9911796707
TMI Blog2020 (10) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... rn was after the date of search the original return was filed on 31.7.2014 for Assessment Year 2014-15 declaring income of Rs. 76,331/-. Assessee was confronted with loose papers, incriminating materials found during the search. After considering the submissions assessment was completed u/s 143(3) by adding additions on account of unexplained cash at Rs. 1,35,500/-, unexplained jewellery at Rs. 38,96,987/- unexplained expenditure on account of foreign tour at Rs. 3,00,000/- and unexplained opening balance of capital account at Rs. 1,79,22,599/- thus assessing income at Rs. 2,23,31,417/-. 3. Aggrieved assessee preferred appeal before Ld. CIT(A) against the above additions and partly succeeded. Now the Revenue is in appeal before the Tribunal against the deletion of additions made by Ld. A.O. raising following grounds of appeal:- (1) On the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in deleting the addition of Rs. 2,25,000/- made by Assessing Officer on account of unexplained expenses incurred in foreign tour u/s 69C of the Income Tax Act, 1961. (2) On the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in deleting the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the following countries during the relevant period, which was not disclosed by the assessee in his written submission. Sr.No Name of the country Date of visit 01 Uzbekistan 24/07/2011 to 29/07/2011 02 Kazakistan 21/07/2013 to 29/07/2013 03 Russian Federation July 2013 (ii) The assessee has not furnished any details of expenses in his case. The assessee's submission that the expenditure on foreign travel of him is incurred by his wife Smt. Yogita Vishwakarma is also not correct. At the outset, his wife has shown foreign tour expenses on 20/07/2012 at Rs. 50,000/- from her cash flow statement, whereas as per the passport entries, the assessee has visited foreign countries in the month of July 2011 and July 20l3. Thus the claim of the assessee is absolutely incorrect. From this fact it is also evident that the cash flow statement (cash book) submitted by Smt. Yogita Vishwakarma is also incorrect. The assessee has also failed to furnish the receipts / bills in support of correctness of his claim regarding foreign travel expenses. Thus the details submitted by the assessee regarding foreign travel expenses are incomplete and also incorrect. (iii) The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be observed from the pass part of the assessee a copy of which is enclosed herewith that the assessee has left New Delhi on 21.07.2013 and have reported back at New Delhi on 29.07.2013. The assessee reached Uzbekistan on 21.07.13 and left Uzbekistan on 25.07.13. Thereafter the assessee reached Russia on 25.07.2013 and left Russia on 28.7.13 where after he landed at Delhi on 29.07.13. Thus the tour to Russia was a part of the tour to Uzbekistan and was undertaken within the period he was out of India. Thus there was a single tour against which the addition has been made twice. In this regards it is further submitted that up till 31.3.13 (A.Y 2013-14), the assessee has been filing his return of income u/s 44AD of the Act, a fact which is duly confirmed by the AO in Para 10 of his order and accordingly the assessee is not required to maintain any books of account. Thus the assessee has not maintained any books of account and in absence of any books of account it was not possible for the assessee to get the items of expenditure incurred by him during F.Y 2011-12 verified with the books. Thus the assessee could not have shown any specific withdrawal for such expense. It may howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the same was also furnished in the case of the assessee. Thus no addition could have been made in the hands of the assessee. The additions have been made by the AO applying provisions of section 69C. Provisions of section 69C is applicable in case where the assessee is found to have incurred any expenditure in any financial year for which the assessee fail to explain the source to the satisfaction of the AO. It is well settled proposition of law that addition u/s 69C can-not be made on adhoc basis or on presumption. The assessee relies on the following judgments _(2009) 311 ITR 175 (Del HC) Sec 69C postulates that first of all the assessee must have incurred some expenditure & there after if the explanation offered by the assessee about the source of such expenditure is not found satisfactory by the Assessing Officer the amount may be added to his income. There was nothing to snow that the expenditure was in fact incurred by the assessee. (2010) 3 ITR (Trib) 177 (Mum) ... Under the provisions of section 69C addition on account of any unexplained expenditure can be made only when the assessee has incurred any expenditure about which he has offered no explanation. