2023 (10) TMI 1406 - AT - Income Tax

Unexplained jewellery found in search and seizure - Addition u/s 69A read with section 115BBE - HELD THAT - We hold that CBDT s instruction No. 1916 dated 11.05.1994 and press release dated 01.12.2016 pertains to seizure of jewellery. It postulates that by going through the archetypal Indian family standard a persons of an Income Tax payee of considerable amount could have had the prescribed amount of jewellery in the circular. As brought into force after a series of due deliberation and its impact on taxation .As never envisaged that the Assessing Authority should restrict the amount of eligible jewellery to the quantity mentioned in the circular. The assesses were trustee of a medical college and also have the returned income in the range of Rs. 21.27 lacs to 49.34 lacs as per the returns. Total withdrawals of the family over the period of assessments was to the tune of more than Rs. 10 Cr. The assessee stated that the income for all the years had fallen into the highest tax bracket which shows that the assessee has been earning substantial Income clearly establishing the status. It has time and again been held that due credit of the same has to be allowed by the assessing officer looking and appreciating the status customs and traditions relating to the family. Hon ble Delhi High Court in the case of Ashok Chaddha 2011 (7) TMI 142 - DELHI HIGH COURT held that collecting jewellery of 906.900 gms by a woman in a married life of 25 years in form of stree dhan or on other occasions is not abnormal. Assessee appeal allowed. Unsecured Loans - statement recorded u/s 131 of loan grantor - HELD THAT -As gone through the statement of Sh. Vibhor Tyagi and Sh. Vaibhav Tyagi produced by the ld. DR wherein they have categorically denied in the statement recorded u/s 131 of giving any loan to Dr. Ankit Sharma. They stated that they were trying to open a petrol pump a partnership of wife of Dr. Ankit Sharma and due to non-allotment of petrol pump the business could not start. Revenue has not brought anything on record to prove that the loan has been extended to Dr. Ankit Sharma. CIT(A) also observes that the loans have been taken by Sh. Jaspal Singh Sharma Trust. Even on that count also the addition ought not to have been made in the hands of the assessee. Thus keeping in view that the above twin facts into consideration we hold that no addition can be made in the hands of the assessee. The appeal of the assessee on this ground is allowed. Bogus loan transactions - HELD THAT - CIT(A) cogently brought on record that the loans received by the assessee could not be treated u/s 68 as the identity genuineness and creditworthiness of the parties has been duly proved. In view of the above facts and the ratio given by the ld. CIT(A) no interference is called in the well reasoned order of the ld. CIT(A). Appeal of assessees is allowed and the appeals of the Revenue are dismissed.

Summary

Issues Involved:
1. Unexplained Jewellery Addition
2. Unexplained Loan Figures on Rough Paper
3. Unexplained Loans from Various Entities
4. Penalty Notice and Interest Charges

Issue-wise Detailed Analysis:

1. Unexplained Jewellery Addition:
Facts and Proceedings:
- During a search, gold jewellery weighing 3877.5 grams valued at Rs. 1,46,15,635/- was found.
- The Assessing Officer (AO) treated 1627.5 grams of jewellery worth Rs. 61,34,610/- as unexplained and added Rs. 20,44,870/- (1/3rd share) to the assessee's income under Section 69A read with Section 115BBE.
- The assessee argued that the jewellery was inherited and received during marriages, but could not provide documentary evidence.

Tribunal's Decision:
- The Tribunal referenced CBDT Instruction No. 1916 and various court judgments, emphasizing that the jewellery found was reasonable given the family's status and customs.
- The Tribunal directed deletion of the addition, holding that the jewellery was satisfactorily explained.

2. Unexplained Loan Figures on Rough Paper:
Facts and Proceedings:
- A document containing details of loans was found during a search, listing unsecured and secured loans from various persons.
- The AO added Rs. 92,00,000/- to the assessee's income based on loans from Sh. Vaibhav Tyagi and Sh. Vibhor Tyagi, which were not reflected in the books.

Tribunal's Decision:
- The Tribunal noted that the document was a mere proposal for selling a college and that the loans were not actually received.
- Statements from Sh. Vaibhav Tyagi and Sh. Vibhor Tyagi confirmed no loans were given to the assessee.
- The Tribunal deleted the addition, finding no evidence of actual loans.

3. Unexplained Loans from Various Entities:
Facts and Proceedings:
- The AO added loans received from entities like M/s Sarvottam Securities Pvt. Ltd., M/s Aspire Sales Pvt. Ltd., and M/s Moral Sales Pvt. Ltd., treating them as bogus based on low income declarations and findings from the Investigation Wing.
- The AO relied on statements from auditors and directors, which were not corroborated with substantial evidence.

Tribunal's Decision:
- The Tribunal found that the assessee provided sufficient evidence, including balance sheets, bank statements, and confirmations, proving the identity, creditworthiness, and genuineness of the transactions.
- The Tribunal upheld the CIT(A)'s decision to delete the additions, emphasizing the lack of concrete evidence from the AO.

4. Penalty Notice and Interest Charges:
Facts and Proceedings:
- The AO issued penalty notices under Section 271AAB and charged interest under Sections 234A, 234B, 234C, and 234D.

Tribunal's Decision:
- The Tribunal did not specifically address the penalty and interest charges in detail, focusing on the primary issues of unexplained jewellery and loans.
- Implicitly, the deletion of additions would affect the penalty and interest calculations.

Conclusion:
The Tribunal allowed the assessee's appeals and dismissed the Revenue's appeals, finding that the additions made by the AO were not substantiated with sufficient evidence. The Tribunal emphasized the importance of considering the family's status, customs, and the genuineness of transactions, as well as the need for concrete evidence before making additions under Sections 68 and 69A.