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TMI Blog2018 (7) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessees. These judgments essentially relate to cash seized which were held to be unexplained which is not the case of the assessee. In the case of Karun Dutt Singh v. CIT [2017 (9) TMI 47 - KERALA HIGH COURT ] it was noted that AO made addition to assessee’s income in respect of gold ornaments recovered from him after rejecting explanation that it belonged to his employer company since Director of employer company denied to have given ornaments to assessee for sale or as samples. There is no denial in the instant case either by the assesses or R.K.Mittal or any other person. The consistent explanation has been that acquisition of jewellery is as “streedhan” on marriage or other occasions and same could not be said to be unexplained jewellery. The basis that assessees have not filed wealth tax returns cannot be a ground to make an addition in view of the judgment of Roshan Di Hatti v. CIT (1977 (3) TMI 3 - SUPREME COURT). Having regard to the foregoing we hold that additions were made in the hands of assessee are not in accordance with law and therefore the same are deleted - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... erwise too, illegal and untenable. 2.2 That the observation of the learned Commissioner of Income Tax (Appeals) that no satisfactory explanation was tendered by the appellant or her husband during the course of search in respect of the jewellery has been arrived at without independent appreciation of the statement recorded of the appellant and her husband at the time of search but is a result of mechanical borrowed conclusion from the order of assessment and therefore untenable. 2.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that mere non filing of wealth tax return cannot be a ground to reject the explanation tendered in support of the jewellery found and seized during the course of search. 2.4 That furthermore also the observation that there is no documentary evidence to support the acquisition of jewellery at the time of marriage is also factually incorrect and contrary to record and untenable. 2.5 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that having regard to quantum and value of jewellery (3299gms), the same cannot be held to be excessive for a family of the status of appellant hailing from a res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the learned Commissioner of Income Tax (Appeals) that no satisfactory explanation was tendered by the appellant or father in law of the appellant during the course of search in respect of the jewellery has been arrived at without independent appreciation of the statement recorded of the appellant and father in law of the appellant at the time of search but is a result of mechanical borrowed conclusion from the order of assessment and therefore untenable. 1.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that mere non filing of wealth tax return cannot be a ground to reject the explanation tendered in support of the jewellery found and seized during the course of search. 1.4 That furthermore also the observation that there is no documentary evidence to support the acquisition of jewellery at the time of marriage is also factually incorrect and contrary to record and untenable. 1.5 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that having regard to quantum and value of jewellery (3299gms), the same cannot be held to be excessive for a family of the status of appellant hailing from a respectable family from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o time. During the course of search in the case of M/s CHD Developers group at the residential premises at 10-11, Nelson Mandela Marg, Vasant Kunj, New Delhi of Sh. R. K. Mittal, Director of M/s CHD Developers Ltd. and other family members, and locker in the name of two assessees jewellery amounting to ₹ 2,89,02,655/- was found. The details of jewellery found is as under: Name of person Jewellery found (In Rs.) Mrs. Ruchie Mittal and Sh. Gaurav Mittal, Plot No. 10-11, second floor, Nelson Mandela Marg, Vasant Kunj, new Delhi 92,15,880/- Mrs. Radha Mitta and Sh. R. K. Mittal, Plot No. 10-11, second floor, Nelson Mandela Marg, Vasant Kunj, New Delhi 65,84,068/- Mrs. Radha Mittal and Mrs. Ruchie Mittal Locker NO. 278, Axis Bank, Vasant Kunj, New Delhi 1,31,02,707/- Total 2,89,02,655/- 4.1 The AO in the orders of assessment held that no satisfactory explanation was offered by the appellants in respect of the jewellery found from the residential premises/locker of the appellants. It is also noted that during the course of search statement was recorded of Sh. R.K. Mittal on 24.11.2012 u/s 132(4) of the I.T. Act wherein he offered ₹ 1.50 crores on account of unacco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving regard to quantum and value of jewellery (3299 gms), the same cannot be held to be excessive for a family of the status of assessee. The assessee submitted that as the Department had conducted a search of all the financial dealings and no paper or document was found to indicate that this jewellery represented undisclosed income of the assessee for assessment year 2013-14. Reference was also made to Annexure A-4 