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trip. The assessee had submitted that the tour was undertaken to attend the meeting of CREDAl (Confederation of Real Estate Developers association of India) on behalf of the partnership firm "Ultimate Builder" in which the assessee was a partner and the expenses of Rs. 84,240/- were paid to M/s Creative Travels" by the said firm and have submitted a copy of ledger account of the travel agent. It is however seen that the assessee has not explained the source of day today expenses incurred in cash on this tour which were not covered by the travel plan. It is also seen that the expense are incurred in June 2013 and the tour is undertaken in July 2013. It is seen that similar tours are priced at Rs. 53,990/- for Kazakistan and Rs. 63,815/- for Uzbekistan respectively by M/s. Make My trip / Thomas Kook which are well recognized travel agents as against which the AO has estimated the total expense ofRs. 3,00,000/- and no basis for such estimation has been given. Considering all the above facts the addition made by the AO is on higher side and therefore, addition amounting to Rs, 50,000/- in AY 2012- 13 and Rs, 75,000/- in AY 2014-15 are Confirmed and appellant gets relief of Rs. 1,50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has referred the Instruction No. 1916 dated 1110511994 of the CBDT issuing guidelines regarding seizure of jewellery during the course of search action. On the basis of this Instruction the assessee has computed permissible gold holding in respect of assessee and his family member and claimed that the jewellery found during the course of search is less than the permissible gold holding as per the CBDT's above instruction. In support of his submission the assessee has relied upon the decision of Hon 'ble Gujrat High Court in the case of Kialashaben Manharlal Chokshi Vs. CIT (2010) 322 ITR 411 (Gujrat), wherein it was held that the Boards instruction is also relevant in considering the assessee's explanation regarding the jewellery found during the course of search. The reliane placed by the assessee upon the CBDT Instruction No. 1916 dated 11/05/1994 is misplaced. The cited instruction is meant to be an administrative instruction for the guidance of the Authorized Officer at the time of search and seizure action regarding non-seizure of jewellery upto 500 gms for married woman and 100 gms for male member etc., given their sentimental attachment to it. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal jewellery found with the family at the time of search was as under: Location Gold Silver total Locker No 267 Uco Bank 893.92 gram - 893.92 At residence 273.41 252 525.41 Total 1167.33 252 1419.33 It may be mentioned that the assessee is living along with his mother and the jewellery was found from the locker jointly owned by the assessee along with his wife. At the time of opening of the locker the assessee had specifically informed the search team that the jewellery in the locker belongs to the wife and her mother in law and this fact is duly mentioned in the statement recorded. It may be mentioned that in Instruction No 1916 dated 11.05.1994 the board has issued guidelines that In the case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family need not be seized.by virtue of instruction of the CBDT the assessee the assessee family was entitled to hold jewellery of up to 1550 Gms as detailed below: Name Relationship Status Permissible Gold holding Yogita Viswkarma Wife Married 500 Gms Mrs Dulari Mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, plea raised by the appellant and findings of the AO. During the course of search total gold jewellery weighing 1167.33 grams and silver articles of 252 grams were found from bank locker and residence of the appellant. the appellant has claimed that the jewellery found during the course of search belongs to his wife and his mother who was staying with him. At the time of opening of the locker the assessee had specifically informed the search team that the jewellery in the locker belongs to the wife and her mother in law and this fact is duly mentioned in the statement recorded at the time of opening of the locker. It has been further claimed that whole jewellery was not belonging to the assessee alone but to his entire family. The details of the various family members in the family was also submitted as detailed below and it was claimed that as per the CBDT circular the gold quantity of up to 1550 Grams should have been considered as explained against which the assessee is found to own only 1167.33 gram of gold. Name Relationship Status Permissible Gold holding Yogita Viswkarma Wife Married 500 Gms Mrs Dulari Mother Married 500 Gms Ms Sakshi Daug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... items of jewellery for strict compliance by the authorities. The CBDT directed that in the case of