2018 (4) TMI 1988 - AT - Income Tax

Unexplained jewellery - no source of investment in the gold and diamond studded jewellery provided - total jewellery of all the family members was valued by approved valuer at one place - HELD THAT - Jewellery which has been found from the bedroom of Dr. Shobha Tomar, Dr. Anurag Tomar and Dr. Swati Tomar belongs to all the family members who were staying jointly with the assessee at the relevant point in time. The same is confirmed by the assessee in his statement recorded u/s 132(4) of the Act where the assessee has categorically stated that the jewellery so found belong to him, his wife, son, daughter in law and B.S.Tomar (HUF). Therefore, we find that the jewellery so found where remained unexplained, the addition has to be made equally in the hands of the each of the family members to whom the said jewellery belongs. Therefore, we found that the observation of the Assessing Officer that since the assessee is the head of family, the whole of the addition shall be made in his hand is not emerging from the facts on record and therefore, the same cannot be accepted. In absence of any specific identification of the jewellery belonging to the assessee and to the other family members, it would be reasonable that if the addition has to be made, it should be made equally in hands of all the family members staying with him at the relevant point in time and the assessee's HUF. The contention regarding the overall valuation of the explainable jewellery amounting to Rs 60,16,749/- being higher than the value of Rs 55,65,762 as determined by the approved valuer is not found acceptable as there is a clear cut finding by the AO that jewellery weighing 2595.72 grams was found as against explainable jewellery of 2212.04 grams. We confirm the findings of the AO to the extent that the jewellery worth Rs 55,65,762 remains unexplained. The addition, towards the unexplained investment in the jewellery so found during the course of search, should be made equally in hands of all the family members staying with him at the relevant point in time. The proportionate addition in the hands of the assessee comes to Rs 245,422 (1/5 of Rs. 12,27,109/-). The balance addition of Rs 981,687 is therefore directed to be deleted. In the result, the ground of appeal is partly allowed. Investment in countries outside India - No evidence regarding the genuineness of the above transactions was submitted during the course of post-search proceedings -case of the Revenue is that an amount of Rs. USD 3,00,000 equivalent to Indian Rupees 1,84,35,000/- has been transacted and transferred on behalf of Dr. B. S. Tomar to various foreign bank accounts - HELD THAT - AO has referred to certain discreet enquiries during pre-search investigation that Tomar family is making a lot of investment in countries outside India, particularly in Madagascar and Mozambique. However, we find that there is nothing available on record in terms of such inquiries which have been conducted by the Revenue and as to how the Revenue has come to such a finding. Therefore, in absence of any material on record in terms of the nature of such enquiries, the person from whom such inquiries have been made, any documentation which has been found and what is the exact findings arising out of such inquiries, we do not find there is any basic to hold that the so called discreet inquiries anyway establishes the fact that Dr. B.S.Tomar has made any investments in countries outside India and the impunged remittances are in connection thereto. Statement of Dr. B. S. Tomar recorded during the course of search u/s 132(4) - I t is clear that the assessee has confirmed that he does not have any foreign bank account, no foreign exchange dealings have been made by him and he does not have any business activities outside the country. If Revenue were to disbelieve such statement which has been recorded on oath, the onus is on the Revenue to demonstrate through verifiable evidence that what the assessee has stated in his statement on oath is incorrect or there is falisity in such statement. Merely disbelieving such statement without bringing anything contrary on record cannot advance the cause of the Revenue. Seized documents which have been found during the course of search - It is not clear whether the said remittance has actually happened or not. There is no subsequent confirmation or any bank advice which has been found unlike the initial remittance of US 100,000. Similarly, according to seized document, there is another email communication from Christine Ramos of Axius Gold of 17th July, 2014 giving the bank details for transfer of US 100,000 to the Oceanix International FZE. It is again not clear and there is nothing on record which suggest that there is any remittance which has actually happened in this regard. In light of the same, the mere fact that certain email communications have been addressed and forwarded to Dr. B.S.Tomar regarding the foreign remittances, to our mind, the same is not sufficient enough to hold that the remittance have been made either by Dr. B.S.Tomar or on his behalf from the undisclosed sources of income. We find that the Settlement Commission has also reached at the same conclusion as we have arrived above that the mere fact that certain email communications have been addressed and forwarded to Dr. B.S.Tomar regarding the foreign remittances, the same is not sufficient enough to hold that the remittance have been made either by Dr. B.S.Tomar or on his behalf from his undisclosed sources of income. No basis for making the addition in the hands of the assessee. The said addition is hereby directed to be deleted. The ground of appeal taken by the assessee is thus allowed. Foreign travel expenses - as based on various seized documents and details collected during the course of post search investigation, the assessee and his wife have frequently travelled to foreign countries - HELD THAT - AR has reiterated the contentions raised before the CIT(A) and submitted that the assessee's drawings during the year are sufficient enough to explain the source of such expenditure. In support, our reference was drawn to the assessee's capital account for the financial year ended 31st March, 2015 which shows total drawings. In absence of anything contrary on record, it would be reasonable to hold that the foreign tour expenses of Rs 203,450 are met out of such drawings. In the result, the addition made by the AO is hereby deleted and ground of the assessee's appeal is allowed.

