2021 (7) TMI 359 - AT - Income Tax

Additions towards cash unexplained - search proceedings u/s 132 - HELD THAT - As assessee has explained that the impugned sum was accounted and on due satisfaction only the authorised officer did not seize such sum. Therefore, the impugned addition is uncalled for. In view of the above, the addition made by the A O and sustained by the Ld. CIT(A) , without properly appreciating the facts and circumstances , is directed to be deleted and the corresponding grounds of the assessee are allowed . Undisclosed investment in jewellery found in premises of the assessee - Settlement Commission Order - HELD THAT - When the assessee furnished a copy of the order of the Settlement Commission before the CIT(A) and pleaded that the assessee has disowned the ownership of the impugned assets and on the other hand his father, Shri. Ravi Kumar Gupta, owned them up before the Settlement Commission, which has duly considered and settled the issue, therefore, the impugned additions in the hands of assessee was opposed to law and the impugned additions are liable to be deleted and relied on relevant case law etc , the impugned direction issued to the A O by the Ld. CIT(A) without appreciating the facts and circumstances properly is not sustainable in law. We find merit in the assessee s submissions. Since Shri. Ravi Kumar Gupta owned up the assets found in various premises referred to in the order of settlement commission which included the impugned assets found in the assessee s premises and the settlement commission on due appreciation of the relevant material has accepted and settled the same in the order referred, supra, no part of the said assets could be considered for addition in the hands of the assessee - A O is directed to delete the impugned addition. Assessee s appeal is allowed.

Summary

Issues Involved:
1. Addition towards cash of ?45,65,420/- found during the search.
2. Addition towards undisclosed investment in jewellery valued at ?1,81,72,099/- (later reduced to ?1,61,42,900/-).

Detailed Analysis:

1. Addition towards Cash of ?45,65,420/-:
- The assessee contested the inclusion of cash found during a search operation amounting to ?45,65,420/-, out of which ?40 lakhs was seized.
- The assessee claimed that ?40 lakhs was owned and declared by his father in a settlement application before the Settlement Commission, and the remaining ?5,65,420/- was explained through cash flow details of family members.
- The Commissioner of Income Tax (Appeals) [CIT(A)] accepted the explanation for ?40 lakhs but maintained the addition of ?5,65,420/-.
- The Income Tax Appellate Tribunal (ITAT) examined the evidence and found that the cash of ?5,65,420/- was treated as accounted by the search parties and not seized, indicating it was explained satisfactorily.
- ITAT directed the deletion of the addition of ?5,65,420/- from the assessee's assessment, as it was accounted for and the authorized officer did not seize it due to satisfaction with the explanation provided.

2. Addition towards Jewellery Valued at ?1,81,72,099/-:
- The jewellery found during the search was initially valued at ?1,81,72,099/-, later reduced to ?1,61,42,900/-.
- The assessee's father declared ?1.5 crores worth of jewellery in his settlement application before the Settlement Commission, which was accepted.
- The CIT(A) directed the Assessing Officer (AO) to dispose of the rectification application concerning the valuation of jewellery but did not address the inclusion of jewellery value in the assessee's hands.
- ITAT reviewed the Settlement Commission's order, which included the jewellery found in the assessee's premises and settled the issue based on the father's declaration.
- ITAT found that the father's declaration and the Settlement Commission's acceptance meant the jewellery should not be included in the assessee's income.
- ITAT directed the AO to delete the addition of jewellery value from the assessee's assessment, as the assets were owned up by the father and settled by the Commission.

Conclusion:
- ITAT allowed the assessee's appeal, directing the deletion of both the cash addition of ?5,65,420/- and the jewellery addition valued at ?1,61,42,900/-.
- The judgment emphasized the proper appreciation of facts and the legal principle that assets declared and settled by a family member before the Settlement Commission should not be included in another family member's assessment.