found and seized from the residential premises of the assessees and on the basis thereof it was submitted that the total investment in jewellery in 2005 on marriage of Radha Mittal was of ₹ 70,12,000/-; and if the value of the jewellery as computed by the revenue on the date of search is restated by adopting the rates as in 2005 the same itself explains the jewellery found as a result of search. Apart from the above, it was submitted that the AO ought to have excluded jewellery as per instruction no. 1916 dated 11.5.1994 issued by the CBDT. As regards the surrender it was submitted that there was no surrender made by both the assessees. Reliance was placed on statement of Sh. R. K. Mittal in the course of search viz-a-viz the jewellery found from residence who in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that neither any penalty will be levied nor any prosecution will be initiated. iii) During the course of search at my residence, plot No. 10-11, Nelson Mandela Marg, Vasant Kunj, New Delhi on 23.11.2012 one locker key of locker at Axis Bank was seized and it may contain jewellery. Since the locker has not been open as yet we cannot estimate the value of jewellery. Further the documents have been seized at my residence as well as from the corporate office of CHD Developers Ltd., which may have certain transaction which I may be unable to explain. I therefore, offer an addition sum of ₹ 2.5 Crore in addition to amount disclosed as above and my regular income to buy peace of mind and to avoid any further litigation and subject to the condition that neither any penalty will be levied nor any prosecution will be initiated."[Emphasis supplied] 5.1 It was submitted that surrender made by Sh. R.K. Mittal perse cannot be made a basis to make any addition in the hands of assessees, since no addition has been made by the AO on the basis of statement u/s 132(4) of the Act. It was further submitted as per the statement the jewellery ought to have been added of Rs. .79 lacs in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to account for all discrepancies as may be found in seized documents and for other discrepancies as found during search proceedings u/s 132 and post search proceedings. This disclosure was made also to cover the possible difference of opinion and to purchase peace of mind and to settle the affairs amicably with the department. It was also brought on record that these figures were tentative and were based upon estimates only since at the time of recording of statement, Sh. R. K. Mittal himself was not aware of complete facts of additional income and thus offered the amount on rough idea basis. We have very categorically informed your goodself that the exact details of additional income of ₹ 22.50 crores will be submitted in 153A returns to be filed later on." 5.4 It was thus stated that since no taxes were paid and nor any income were offered in the returns such declaration made could not be a ground to make the addition in the hands of appellants. It was also submitted that at-best entire jewellery could not be brought to tax in the hands of the appellants but added bifurcated equally amongst all the members of the family. 5.5 The Ld. CIT(A) however did not accept the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) while granting the benefits of jewellery of 1100 grms in the case of Radha Mittal and 700 gms in case of Ruchie Mittal has incorrectly applied the rate of 2100 per gram as against the average rate of jewellery seized @ 8758.83 per gms. It was further submitted that the claim of assessee as to quantity of jewellery seized is also in accordance with law. It was submitted that even as per quantity, the learned Commissioner of Income Tax (Appeals) has fallen into error and overlook the binding judgments where higher quantity of jewellery stands accepted: i) Radha Mitta Sr. No. Name Weight of jewellery as per appellant Weight of jewellery as per CIT(A) order i) Radha Mittal 1,000 1,000 ii) R. K. Mittal 100 100 iii) Smt. Shanti Mittal 960 100 Total 2,060 1200 ii) Ruchie Mittal Sr. No. Name Weight of jewellery as per appellant Weight of jewellery as per CIT(A) order ii) Smt. Ruchi Mittal 960 1,000 iii) Gaurav Mittal 100 1,00 iv) Arman Mittal 100 100 Total 1,160 1,200 6.1 It was further submitted that this claim of assessee is supported by following judgments: Sr. No. Judgment Total Qty of Gold Allowed (Gms) i) 202 Taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions may kindly be considered with regard to addition u/s 69C of the Act: i) R. Mallika v. CIT 79 taxmann.com 117 (SC) CIT v. R. Mallika 219 Taxman 244 (Mad) ii) Sukh Ram v. ACIT 285 ITR 256 (Del) iii) Kahan Udyog v. CIT 219 Taxman 23 (Del) (Mag) iv) S. Rudramuniyappa v. CIT 75 taxmann.com 241 (SC) v) Karun Dutt Singh v. CIT 85 taxmann.com 177 (Ker) vi) CIT v. Kuwer Fibers (P) Ltd. 77 taxmann.com 345 (Del) vii) Ashokbhai H. Jariwala v. ACIT 80 taxmann.com 175 (Guj) viii) Mahabeer Prasad Jain v. CIT 88 taxmann.com 9 (All) 7.2 Further reliance was also placed on the following judgments to contend that following decisions may ALSO kindly be considered with regard to validity of statement recorded u/s 132(4) of the Act: i) Kishore Kumar v. CIT 234 Taxman 771 (SC) B. Kishore Kumar v. CIT 52 taxmann.com 449 (Mad) ii) Bhagirath Aggarwal v. CIT 351 ITR 143 (Del) iii) Smt. Dayawanti v. CIT 390 ITR 496 (Del) iv) M/s Pebble Investment and Finance Ltd. v. ITO 2017 TIOL 238 (SC) v) M/s Pebble Investment and Finance Ltd. v. ITO 2017 TIOL 188 (Bom) vi) Raj Hans Towers (P) Ltd. v. CIT 373 ITR 9 (Del) vii) PCIT v. Avinash Kumar Setia 81 taxmann.com 476 (Del) 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been held to be unexplained without appreciating the fact that assessees had been married for 35 years and 8 years respectively. Moreover they were jointly residing with their mother in law Shanti Mittal who had been married for about 65 years. Apart from the above the family comprised of husband of both the assesses and one son of Radha Mittal, which explains the possession of jewellery. We also observe that CBDT Instruction No. 1916 dated 11.5.1994 vide para no. (iii) stipulates as under: "The authorized officer may, having regard to the status of the family, and the custom and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure." 8.2 We find that the Delhi Bench of Tribunal in the case of Vibhu Agarwal v. DCIT in ITA No. 1540/D/2015 dated 4.5.2018 AY 2011-12 has accepted the jewellery value of 2531.3 gms following the instruction no. 1916 dated 11.5.1994 by holding as under: "6.1 In view of above instructions, the excess jewellery found in the case of assessee, his parents, his wife, their children and the HUF was very nominal, and was very much reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l dealings which were within his knowledge and no paper or document was found to indicate that this jewellery belonged to the appellant and that it was undisclosed income of the assessment year 2006-07. In a search operation, no scope is left with the tax department to make addition on subjective guess work, conjectures and surmises. It was also argued that jewellery is "streedhan" of the assessee's wife, evidenced in the form of declaration which was furnished by mother-inlaw of the assessee stating that she had given the jewellery in question to her daughter. She argued that it is a normal custom for a woman to receive jewellery in the form of marriage and other occasions such as birth of a child. The assessee had been married more than 25-30 years and acquisition of the jewellery of 906.900 grams could not be treated as excessive. 3. Learned Counsel for the respondent on the other hand relied upon the reasoning given by the authorities below. After considering the aforesaid submissions we are of the view that addition made is totally arbitrary and is not founded on any cogent basis or evidence. We have to keep in mind that the assessee was married for more than 25-30 years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT passed in ITA No. 5259/Del/2017 dated 16.3.2018 wherein the Tribunal has accepted the jewellery in excess of limits specified in the CBDT Instruction No. 1916, by following the decision of the Hon'ble Delhi High Court in the case of Ashok Chadha vs. ITO (Supra). 6.2 After perusing the aforesaid decisions of the Hon'ble Delhi High Court as well as the ITAT, Delhi, we are of the considered view that facts and circumstances of the present case are similar to the aforesaid decision of the Hon'ble Delhi High Court and Tribunal, hence, the issue in dispute is squarely covered by the aforesaid decisions. 6.3 Keeping in view of the aforesaid facts and circumstances of the case as well as the status of the family and on the anvil of the judgement of the High Court of Delhi in the case of Ashok Chadha vs. ITO (Supra) & of Sushila Devi in Writ Petition No. 7620 of 2011 dated 21.10.2016 and the ITAT Delhi decision in the case of Suneela Soni vs. DCIT passed in ITA No. 5259/Del/2017 dated 16.3.2018, the explanation given by the assessee's counsel is accepted. Accordingly the orders of the authorities below are cancelled and addition made by the AO and partly confirmed by the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mittal. Contrary to the above additions were made on account of unexplained jewellery u/s 69A of the Act in the hands of assessees and no addition has been made in the hands of R.K. Mittal. Moreover Ld. CIT(A) granted benefit of ₹ 23,10,000/- in the case of Radha Mittal and ₹ 14,20,000/- in the case of Ruchie Mittal which has also not been disputed by revenue. In any case even otherwise it is a matter of record that no taxes were paid by the assessees or R.K. Mittal in respect of the above statement and such a statement were never acted upon either by the assessees or by R. K. Mittal. Also letters had been furnished on 24.1.2013 and 5.7.2013 i.e. within 2 months of search that declaration by R.K. Mittal was merely estimated and tentative figures. Having regard to the above each of the judgments relied upon by the ld. DR on the validity of statements recorded are inapplicable to the facts of the assessee. In absence of any surrender made by the assessees u/s 132(4) of the Act, no obligation was imposed upon them to offer the impugned sums as income. Also judgments u/s 69C of the Act are distinguishable on the facts of the assessees. These judgments essentially relate to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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