Summary

Issues Involved:
1. Sustaining addition of Rs. 12,27,109/- on account of excess jewellery.
2. Sustaining addition of Rs. 1,84,35,000/- related to alleged foreign remittance.
3. Sustaining estimated addition of Rs. 2,03,405/- for foreign tour expenses.

Detailed Analysis:

1. Sustaining Addition of Rs. 12,27,109/- on Account of Excess Jewellery
The case involved a search and seizure operation at the residential premises of the assessee, where gold, diamonds, and silver were found. The assessee claimed the jewellery belonged to all family members and was disclosed in their wealth tax returns. However, the Assessing Officer (AO) found 383.68 grams of gold, 19.3 cts of diamonds, and silver worth Rs. 14,280 unexplained and added Rs. 12,27,109/- to the assessee's income.

The assessee appealed, arguing that the jewellery was owned by all family members and should not be added solely to his income. The CIT(A) upheld the AO's decision, citing inconsistent explanations by the assessee.

Upon further appeal, the Tribunal noted that the jewellery belonged to all family members living jointly and should be proportionately added to each member's income. The Tribunal reduced the addition in the assessee's hands to Rs. 2,45,422/- and directed the deletion of the balance Rs. 9,81,687/-. Thus, the ground of appeal was partly allowed.

2. Sustaining Addition of Rs. 1,84,35,000/- Related to Alleged Foreign Remittance
The AO observed foreign investments by the Tomar family in Madagascar and Mozambique, based on seized documents and statements. The AO concluded that USD 3,00,000 was remitted by Dr. B.S. Tomar through Mr. Bitthal Maheshwari's HSBC Hong Kong account, adding Rs. 1,84,35,000/- to the assessee's income on a protective basis.

The assessee argued that the remittance was made by Mr. Maheshwari for his own business, not on behalf of Dr. Tomar. The Settlement Commission had also found no evidence that Dr. Tomar provided the funds. The CIT(A) upheld the AO's addition, stating the Settlement Commission's findings pertained to IMT, not the assessee.

The Tribunal found no material evidence linking the remittance to Dr. Tomar, noting the lack of inquiries with banks or the recipient. The Tribunal concluded that the email communications alone were insufficient to establish the remittance as the assessee's undisclosed income. Thus, the addition of Rs. 1,84,35,000/- was deleted, and the ground of appeal was allowed.

3. Sustaining Estimated Addition of Rs. 2,03,405/- for Foreign Tour Expenses
The AO added Rs. 2,03,450/- for unexplained foreign tour expenses, noting that NIMS University paid part of the expenses, and the balance was unexplained. The assessee contended that the expenses were covered by his personal drawings of Rs. 10,17,138/-.

The CIT(A) confirmed the AO's addition, citing insufficient evidence linking the expenses to the drawings. The Tribunal, however, accepted the assessee's argument, noting that the drawings were sufficient to cover the expenses. Thus, the addition of Rs. 2,03,450/- was deleted, and the ground of appeal was allowed.

Conclusion
The appeal was partly allowed. The Tribunal directed proportionate addition for unexplained jewellery among family members, deleted the addition related to foreign remittance due to lack of evidence, and accepted the assessee's explanation for foreign tour expenses.