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TMI Blog2018 (2) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 was conducted at his residential premises as well as on the premises of his other concerns/business associates. Notices u/s 153A of the Act dated 31.12.2012 was issued to the appellant for reopening the case u/s 147 of the Act. Against the said notice the appellant filed the return showing the same income of Rs. 11,89,296/- and agriculture income of Rs. 3,02,432/-. The assessment was completed at the income of Rs. 34,54,921/- and agriculture income of Rs. 3,02,432/- by making addition of Rs. 22,65,625/- against ornaments and jewellery found during the course of search. 3. Aggrieved by this, the assessee preferred an appeal before the Ld.CIT(A) but could not succeed. 4. Now the assessee is in appeal before the Tribunal pressing following grounds of appeal. 1. That on the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the action of Assessing Officer by reopening the case u/s 147 though under the facts and circumstances of the case, the reopening is unjustified, unwarranted and bad in law. 2. That on the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the addition of Rs. 22,65,625/- for ornaments, jewellery and silv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sable to tax has escaped assessment. Explanation 1 to proviso of section 147 further clarifies that production before the AO of books of accounts and other evidence does not exonerate the assessee from the duty to made full and true disclosure of material fact, if some material necessary for assessment lay embedded in books of accounts or other evidence which the AO could have uncovered with due diligence but did not. Then, production of account books or other evidence will not tantamount to full and true disclosure of material facts. For the sake of convenience, Explanation 1 below proviso to section 147 is reproduced as under: "Explanation 1 - Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso". 4.3 It is well settled principle of law that AO should have material on the basis of which he could form a bonafide belief that the income as assessable to tax has escaped assessment for the relevant assessment year. It is necessary to refer to some of the relevant decisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the cases of ITO v Selected Dalurband Coal Co. P. Ltd (1996) 217 ITR 597 (SC) and Raymond Woollen Mills Ltd. v ITO (1999) 236 ITR 34 (SC) where the ratio laid down is clearly applicable on the case under consideration. 4.4 The legal principles that merge from the aforementioned decisions may be summarized as under:- - That for valid reopening of assessment after four years, the AO should have reason to believe that the income of the assessee has escaped assessment by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. It is a condition precedent for assumption of jurisdiction under 147(1). - The condition that the AO has reason to believe that the income of the assessee had escaped assessment is question of jurisdiction can always be investigated by Court. The word `has reason to believe' in section 147 are stronger than the words `is satisfied'. The belief entertained by the AO must not be arbitrary or irrational. It must be reasonable or in other words, it must be based on reasons which are relevant and material. - The belief of the Officer should not be a product of imagination or speculatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year under consideration. In the case of ITO vs. Biju Patnaik (1991) 188 ITR 247, the Apex Court has sounded the note of caution that at the stage of notice under section 147/148 of the Act, the Court is not to go into the merits of the controversy whether a particular income is taxable. Taking, the totality of the facts and circumstances of this case into consideration, I uphold the reopening of assessment u/s 148. Therefore, the ground No.1 of the appeal is dismissed". 10. In the result Ground No.1 of the assessee is dismissed. 11. Ground No. 2 and 3 relates to the addition of Rs. 22,65,625/- for gold ornaments, diamond jewellery and silver found during the course of search. These included 614.25 (net weight) of gold jewellery, diamond jewellery of 30 carrats and 3 carrots and silver ornaments weighing 2000 grams (net weight). 12. The Ld. Counsel for the assessee submitted that both the lower authorities failed to appreciate that out of total jewellery 350 grams of gold jewellery were received through "WILL" from assessee's mother in law in the year 1993 and as a token of evidence copy of balance sheet reflecting the said gift are enclosed and were also submitted befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax/Commissioner authorizing the search all the time of furnishing the search report. (iv) In all cases, a detailed inventory of the jewellery and ornaments found must be prepared to be used for assessment purposes." 15. From the perusal of the above mentioned CBDT instructions which in our view provides a guideline to the search conducting team that no seizure should be made of the jewellery and ornaments found during the course of search proceedings u/s 132 of the Act, if the same have been duly declared in the wealth tax returns filed by the tax payer or where such ornaments are within the prescribed limits of 500, 250 or 100 grams as stated in the said instructions. 16. Now turning towards the facts of the present appeal we find that out of total seized jewellery of Rs. 22,65,625/- (being the value of seized jewellery as on the date of search), we find that the assessee has been successful enough to explain the jewellery worth Rs. 17,59,500/- on account of following; (i) Diamond jewellery belonging to assessee's wife purchased in 1993 for Rs. 2,16,000/- (duly shown in the balance sheet) which values at Rs. 10,77,000/- as on date of search. (ii) secondly the Gold jeweller ..... 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