatically be treated as the assessee’s unexplained asset when it was not found in his personal possession or in a locker held exclusively in his name. Contemporaneous valuation reports of deceased family members, correlation between the old valuation reports and jewellery found during search, and an uncontroverted affidavit of the assessee’s mother were sufficient to establish the lineage and ownership of the jewellery.
The ruling was delivered in DCIT, Central Circle-1(1), Kolkata v. Miraj Digvijay Shah, ITA No. 1078/Kol/2026, Assessment Year 2023-24, order dated 11 September 2026.
Search and seizure of jewellery and bullion
A search under Section 132 was conducted on 21 June 2022 at the residential and business premises of the assessee and in various bank lockers held by the assessee and his family members.
Jewellery and bullion valued at ₹14,68,97,402 were found. Out of this, assets worth ₹14,00,31,943 were seized because the search authorities were not satisfied with the explanation regarding their source.
During the assessment, the assessee filed a detailed reconciliation, a master report and supporting evidence. The Assessing Officer accepted jewellery worth ₹1,66,97,498 as explained because it was reflected in the wealth-tax returns of two family members. The balance was treated as unexplained.
In appeal, the CIT(A) granted relief in respect of jewellery and bullion valued at ₹2,21,29,455. The Revenue challenged before the Tribunal only the relief of ₹1,56,77,954, representing ancestral jewellery weighing 3,233.11 grams.
The Department did not challenge the separate relief relating to jewellery weighing 1,293.43 grams and valued at ₹64,93,280, which was accepted as belonging to the assessee’s mother.
Jewellery found in family lockers
The disputed jewellery was not found in the personal possession of the assessee or in any locker held exclusively in his name. It was found in UCO Bank lockers held in the names of various family members, including:
- the assessee’s mother;
- his deceased father;
- his deceased grandfather;
- his brother;
- his aunt; and
- another relative.
In the statement recorded under Section 132(4), the assessee stated that he was unaware of certain UCO Bank lockers because they belonged to his mother. He further stated that he had not accessed the UCO Bank lockers for the preceding five to seven years.
The CIT(A) found this explanation significant because the assessee had not claimed ignorance of every family locker. He admitted his knowledge of the Federal Bank lockers but specifically stated that the UCO Bank lockers and their contents were within his mother’s domain.
This contemporaneous statement supported the assessee’s contention that the jewellery found in the UCO Bank lockers did not belong to him.
Old valuation reports support ancestral ownership
The assessee produced valuation reports obtained by the deceased family members during the period of the Voluntary Disclosure of Income Scheme, 1997.
The Revenue did not dispute the genuineness of these reports. More importantly, the description and contents of the jewellery mentioned in the old reports correlated with the jewellery recovered from the lockers during the search.
The assessee also produced a sworn affidavit from his mother, Smt. Rekha Shah, confirming the ownership and family lineage of the jewellery. The affidavit was not disproved by the Assessing Officer.
The Tribunal observed that the jewellery represented assets belonging to the estates of the assessee’s deceased grandmother, grandfather and father, as well as the HUF of his deceased father.
The assessee was neither the executor nor the legal heir responsible for administering every deceased family member’s estate. Therefore, he could not reasonably be expected to produce their old wealth-tax returns, particularly when the estates had not been fully settled.
Presumption of ownership successfully rebutted
The statutory presumptions arising from possession under Sections 132 and 292C are rebuttable. They cannot be applied mechanically merely because assets are found during a search connected with the assessee.
In the present case, the following circumstances collectively rebutted the presumption:
- the jewellery was not found in the assessee’s exclusive possession;
- the lockers stood in the names of different family members;
- the assessee had denied ownership during the search itself;
- valuation reports dating back to 1997 were produced;
- the jewellery descriptions substantially correlated;
- the mother confirmed the ownership through an affidavit; and
- the Revenue failed to disprove the documentary evidence.
The Tribunal relied upon Priyanka Lalitkumar Raizada v. DCIT, wherein an old valuation report in the name of the assessee’s deceased father, supported by the mother’s affidavit, was accepted as sufficient evidence of inherited jewellery.
The deletion of the addition of ₹1,56,77,954 relating to 3,233.11 grams of jewellery was therefore upheld.
Deletion of ₹40 lakh cash addition
During the search, cash of ₹2,89,50,000 was found, out of which ₹2,48,00,000 was seized.
The Assessing Officer accepted ₹50 lakh as cash belonging to the group entity, M/s Priority Vintrade LLP, but treated the remaining ₹1.98 crore as unexplained.