a person not assessed to wealth-tax, gold jewellery and ornaments to the extent of 500 gms. per married lady, 250 gms. per unmarried lady and 100 gms. per male member of the family, need not be seized. " 5.5.4 The law with respect to quantity of jewellery and ornaments which could generally be held by the family members of an assessee has gone through huge litigations. Nevertheless, almost all Tribunals/ courts have consistently taken judicial notice of CBDT, Circular no. 1916 dated 11th may 1994 which lays down guidelines for seizure of jewellery and ornaments which has also been interpreted by various courts and tribunals in following manner: *In the case Commissioner of Income Tax vs Ratanlal Vyaparilal Jain [(2010) 235 CTR 0568: (2010) 45 DTR 0290; (2011) 339 ITR 0351] it has been held that: "Instruction no. 1916, dt 11th may 1994 which lays down guidelines for seizure of jewellery in the course of search takes into account the quantity of jewellery which would generally be held by the family members of an assessee and, therefore unless anything contrary is shown, it can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith regard to his daughters out of the jewellery, weighing 1721.07 gms (gross) and 1662.05 gms (net) was found out of which only 765.25 gms seized. * In the case of Smt. Sulochana Devi Jaiswal v/s DCIT (2004) 90 TTJ (JAB)974 In this case it was held that The Board vide its Circular No. 1916, dated. 11th May, 1994, has prescribed the limit of 500 gms. for gold jewellery which is not to be seized. In other words, the Board has considered the issue and felt that gold jewellery to the extent of 500 gms. could be possessed by an ordinary family. The intention behind such circular was, therefore, very clear. As the unexplained jewellery found during the course of search was much less than 500 gms. We have no hesitation in holding that the addition on account of unexplained investment in jewellery is not justified and the same is deleted. * In the case of Ritubajaj v/s ACIT ID ITA no 4101/DEL/2017 dated 09.03.2018 It was undisputed that all theses members were residing together. Under these circumstances, the submissions of the appellant that jewellery could not be said kept in water tight compartments in the Joint Family Members. The fact that at the time of search no state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 69C of the Act. We thus find no reason to interfere in the finding of Ld. CIT(A) and confirm the same. Accordingly Ground No.2 raised by the Revenue stands dismissed. 11. Apropos Ground No.3 wherein the Revenue has challenged the deletion of addition for unexplained cash at Rs. 1,35,500/- found at the assessee's residence during the course of search. We observe that Ld. CIT(A) deleted the additions observing as follows:- 5.6 Ground No 5 for AY 2014-15:- Through this ground of appeal, the appellant has challenged addition of Rs. 1,35,500/- on account of cash found during the course of search. The AO during the course of assessment proceedings in the case of Smt Yogita Vishwakarma wife of the assessee, who has claimed to be owner of the cash found from residence and bank locker, has rejected cash flow submitted by Smt Yogita Vishwakarma in support of her claim by stating that the assessee is only earning member of the family. 5.6.1 The appellant during the course of appellate proceedings filed written submissions which are reproduced as under:- "During the course of assessment the AO was informed that the cash in hand found at the residence of the assessee belonged to the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove finding of Ld. CIT(A) and also going through the facts and circumstances of the case we observe that looking to the consistent substantial taxable income offered by the assessee for Assessment Year 2008-09 to 2013-14 and withdrawals made, we are of the view that the cash found at assessee's residence is reasonable and explainable. We thus find no reason to interfere in the findings of Ld. CIT(A) and the same stands confirmed. Accordingly Ground No.3 of the appeal of Revenue stands dismissed. 13. Now we take up Ground No.4 wherein the revenue has challenged the deletion of addition for unexplained opening balance of capital at Rs. 1,79,22,599/-. Brief facts are that during the course of assessment proceedings Ld. A.O observed that up to Assessment Year 2013-14 assessee has not maintained regular books of accounts and was showing the income on estimated basis under the provisions of Section 44AD of the Act but for Assessment Year 2014-15 i.e. the year under appeal assessee has submitted the balance sheet for the first time and opening capital balance was shown at Rs. 1,79,22,599/-. The assessee has the income and expenditure statement for last six assessment years along with st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the above chart. 