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TMI Blog2019 (12) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T.A. No.585/Viz/2019, A.Y.2014-15 3. In this case, search and seizure operation u/s 132 of the Income Tax Act, 1961 (in short 'Act') was carried out in the business premises of the assessee, M/s Hira Panna Jewellers on 24.11.2015. The assessee was the proprietor of the said business concern, (M/s Hira Panna Jewellers) upto 31.10.2014. Thereafter, the proprietary concern was converted into the status of partnership firm from 01.11.2014, consisting of 3 partners viz. Sri Suresh Kumar Jain, Sri Mahendra Kumar Jain and Sri Rajendra Jain. The assessee filed the return of income on 28.11.2014 admitting total income of Rs. 1,87,83,950/-. Subsequently, a notice u/s 153A of the Act was issued to the assessee calling for the return of income for the A.Y.2014-15, in response to which the assessee filed his return of income on 24.02.2017 admitting total income of Rs. 1,87,83,950/-. The Assessing Officer (AO) completed the assessment u/s 143(3) r.w.s. 153A of the Act on total income of Rs. 3,49,19,910/-. The AO made the following additions to the returned income in the assessment made u/s 143(3) r.w.s. 153A : Unexplained expenditure u/s 69A of the Act - Rs. 23,32,200 Unexplained money - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scope of assessment u/s 143(3) u/s 153A of the Act, the Ld.CIT(A) did not adjudicate the issue. In this case, there is no dispute that the assessee has filed the return of income on 28.11.2014 and the time limit for issue of notice u/s 143(2) was expired on 30.09.2015. As per the settled law, the AO is not permitted to make the addition u/s 153A in the completed assessments without the support of incriminating material. In the instant case, there was no incriminating material found and the assessee has filed the return of income claiming deduction u/s 80IA. The audit report in Form 10CCB was filed manually. Therefore, addition made by the AO without support of the incriminating material u/s 80IA is unsustainable, accordingly, we set aside the order of the Ld.CIT(A) and allow the appeal of the assessee. 11. Ground No.3 is related to the addition of Rs. 23,32,202/- and Rs. 1,28,90,658/- u/s 69A of the Act. A survey u/s 133A was conducted in the business premises of Hira Panna Jewellers. During the course of survey, soft copy of data was found and marked as Annexure A/HPJ/02/VSP in the business premises of Hira Panna Jewellers on 24.11.2015. Based on the information found during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of survey proceedings in the premises of M/s Hira Panna Jewellers on 24.11.2015, a soft copy of the data found in the business premises of firm was copied and impounded as A/HPJ/02/Vsp. On perusal of the data, certain excel sheets were found in it, which were printed and serially numbered from 1 to 18. The same was provided to Managing partner Sri Mahendra Kumar Jain to explain its contents vide summons u/s 131(1A) dated 25.02.2016. He stated that the papers from pages nos. 1 to 14 and 16 not their papers some dealers may brought mail from their Office, they just give them the print outs from their system. They don't have any idea about the pages. The page nos. 15, 17 and 18 are the valuation reports estimated by his brother registered valuer Sri Suresh Kumar Jain(assessee), might be for visa approval or wealth tax purposes. 9.2. The assessee is admitting some pages nos. 15, 17 and 18 belongs to him and pages nos. 1 to 14 and 16 not belong to him though all pages sI. No.1 to 18 mentioned above are found from the same system of the assessee. As mentioned above, proprietary business was converted into firm as going concern, all the data, soft data, system were u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be observed, that the total making cost is calculated by adding the cost of the material and the making charge. Thus, in this case, the total cost amounts to 4000+1395+180+1237.50+14602 = 21414.50 which is mentioned against the head "CASH", Further, below it is mentioned "OLD CASH" and a value of 2785771.25 is mentioned. The "TOTAL CASH" is similarly arrived upon by adding the two values above at 2807185.75. Below the head "TOTAL CASH" is mentioned "PAID CASH" against which 0 is written and further below it, "BAL. CASH" is written against which the figure 2807185.75 is repeated. 9.5. Similarly, on perusal of leftmost column, on the bottom half of the page, the "TOT WEIGHT- is arrived upon at 81.820 by taking the gross weight of the metal at 80.600 and then by considering the allowances and wastage. This "TOT WEIGHT" is then carried to the next column where three heads appear viz "METAL", OLD METAL", "TOTAL METAL" and the values written against them are 81.820, 5900.780 and 5982.600 respectively. Two more heads, viz. "PAID METAL" and "BAL. METAL" with figures of 0.0 and 5982.600 respectively are also written. 9.6. The modus operandi of the assessee was that gold used for the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the total unexplained expenditure for the F.Y. 2013-14, it is taken the value against "BAL CASH" as appearing on Page No. 11 which is 23322.02 and multiply it with the factor of 100. Thus, total unexplained expenditure for the AY 2014-15 is Rs. 23,32,202/- in addition to the returned income." 12. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition made by the AO as discussed in para No.6.2 of the CIT(A) order as under : "6 2. I have considered the assessment order, submissions of the appellant and the material placed before me. It is seen that the material under question contain , details of transactions related to gold / jewellery business. The same are details of gold issued to 'Goldsmiths' for making ornaments and their charges including cost of other metals/material used in making ornaments. The description and the linking of the details to bring out the substance of transaction has been painstakingly brought out by the AO in the order. The appellant has nothing to say about or against the above. The only explanation /stand of the appellant is that they do not belong to them and that some custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search / survey, unless it is established that the same belongs to the third party. In the instant case, neither the assessee nor Shri Mahendra Kumar Jain, Managing Partner of Hira Panna Jewellers have accepted that the material does belong to the assessee. The department also did not prove that the information contained in the loose sheets pertained to the assessee. Therefore, argued that the loose sheets found during the course of search do not belong to the assessee, hence, the same cannot be assessed in the hands of the assessee. Accordingly, requested to set aside the order of the Ld.CIT(A) and allow the appeal of the assessee. 14. On the other hand, the Ld.DR argued that an Excel loose sheet was found during the course of survey conducted in the Hira Panna Jewellers and the assessee was the partner till 30.03.2015 and the loose sheets found during the course of survey were pertaining to the period when Suresh Kumar Jain was the Proprietor of the firm, i.e the date mentioned in the loose sheet was 20.03.2014. On the top of the loose sheet, it was mentioned as JKS, which means Suresh Kumar Jain in short. Contents of the loose sheets clearly show that these were the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts found during the course of search /survey are presumed to be belonging to the assessee, where the search or survey is conducted. In the instant case, survey was conducted in the business premises of Hira Panna Jewellers. Therefore, as per the presumption u/s 292C, loose sheets pertained to the Hira Panna Jewellers, but not to the assessee. Unless it is established that the loose sheets pertained to the assessee, the AO is not permitted to tax the contents or unexplained money or expenditure recorded in the loose sheets in the hands of the assessee. In the instant case, there was no material placed on record to show that the loose sheets were belonging to the assessee, therefore, the addition made by the AO in the hands of the assessee on account of unexplained money or expenditure is unsustainable. Accordingly, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. Appeal of the assessee is allowed on this issue. I.T.A. No.586/Viz/2019, A.Y.2015-16 17. Ground No.1 and 5 are general in nature which does not require specific adjudication. 18. Ground No.2 is related to the addition made on the basis of material impounded as Annexure A/HPJ/02/VSP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the facts of the case and the assessment order passed by the Assessing Officer and the submissions of the appellant. .It-is seen that the appellant only offered general explanation right from the search proceedings, postsearch enquiries, assessment proceedings and also during the appellate \proceedings Except saying that jewellery is received during the marriage and as gift on other occasions no supporting evidence whatsoever has been produced by the appellant. The decisions relied on are not applicable to the facts of the case as the circumstances and factual position differs However, keeping in view the fact that substantial portion of the gold was explained as belonging to Mrs Kanchan Jain who is mother of the appellant and she has been Income Tax assessee for a long time, the explanation of the appellant can not be ignored a1 together also. The/ customs and tradition of the family of holding gold and jewellery also cannot be ignored. Accordingly, 50% of jewellery is treated as explained to meet the ends of justice. The addition to the extent of 50% is deleted and the balance is confirmed. The appellant partially succeeds on grounds raised." 25. Against which the assessee fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontext of seizure of gold jewellery but the same can also be applied while considering the unexplained investment in gold jewellery by the assessee. In the aforesaid instruction 1915 dated 11.5.1994, it is clearly mentioned that in case of married lady 500 gms. And in case of unmarried lady 250 gms can be given credit. The Hon'ble Gujarat High court in case of CIT Vs. Ratanlal Vyaparilal Jam (supra) taking note of board's instruction no.1916 has also expressed similar view by holding that though the circular has been issued for the purpose of laying down guidelines for seizure of jewellery but it can also be considered for the purpose of explaining the source of jewellery in terms with the guidelines laid down in the said instruction. Considering the aforesaid facts and circumstances and in the light of the board's instruction no.1916 dated 11.5.1994 and decision of Hon'ble Gujarat High Court we direct the assessing officer to work out the unexplained investment, if any,, after giving credit for gold jewellery as per clause (il) of board's instruction no.1916 dated 11.5.1994. Accordingly, assessee's appeal is considered to be allowed for statistical purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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