The CIT(A) found that another ₹40 lakh was reconcilable with the cash book of M/s D.J. Shah & Co.
The cash book found and seized during the search reflected a balance of ₹52,76,052 as on 18 August 2022. However, it contained certain post-dated entries. After excluding those future entries, the actual cash balance as on the search date was ₹40,98,502, which adequately explained the physical cash of ₹40 lakh.
The audited financial statements showed that the cash balance arose from the opening balance and cash collections from debtors. Those receipts were accounted for and offered to tax in Assessment Year 2023-24.
Significantly, assessments of M/s D.J. Shah & Co. for earlier years had been reopened on the allegation that its books were unreliable. Those reassessments were subsequently completed accepting the book results. The Department also accepted the cash collections and cash balance in the scrutiny assessment of the firm.
The Tribunal therefore upheld the deletion of the ₹40 lakh addition.
Author’s comments
This decision is significant in search cases involving family jewellery accumulated over several generations. The mere fact that jewellery is discovered during a search does not conclusively establish that it belongs to the person searched. The place of recovery, names of locker holders, statements recorded during search and documentary evidence regarding earlier ownership must all be considered.
The ruling also demonstrates the evidentiary value of old valuation reports prepared by registered valuers. Although a valuation report does not by itself establish the source of acquisition, a report prepared decades before the search becomes strong corroborative evidence when its description matches the jewellery subsequently found and is supported by an affidavit from a family member.
The decision should not, however, be read as holding that every claim of ancestral jewellery must be accepted merely on the basis of an affidavit. Relief was granted because several pieces of evidence converged: the lockers were not exclusively held by the assessee, the statement during search was consistent, the valuation reports were contemporaneous, the descriptions correlated, and the Revenue did not bring any material to disprove the explanation.
On the cash issue also, the Tribunal adopted a practical approach. It did not accept the inflated cash balance containing future entries. It excluded the post-dated receipts and considered only the cash balance actually available on the search date. Thus, the ruling protects genuine book balances while refusing to rely upon artificial or future entries.
The broader principle is clear: a search authorises investigation, but it does not dispense with evidence. Once the assessee rebuts the statutory presumption through credible and contemporaneous material, the Revenue must bring positive evidence to disprove the explanation before treating family jewellery or recorded cash as unexplained assets.
Cases Discussed
- Priyanka Lalitkumar Raizada Vs DCIT (ITAT Mumbai) — ITA No. 4379/Mum/2025.
- Kirti Singh Vs ACIT (ITAT Delhi) — 157 taxmann.com 298.
- Sabita Dey Vs DCIT (ITAT Kolkata) — ITA No. 57/Kol/2015.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, KOLKATA
This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 20.01.2026 for the AY 2023-24.
2. The issue raised in Ground No. 1 is directed against the order of the ld. CIT(A) deleting the addition of Rs.1,56,77,954/- made by the AO to the extent of jewellery weighing 3233.11 gms.
2.1. Brief facts of the case are that, a search and seizure action u/s 132(1) of the Act was carried out on 21.06.2022 and subsequent dates on the residential as well as business premises of the assessee. In the course of search, at the residential premises as well as from various bank lockers held in the name of the assessee as well as his family members, jewellery and bullion worth Rs. 14,68,97,402/- were found, out of which, jewellery and bullion worth Rs. 14,00,31,943/- were seized due to unsatisfactory explanation regarding the source of the assets. The ld. AO vide notice u/s 142(1) of the Act dated 04.10.2023 had required the assessee to reconcile and provide the source of jewellery and bullion worth Rs. 14,00,31,943/-, that were seized during the search and seizure action at his residential premises and the bank lockers held in the name of the assessee and his family members. It was brought to our notice that the assessee vide submissions dated 06.11.2023 and 03.01.2024 had furnished the reconciliation of the seized jewellery and bullion which inter alia included a master report along with supporting evidences. The AO has partially accepted the explanation regarding the source of jewellery to the extent of Rs.1,66,97,498/-which was found reflected in the wealth-tax returns of Smt. Rekha D Shah and Smt. Shibani Shah. In absence of satisfactory details in respect of other items of jewellery, the ld. AO treated the balance amount as unexplained and unaccounted for.
