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TMI Blog2021 (1) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... heard. Addition on account of commission income for obtaining accommodation entries - AO observed huge amount of credits in two bank accounts maintained with Federal Bank Ltd. and Karnataka Bank Ltd. respectively - HELD THAT:- On perusal of the order of the AO, we find that addition has made on the presumption that assessee was engaged in providing accommodation entries, but no evidence has been brought on record by the AO to substantiate that the assessee was engaged in providing accommodation entries. The assessee has been subject to search and if at all the assessee was carrying out business of providing the accommodation entries, then such evidence must have been found against the assessee. But as per record no such evidences have been found even after conducting search at the premises of the assessee. Thus, addition cannot be made merely on the presumption that family concerns have admitted providing accommodation entries in their statement of facts before the Settlement Commission. Accordingly, we do not find any infirmity in the finding of the Ld. CIT(A) on the issue-in-dispute and accordingly, we uphold the same. The ground No. 2 of the appeal of the Revenue is acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )-29, New Delhi [hereinafter referred to as CIT(A)], is bad in law. 2. That on the facts and circumstances of the case and in law, the CIT(A) was not justified in partly upholding the action of the AO by sustaining addition of ₹ 5,76,580/- on account of unexplained jewellery found from the premises R-4 during search action out of total jewellery aggregating ₹ 1,48,92,281/-. 3. That the appellant craves leave to add, alter, amend, modify any of the grounds of appeal at the time of hearing of earlier. 3. Briefly stated facts of the case are that, the assessee on individual filed return of income for the year under consideration, i.e, AY 2014-15 , under section 139(1) of the Income-tax Act, 1961 (in short the Act ) on 31/01/2015, declaring total income of ₹26,40,665/-. In the case of the assessee, the search and seizure action under section 132 of the Act was carried out on 15/10/2013. Consequently, the scrutiny assessment proceedings were commenced for the year under consideration and statutory notices under the Act were issued. Initially, the assessee did not comply the notices, however, subsequently, filed part replies. The Assessing Officer accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn. The assessee submitted that soft copy of those approvals notes were seized during the course of the search by the Income Tax Department. Further, the assessee explained that certain items of the jewellery were received at the time of the marriage and other occasions from friends and relatives. The assessee also contested that valuation of the jewellery had been made on the higher side. The Learned Assessing Officer rejected the claim of the assessee that jewellery found from her room was acquired on approval from the family concern. First ground of the rejection was that keeping jewellery on approval for a period of five months (May, 2013 to October, 2013), cannot be held as normal. Second, ground of rejection was that approval notes are in the name of Sh. Praveen Gupta and his wife and not in the name of the assessee, whereas jewellery was found in possession of the assessee. The Assessing Officer asked wealth tax return of the assessee and in failure to do so, he held the jewellery found from the room of the assessee as unexplained and made addition of ₹ 1,48,92,281/-. 5.2 The Ld. CIT(A) after verifying the valuation report along with the approval slips held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has been done on the higher side by authorized valuer during the search. However, no further details in this regard has been provided by appellant to show that there has been inflated valuation of jewellery found during the search. It is also observed that during search or post search proceedings no such issue has been raised or substantiated to show that jewellery has been priced higher by the approved valuer. Since the jewellery has been found, not duly accounted for in the hands of appellant, therefore value has to be taken as per the existing rate, at the time of search. Further, the appellant has provided chart indicating the value of jewellery where the total value of jewellery on the date of issue has been found more than what has been valued by the approved valuer. Therefore, this argument of the appellant is not duly substantiated and actually contradicted by her own submission and hence cannot be considered. 7.6 Therefore, as discussed in the foregoing paragraphs, the addition amounting to ₹ 5,76,580/- is sustained and the balance is allowed as relief. This ground of appeal is partly allowed. 5.3 Before us, the Learned Counsel of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wellers Private Limited as on the date of the search. In absence of such a finding of the fact, the jewellery found from room of the assessee cannot be treated as explained merely by presenting approval notes. In the facts and circumstances of the case, we feel appropriate to set aside the finding of the Learned CIT(A) and restore the matter back to the file of the Assessing Officer for verifying source of acquisition of the jewellery with following directions: 1. To verify whether the approval notes form part of the seized record. 2. To verify whether the challans of jewellery issued and presented by the assessee before the AO also forms part of the seized record. 3. If the approval notes and challans form part of the seized record, then to verify and reconcile the details of the jewellery provided in the valuation report with the details provided in approval notes like name of the customer, name of the item of the jewelry, gross and net weight etc. 4. If the jewelry mentioned in the valuation report reconcile with the approval notes, then to verify whether the jewelry items form part of the stock appearing in the books of accounts of M/s Raj Mahal Jewellers Private Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the AO has not established his case on merits that it is a commission earned on the accommodation entry beyond doubt and thus addition has been made only on conjecture and hence deserves to be deleted. Accordingly, this ground of appeal is allowed. Appellant gets a relief of ₹ 6,22,637/- 6.2 Before us, the learned DR relied on the order of the Assessing Officer, whereas learned Counsel of the assessee relied on the order of the Learned CIT(A). 6.3 We have heard rival submission of the parties on the issue in dispute. On perusal of the order of the Assessing Officer, we find that addition has made on the presumption that assessee was engaged in providing accommodation entries, but no evidence has been brought on record by the Assessing Officer to substantiate that the assessee was engaged in providing accommodation entries. The assessee has been subject to search and if at all the assessee was carrying out business of providing the accommodation entries, then such evidence must have been found against the assessee. But as per record no such evidences have been found even after conducting search at the premises of the assessee. Thus, addition cannot be made merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part from transactions through Karnataka Bank Ltd., ₹ 3,00,00,000/- has been invested on 28.03.2014 by appellant through transfer from her account maintained in Fedral Bank and the funds have been received from M/s Riddhi Siddhi Gold. Accordingly, the appellant has explained this investment, duly supported the nature and source of investment in the shares in M/s Ginni Industries Ltd. and Shri Raj Mahal Jewellers Ltd. for the year under consideration. 9.2 The AO has made this addition without considering the details of bank account by the appellant. However, in view of the above discussions and looking to the facts and circumstances of this case and in law, the source has been treated to be duly explained and therefore addition made on account of unexplained investment from undisclosed sources deserves to be deleted. Accordingly, this ground of appeal is allowed. 7.2 Before us, the Learned DR relied on the order of the Assessing Officer, whereas the Learned Counsel of the assessee relied on the order of the Learned CIT(A). 7.3 We have heard rival submission of the parties on the issue dispute and perused the relevant material, including the order of the lower ..... X X X X Extracts X X X X X X X X Extracts X X X X
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