5.7.1 The appellant during the course of appellate proceedings has filed written submissions which are reproduced as under:- "The assessee had been offering his income for tax under various presumptive provisions of the Act and has not been maintaining any books of accounts as per the option available to him under the act. This fact is mentioned by the AD also in Para 10 of the assessment order. However the various companies and firms in which the assessee was a partner or shareholder or director were required to maintain books of account and were accordingly maintaining their books of accounts in the regular course of business in which all transactions undertaken by the assessee with those firms were duly recorded in the capital account of the assessee. All these firms and companies were also assessed u/s 153A by the AO simultaneously and the books of accounts of these firms were duly produced and verified by the AO and no specific defects/deficiencies were found by the AO in the books maintained. The assessee has prepared his balance sheet for the first time on 01.04.2013 in which all the assets and liabilities were recorded as per records maintained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional balance sheet as on 31.3.13 as per which the excess of investments over the liabilities was ascertained at Rs. 1,79,22,599/- which was taken as capital. These balances were incorporated as opening balance as on 01.04.2014 in the regular books of account maintained by the assessee since then. Thus the details of investment of the capital was readily verifiable from the books maintained by the assessee in A.Y. 2014-15 which were duly produced before the AO and verified by him during the course of assessment proceedings as confirmed by him in Para 2 of the assessment order. v The chart does not contain correct picture of assessee withdrawal as the withdrawals shown by the assessee are low The withdrawn shown by the assessee has been accepted by the AO and no additions are made on this account. Thus this observation is not relevant. vi Investment in jewellery is not reflected in the chart The chart was a summary of income earned as per ITR and expenses incurred to ascertain the increase in capital in various years and thus details of investment in jewellery have no relevance. It may also be mentioned that the jewellery belonged to the other members of the family and cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lands and other properties purchased by him until 31.03.2013 and owned by him on that date were also taken as opening balances of asset. The bank balances were also accounted accordingly. After completion of this exercise, the total value of liabilities and investments made up till 31.03.13 was determined at Rs. 2,91,21,421.55/- and Rs. 4,70,44,020.55/- respectively. The difference between the assets and liabilities was calculated at Rs. 1,79,22,599/- which was recorded as opening balance of the capital. The assessee also prepared a chart of income earned by him in the past 6 years (FY 2007-08 to FY 2012-13) and the estimated withdrawals made by him to determine the surplus earned by him every year. The chart is reproduced as under:- Details of Capital Assessment Year 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Salary from Ultimate Constr 172428 649427 0 800000 1800000 1800000 Salary & Int CNP construction 997434 1173761 2119113 145865 2502310 2917697 Exempted profit Ultimate Builder 0 145667 414466 1931542 Exempted profit CNP cost 38845 285130 821634 306829 Profit u/s 44AD 369815 267881 1235638 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank account, or the details of investments made, or the details of purchase of jewelry appearing in this chart and the observation of the AO in this regard are not relevant. The assessee admittedly was given an option under the Income Tax act, not to maintain the books of account and thus no adverse inference could have been drawn from his inability to submit date wise record for these years. The observation of the AO that withdrawals for house hold expenses shown by the assessee are very low does not carry any weight as he has not brought any material to substantiate that the assessee has incurred expenses more than what is estimated by him and further he has not made any addition for low house hold expenses. It is also seen that the AO has made addition towards unexplained investment u/s 69 of the Act. However the amount of Rs. 1,79,22,599/ reflected the opening capital of the assessee which was the difference of all assets and liabilities of the assessee as on 31.03.2013. The amount did not reflect any investment. The AO has failed to bring on record any specific investment made by the assessee which remained unexplained. It is further seen that all the investments represented ..... X X X X Extracts X X X X X X X X Extracts X X X X
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