2.2. Aggrieved by the said order, the assessee preferred appeal before the ld. CIT(A). In the appellate proceedings, the Ld. CIT(A) inter alia deleted addition made by the AO to the extent of Rs.2,21,29,455/- by accepting the explanation of the assessee that these items of jewellery and bullion were belonging to his family members. The operative portion of the order of Ld. CIT(A)is as under:-
“Apart from the above, the assessee had explained the ownership and source of jewellery to the extent of Rs.1,56,77,954/- as follows:
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5.12 From the above, it is observed that the assessee had claimed that these jewellery belonged to the estates of his deceased grandmother, grandfather and father. The assessee also claimed that certain jewelleries belonged to his late father’s HUF and his mother as well. It is observed that, these items of jewellery were majorly found and seized from the bank lockers at UCO Bank. I find that the assessee was unaware about these bank lockers as the same is evident from his answer given to Question Nos. 19 & 20 of his statement recorded u/s 132(4) of the Act.
“Q.19 During the course of search & seizure action u/s 132(1) of the IT Act, 1961 conducted at your residential premises at Kalyan Bhawan, 2, Elgin Road, Bhawanipur, Kolkata-700020 on 21.06.2022, summons u/s 131 of the IT Act, 1961 was served to banks where you or your family member or all your entities maintain bank accounts, it has been found that following Nine bank lockers were maintained by you or your family members
Kindly acknowledge the same and provide the reason of not declaring the 5 bank lockers of UCO Bank in the preliminary statement. Also, kindly provide the keys of the above locker.
Ans. I was not aware of these lockers as they were of my mother. I will urge my mother and my wife to furnish any details regarding the keys of the lockers if they have any knowledge about them.
Q.20 From the details received from the bank, this can be seen that these lockers including the ones in Federal Bank have been operated very recently. When did you operate them last? In this case, why are the keys not present on the premises?
Ans I have not been to UCO Bank lockers in the last 5 to 7 years. Federal Bank lockers were used by my wife and I may have visited with her. However I don’t remember the dates of the visit you may find out from the bank manager, as they maintain these records.”
5.13 It is particularly noted that it was not a case that the assessee had claimed ignorance all the bank lockers of his family members. Instead, he had clearly stated that the bank lockers at Federal Bank were within his knowledge and that the bank lockers at UCO Bank and the contents therein, were within the exclusive domain and knowledge of Smt. Rekha Shah. The assessee has further pointed out from the above Question No. 19 of his statement that the bank lockers at UCO Bank was held in the names of Smt. Rekha Digvijay Shah (mother of the assessee), Late Shri Digvijay Shah (father of the assessee), Late Shri Jagjivan Ranchorlal Das (grandfather of the assessee), Romil D Shah (brother of the assessee), Mrs. Diwali Shah (aunt of the assessee) and Sudip Shah (son of Smt. Diwali Shah), etc. Having regard to this contemporaneous fact, that the bank lockers were also held in the respective names of the assessee’s deceased family members, and/or his brother / aunt, there is merit in the assessee’s submission that it is imprudent to assume that the impugned jewellery found from these bank lockers belonged to him. It is seen that the assessee has also furnished copies of the valuation reports which were obtained by his since deceased family members during the period of VDIS of 1997. I find that the AO has not doubted the veracity of these valuation reports furnished by the registered valuers. It is also observed that the contents of these valuation reports of 1997 of the deceased family members also correlate with the description and contents of the jewellery found from these bank lockers. Having regard to these facts, there is merit in the assessee’s claim that these jewellery item did not belong to him but his since deceased family members. I find this to be also corroborated by the sworn affidavit furnished by the assessee’s mother Smt. Rekha Shah who was also assessed to tax by the same AO and the said affidavit is found to remain uncontroverted.
