2022 (12) TMI 551 - AT - Income Tax

Assessment u/s 153A - unexplained jewellery - whether no search warrant or Panchnama drawn in the case of the assessee? - HELD THAT - As admitted fact that the bill has also been found seized from the same locker no. 144, in the name of Sh. Roop Sachdeva and on the same analogy, it is for Shri Roop Sachdeva to explain the source of purchase of such jewellery and in absence of any satisfactory explanation, the addition, if any is required to be made in the hands of Shri Roop Sachdeva and not in the hands of the assessee. Merely because the name of the assessee is mentioned on the said bill, the same doesn't automatically result in discharge of burden on part of Shri Roop Sachdeva as the bill has been found and seized from the locker in name of Shri Roop Sachdeva and it is quite likely that he had purchased the jewellery in the name of his wife out of his own sources of income. Therefore, the presumption is that he has made the purchases out of his own sources of income and it is for him to explain the same and in absence thereof, the action, if any as per law can be taken in his hands. In light of the same, we find that there is no basis for making the addition in hands of the assessee and the same is directed to be deleted. Addition u/s. 115BBE - Unexplained investment in the jewellery - jewellery was found from the residence owned by Sh. Krishan Lai Sachdeva, head of the family and part of the jewellery was found from the locker in the name of Sh. Roop Sachdeva - HELD THAT - Case of the Revenue is that the jewellery has been found from the locker of the assessee and the onus is therefore on the assessee to explain the source of investment in the jewellery so found and seized. As we have seen in A.Y 2013-14 wherein similar addition was made in hands of the assessee basis certain bills found in the same locker no. 144 no. which was in the name of Sh. Roop Sachdeva and not in the name of the assessee, the ld. CIT(A) has returned a finding that the bill amounting to Rs. 1,52,390/- have been found seized from the locker no. 144, in the name of Sh. Roop Sachdeva and cognizance of the same should have been taken in his hands and addition, if any, was required to be made in the case of Sh. Roop Sachdeva. We failed to understand why the same reasoning doesn't apply or has not been applied in the instant case. It is an admitted and undisputed fact that locker no. 144 is not in the name of the assessee but in the name of Sh. Roop Sachdeva and therefore, very basis of making the additions in the hands of the assessee doesn't survive. As we have held above, it is for Shri Roop Sachdeva to explain the source of purchase of such jewellery and in absence of any satisfactory explanation, the addition, if any is required to be made in the hands of Shri Roop Sachdeva and not in the hands of the assessee. Any inaction on part of the Revenue in case of Shri Roop Sachdeva doesn't bestow the right on the Revenue to take action in hands of the assessee. In the result, the addition so made is directed to be deleted. Appeal of the assessee is allowed.

Issues Involved:
1. Assumption of jurisdiction under section 153A.
2. Validity of proceedings under section 153A due to lack of search warrant or Panchnama.
3. Addition of Rs. 1,94,655/- on account of purchase of jewellery.
4. Addition of Rs. 11,92,000/- under section 115BBE.
5. Addition of Rs. 4,52,256/- on account of excess jewellery.

Detailed Analysis:

1. Assumption of Jurisdiction under Section 153A:
The assessee challenged the assumption of jurisdiction under section 153A, arguing that no search warrant or Panchnama was drawn in their name. The assessee cited the case of Regency Mahavir Properties where similar proceedings were quashed. The Revenue countered by submitting the warrant of authorization, asserting that the search was duly initiated and the assessment completed under section 153A r/w 143(2) was valid.

2. Validity of Proceedings under Section 153A:
The assessee contended that the search warrant and Panchnamas were in the name of entities and individuals other than the assessee, thus making the proceedings void-ab-initio. The Revenue maintained that the search was validly initiated. The Tribunal found that the search and seizure operations were not directly linked to the assessee, thereby questioning the validity of the proceedings under section 153A.

3. Addition of Rs. 1,94,655/- on Account of Purchase of Jewellery:
The assessee argued that the jewellery was found in a locker in the name of Shri Roop Sachdeva, and no addition should be made in the assessee's hands. The Tribunal noted that the bill for the jewellery was found in the locker of Shri Roop Sachdeva, and any addition should be made in his hands, not the assessee's. The Tribunal directed the deletion of the addition in the assessee's hands.

4. Addition of Rs. 11,92,000/- under Section 115BBE:
The assessee challenged the addition, stating that the jewellery was found in the residence of Shri Krishan Lal Sachdeva and the locker of Shri Roop Sachdeva, not from the assessee's possession. The Tribunal observed that the locker was not in the name of the assessee, and thus, the addition should be made in the hands of Shri Roop Sachdeva. The Tribunal directed the deletion of the addition in the assessee's hands.

5. Addition of Rs. 4,52,256/- on Account of Excess Jewellery:
The assessee argued that the jewellery belonged to the entire family and was acquired over time through customary practices. The Tribunal found the explanation reasonable, considering the family's status and customary acquisition of jewellery. The Tribunal directed the deletion of the addition.

Conclusion:
The Tribunal allowed all three appeals, directing the deletion of additions made in the assessee's hands and questioning the validity of the proceedings under section 153A due to the lack of direct search warrant or Panchnama in the assessee's name. The Tribunal emphasized that any additions should be made in the hands of the individuals directly linked to the search operations.

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