5.14 I find that, it is not a case that the assessee in any of his statement had ever admitted that these items of jewellery belonged to him or represented his unaccounted asset. Rather, he is found to have also maintained that they belonged to his family members. Further, even the AO has been unable to point out any falsity or infirmity in the above evidences furnished by the assessee demonstrating theownership of his deceased family members and their HUF. Rather, the AO is found to have disbelieved the explanation because the assessee was unable to furnish their respective wealth tax returns. I find that the assessee was neither the executor nor the legal heir to the estate of his deceased family members and therefore, he could not have been possibly expected to furnish wealth tax returns, if any, filed by the respective estates. It was brought to my notice that, these family members had expired several years ago and that their respective estates were yet to be executed /settled / finalized and that, it was the assessee’s mother Smt. Rekha Shah who was in custody of the same. Hence, it was imprudent to expect the assessee to provide such details when admittedly, the impugned jewellery was neither found from hisbank lockers nor seized from his possession. The assessee is thus found to have been able to rebut the presumption set out in Section 132 and 292C of the Act with the valuation reports and the affidavit of his mother, as discussed (supra). The case of the assessee is found to be supported by the decision of the Hon’ble ITAT, Mumbai in the case of Priyanka Lalitkumar Raizada vs. DCIT (ITA No.4379/Mum/2025). In the decided case also, the AO had disputed the existence and ownership of jewellery with the assessee, which she had inherited from her deceased father. On appeal, the Hon’ble ITAT observed that the assessee was able to furnish a contemporaneous valuation report in the name of her deceased father, which was also supported by a sworn affidavit of her mother and thus these evidences were held to be sufficient to discharge the existence and ownership of the jewellery. The relevant findings as noted is as follows
“8. We have heard both the parties and perused the material on record. We have given our thoughtful consideration to the corroborative material forming part of the paper book. Admittedly, it is a fact on record that sale proceeds of gold ornaments sold by the assessee in her name are through proper banking channel. The sale bills contain list of items and there gross/net weight and the same matches with the items of jewellery listed in the valuation report as contended by the assessee. Further, the valuation report issued by Government Approved Valuer in the name of deceased father of the assessee is a good evidence which supports the contention of the assessee about gold jewellery having bequeath to her on the death of her father which in turn is supported by a duly notarised affidavit of her mother. Furthermore, the quantum of gold ornaments are well within the limits mentioned in the CBDT instruction (supra). It is also worth noting a fact that assessee is an individual of repute and means which is evidenced by her returns of income filed for the preceding years and is a regular tax paying assessee. Considering all these factual positions which remain uncontroverted and nothing cogent brought on record to rebute the same, we find that assessee has adequately and satisfactorily explained the sale transaction under taken by her for the gold ornaments for which addition has been made by the ld. AO. Accordingly, we delete the addition made in respect ofsale consideration of the gold ornaments u/s. 68 of the Act. Grounds raised by the assessee in this respect are allowed.”
5.15 For the above set out reasons and having regard to the decision (supra), I am of the view that the assessee has been able to reasonably demonstrate the lineage and ownership belonging to his deceased family members and therefore, such ancestral jewellery is treated to be explained, which clearly did not belong to the assessee and therefore could not be treated as his unexplained or unaccounted asset. Accordingly, the items of gold ornaments shown to be belonging to Late Smt. Chandubai Jagjivan Shah, Late Shri. Jagjivan Runchordas Shah, Late Shri. Digvijay Shah & HUF of Late Shri. Digvijay Shah weighing 3233.11 grams of value Rs.1,56,77,954/- is treated to be explained.
5.16 In so far as the jewellery weighing 1293.43 grams valued at Rs.64,93,280/- is concerned, it is seen that this jewellery was claimed to be belonging to the assessee’s mother Smt. Rekha Shah. The assessee in support has furnished her valuation report dated 09.04.1997 along with her affidavit, wherein she affirmed her ownership as well. It is observed that the AO upon verification of the details had allowed credit in respect of the jewellery and bullion declared by Smt. Rekha Shah to the tune of Rs.72,35,438/- and the balance items of gold ornaments ofRs.64,93,280/- had been treated as unexplained. In the appellate proceedings, theassessee has claimed that having regard to the status of his mother’s family, her age, customs and practice of the community to which she belongs, her income bracket, etc. the legitimate existence of further jewellery of 1293.43 grams, apart from her VDIS disclosure of 1997 should not be questioned and be treated as explained. Theassessee in support has relied on the decisions of Hon’ble ITAT, Delhi in the case of Kirti Singh vs. ACIT (157 taxmann.com 298) & Hon’ble ITAT, Kolkata in the case of Sabita Dey vs. DCIT (ITA No. 57/Kol/2015). I find that the assessee’s mother had furnished her valuation report obtained in 1997, which has remained unrefuted by the AO. It is also seen that the contents of this valuation report correlates with the valuation report prepared at the time of search. It is by now well settled in law that the limits set out in the CBDT Instruction dated 11.05.1994 as to the gold jewellery found from the possession of a female member is not absolute and that having regard to the social background and financial standing, the plausibility of the existence of such gold jewellery can be ascertained. It is observed that the assessee’s mother is 78years old and holds a degree in law. She is also one of the partners in M/s DJ Shah& Co., a professional firm. Having regard to her educational background and the community to which she belongs and her net worth / financials and also her age, it cannot be said to be imprudent for her to be in possession of gold jewellery of1293.43 grams. It is also seen that the assessee’s mother had furnished her affidavit claiming ownership of such jewellery as well, which again has not been disputed by the AO. Having regard to the foregoing facts and following the ratio laid down in the decisions of Kirti Singh vs. ACIT (supra) & Sabita Dey vs. DCIT (supra), I therefore hold that the jewellery weighing 1293.43 grams indeed belonged to Smt. Rekha Shah, assessee’s mother and its existence and ownership has been duly explained.
2.3. It was brought to our notice that, the Revenue has not disputed the deletion of addition qua the jewellery weighing 1293.43 grams worth Rs.64,93,280/- which was claimed by the assessee to be belonging to Smt. Rekha Shah (assessee’s mother). The ground raised before us relates to the deletion of the addition of the items of gold ornaments weighing 3233.11 grams of Rs.1,56,77,954/- which were held to be belonging to assessee’s ancestors viz., Late Smt. Chandubai JagjivanShah, Late Shri. Jagjivan Runchordas Shah, Late Shri. Digvijay Shah & HUF of Late Shri. Digvijay Shah.
2.4. The ld. DR appearing for the Revenue strongly supported the order of the AO. It was submitted that the assessee had failed to place on record any corroborative material to substantiate the claim that the gold and jewellery in question were ancestral in nature, or to demonstrate that the quantum of such heirloom holdings was reasonable having regard to the status of the family. He thus claimed that the addition made by the AO ought to be restored. Per contra, the ld. AR appearing for the assessee supported the order of the ld. CIT(A).
2.5. After hearing the rival contentions and perusing the material on record, it is seen that the impugned jewellery weighing 3233.11 grams was not found from the personal possession of the assessee, or from any bank locker held in his sole name. It is not in dispute that, these items were seized from the bank lockers at UCO Bank which stood in the joint names of Smt. Rekha Digvijay Shah (mother), Late Shri Digvijay Shah (father), Late Shri Jagjivan Ranchorlal Das (grandfather), Shri Romil D Shah (brother), Mrs. Diwali Shah (aunt) and Shri Sudip Shah, amongst others. It is also observed that, the assessee, in his statement recorded under section 132(4) of the Act (Q Nos. 19 and 20)had stated that, these locker(s) belonged to his mother, and that he had not accessed them in the preceding five to seven years. These material facts supports the findings of the ld. CIT(A) that the items found in these lockers could not be treated as assessee’s unexplained jewellery. It is seen that, the assessee had supported his explanation by placing on record the valuation reports of the year 1997, obtained by his since-deceased family members, the veracity of which has not been doubted by the Revenue.
The ld. CIT(A) has also recorded a finding of fact that the description and contents of those reports correlated with the description and contents of the jewellery recovered from the said lockers. The ld. CIT(A) has rightly held that, this explanation was also corroborated by the sworn affidavit of the assessee’s mother, Smt. Rekha Shah, which was not disproved by the AO. We may also observe at this juncture that, the Revenue has not challenged the Ld. CIT(A)’s action of deleting the addition made in relation to jewellery weighing 1293.43 grams which was owned up Smt. Rekha Shah. Having accepted the affidavit of Smt. Rekha Shah in relation to the existence and ownership of her 1293.43 gms of gold jewellery, it is unjustified to assail the addition of the impugned ancestral jewellery, which similarly rested on the valuation reports of the deceased family members and the assessee’s mother’s uncontroverted affidavit. In view of these facts, we find that the ld. CIT(A) has rightly relied on the decision of the Coordinate Bench in Priyanka Lalitkumar Raizada v. DCIT (supra), wherein on similar facts, the valuation report in the name of the deceased father supported by the sworn affidavit of the mother was held sufficient to establish the existence and ownership of inherited jewellery. We thus hold that the ld. CIT(A) had rightly deleted the impugned addition, and we find no reason to interfere with the same. Ground No. 1 raised by the Revenue is accordingly dismissed.
3. The issue in Ground No. 2 relates to the action of the Ld. CIT(A) deleting the addition made by the AO on account of unexplained cash of Rs.40,00,000/-.
3.1. The facts in brief are that, the Investigating authorities had found cash amounting to Rs. 2,89,50,000/- in the course of search, out of which cash to the extent of Rs. 2,48,00,000/- was seized due to unsatisfactory explanation. After considering the explanation furnished by the assessee, the AO accepted the submission that cash to the extent of Rs.50,00,000/- was reflected in the books of accounts of group entity, M/s Priority Vintrade LLP and the remaining sum of Rs.1,98,00,000/- was treated to be unexplained.
3.2. In the appellate proceedings, the Ld. CIT(A) inter alia held that, out of the cash of Rs. 1,98,00,000/- treated as unexplained, the amount to the tune of Rs.40,00,000/- stood reconciled with the cash book of M/s DJ Shah & Co. The relevant operative portion of the order of Ld. CIT(A) is as under:-
““5.6 In respect of cash of Rs.40,00,000/- which is claimed to relate to M/s D J Shah & Co., I find that the cash book of M/s D J Shah & Co. for the relevant period was found and seized by the Investigating authorities. The cash book extracted from the tally accounts revealed that, there was a cash balance of Rs.52,76,052/- as on18.08.2022. It is seen that, there were post-dated entries of cash receipts shown int he tally accounts due to which cash balance was inflated. The assessee has brought to my notice that, if the post dated entries are ignored, the cash balance as on22.06.2022 i.e. date of search was Rs.40,98,502/- which was commensurate with the explanation being given in respect of cash of Rs.40,00,000/-. I find that, the AO had rejected this explanation by observing that there were future entries in the cash book and therefore the cash balance was unreliable. I however find that, once the future entries are ignored, the cash balance as on date of search was Rs.40,98,502/- which was commensurate to the explanation given for cash of Rs.40,00,000/-. Theassessee has further placed before me the audited financials of M/s D J Shah & Co. for AY 2023-24 and showed that the cash balance as on 21.06.2022 comprised of (i)opening cash balance and (ii) cash collections from debtors/invoices, all of which was offered to tax in the relevant AY 2023-24. It was also brought to my notice that, the income-tax assessments of M/s D J Shah & Co. was reopened u/s 147 of the Act for AYs 2016-17 to 2022-23 inter alia on the allegation that the books of accounts was unreliable. It is seen that, all the income-tax assessments have since been completed u/s 147/143(3) of the Act wherein the book results have been accepted by the AO. Having regard to these contemporaneous facts, I am of the considered view that, indeed the entire cash balance of Rs.52,76,052/- found in the tally accounts could not have been relied upon, but the cash balance as on 21.06.2022 of Rs.40,98,502/-reflected in tally accounts was in praesenti and therefore acceptable.”
4. The Ld. DR vehemently submitted that the ld. CIT(A) was unjustified in accepting the explanation of the assessee that cash to the extent of Rs.40,00,000/- pertained to the cash balance of his firm, M/s D J Shah & Co. as the cash book was unreliable. He contended that, the search authorities had found post dated entries of cash receipts in the cash book due to which cash balance on the date of search was inflated and thus it was wrong to rely on such books of accounts. He thus prayed before us to reverse the order of Ld. CIT(A) and restore the action of the AO. Per contra, the ld. AR supported the order of ld. CIT(A).
5. We have heard the rival submissions and perused the material on record. The short question is whether cash of Rs.40,00,000/- stood explained by the cash balance of the assessee’s firm, M/s D J Shah & Co. It is not in dispute that the cash book of the firm was itself found and seized by the Investigating authorities in the course of the search, and that the tally accounts so seized reflected a cash balance of Rs.52,76,052/- as on 18.08.2022. The ld. CIT(A) is found to have ignored the inflated cash balance on account of certain post-dated receipts and thereafter arrived at the correct cash balance of Rs.40,98,502/- as on the date of search, whose credit was allowed against the physical cash found to the extent of Rs.40,00,000/-.We note that the books of accounts of M/s D J Shah & Co. were completed and audited post search for the year ended 31st March 2023, wherein the cash balance which constituted the cash collections from debtors was offered to tax in AY 2023-24. The Ld. DR was unable to controvert the fact that these cash collections were examined and accepted alongwith the cash balance in the income-tax assessment of M/s D J Shah & Co completed u/s 143(3) of the Act. It is also observed that, the income-tax assessments of M/s D J Shah & Co. for AYs 2016-17 to 2022-23 had been reopened under section 147 inter alia on the allegation that its books were unreliable, but have since been completed under section 147/143(3) accepting the book results. On these facts, we find no infirmity in the reasoned finding of the ld. CIT(A) deleting the addition of Rs.40,00,000/-, and the same is upheld. Ground No. 2 raised by the Revenue is dismissed.
6. In the result, the appeal of the Revenue is dismissed.
Order pronounced on 11.09.2026.
