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TMI Blog2021 (9) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... 16, we are quite convinced that the amount of addition is negligible and can not be justified in view of the financial strength and status of the family as well as the foreign residents Ms. Sangeeta Mehta and Mr. Manoj Mehta. Even considering the jewellery found with the family as per circular instruction No.1916 dated 11.05.1994, the addition as sustained by Ld. CIT(A) seems to be fallacious and without any cogent reasons. Considering all these facts and various case laws relied by the Ld. A.R., we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. We are not in agreement with the conclusion of Ld. CIT(A) that the assessee has offered general explanation not supported with the bills, vouchers and bank statement. We find that the confirmation of addition to the extent as unexplained expenditure is against the facts on record which were also available before the authorities below - both the authorities have failed to appreciate the facts in correct perspective. In view of these facts, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition made under section 69C of the Act. - Decided in favour of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act on 28.09.2016 for A.Y. 2016-17 declaring total income of ₹ 91,78,060/-. A search and seizure action under section 132(1) of the Act was conducted on Surjem Group which belongs to the assessee on 18.11.2015. During the course of search in the residential premises of key persons as well as on the lockers maintained by the family, certain jewelleries of gold and diamond were found. The assessee was asked to explain and file a reconciliation of the said jewellery found during the search. The jewellery was valued by the government approved valuer Mr. Kamlesh S. Nahar and Mr. Praful Jayant Kumar Bansali. The assessee also filed the reconciliation of the jewellery before the search team. The difference between the total jewellery found at the time of search in the hands of 5 assessees namely; Mr. Vivek Sunil Mehta and other four assessee is summaried as under the reconciliation in respect os which was furnished by these individuals as under: (i) Excess gold jewellery of 1140.30 gms valuing at ₹ 26,59,858/- (ii) Excess diamond jewellery of 221.93 carats valuing ₹ 22,00,616/- thus total addition made in the hands of 5 persons as stated above was ₹ 48,60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well as Locker No 1335 with Bank of India and Locker No 449 with Dena Bank, diamond and gold jewellery etc. were found. Similarly, from the residence of Mr. Vivek Mehta at Usha Kiran, M L Dahanukar Marg, Mumbai as well as Locker Nos 47, 791, 61 OF, 650 11, diamond and gold jewellery etc were found. 5.4 Mr. Saket Mehta was asked to confirm and reconcile the diamond and gold jewellery etc. found from his residence at Sushilp and locker No 1335 with Bank of India and Locker No 449 with Dena Bank. In response, he stated that theirs is a joint family and his cousin brother Mr. Vivek Mehta will provide the complete reconciliation of the jewellery found for the entire joint family. He also gave a general statement that his paternal uncle, Mr. Manoj Mehta and aunt, Mrs Sangita Mehta have kept some jewellery items with his mother, Mrs Shilpa Mehta for safekeeping for their use during their visits to India. However, since his mother, Mrs Shilpa Mehta was not in India at the time of search action, this claim of Mr. Saket Mehta could not be verified. 5.5 On reconciliation of the diamond and gold jewellery found at the time of search action with the Wealth Tax Returns filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant portion of the statement on oath of Mr. Saket Mehta and Mr. Vivek Mehta recorded on 27.11.2015 at the time of the search action is reproduced as under: Saket Mehta Q. 7 Please provided the documentary evidence like valuation reports along withwealth tax returns, balance sheet of Shri Manoj Mehta, Smt Sangeeta Mehta or evidence of keeping valuable articles by Shri Manoj Mehta and Smt Sangeeta Mehta at Sushilp, 25/c, B C Kher Road, Ridge Road, Malabar Hill, Mumbai. Ans As mentioned above they are NRIs. Moreover, the value of the total jewellery belonging to them lying with us may not be exceeding basic wealth tax exemption limits. Vivek Mehta Q.7 Please provided the documentary evidence like valuation reports along withwealth tax returns, balance sheet of Shri Manoj Mehta, Smt Sangeeta Mehta or evidence of keeping valuable articles by Shri Manoj Mehta and Smt Sangeeta Mehta at Flat No 8, 4th Floor, Ushakiran, M L Dahanukar Road, Mumbai. Ans As mentioned above they are NRIs. Moreover, the value of the total jewellery belonging to them lying with us may not be exceeding basic wealth tax exemption limits. 5.7 From the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta and Mr. Manoj Mehta. She even could not provide details of the specific place at her residence/locker where the said alleged diamond and gold jewellery items belonging to Mrs Sangita Mehta and Mr. Manoj Mehta were lying. 5.10 It is surprisingly noted that in the confirmation filed by Mrs Sangita Mehta and Mr. Manoj Mehta in course of the assessment proceedings, they have owned up all the items of diamond and gold jewellery which were found to be in excess. It is a standard practice among lady members that when jewellery items are given for safekeeping, an inventory is made and is handed over together in a box / pouch, etc. Such items are normally handed over to a single responsible person who in turn keeps it in safe custody either at the residence or in a locker. However, in the instant case, the assessee group claims that the jewellery items were given to 2 members of the family, the assessee and Mrs Kaushika Mehta. It is further noted that no inventory of the jewellery items was found or furnished at the time of the search action. Further, the said alleged jewellery items could not be identified by the relevant members of the Mehta joint family, even after around 4 month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f treating the diamond jewellery of ₹ 1,40,382/- as unexplained. Accordingly, this ground of appeal is partly allowed. 6. The Ld. A.R. submitted before us that the Ld. CIT(A) has passed the order by ignoring the legal as well as factual aspects and huge net worth of the family while disposing and deciding the appeal. The Ld. A.R. submitted that total addition made in the hands of five assessee s were aggregated to ₹ 48,60,474/- comprising ₹ 26,59,858/- towards unexplained gold jewellery and ₹ 22,00,616/- towards excess diamond jewellery by the AO. The Ld. A.R. submitted that during the course of search at the different places of search, the three family members namely Mr. Saket Mehta, Mr. Vivek Mehta and Mrs. Shilpa Sudheer Mehtahad specifically stated during the course of recording of their respective statements under section 132(4) of the Act that Ms. Sangeeta Mehta and Mr. Manoj Mehta ,citizens of Belgium , have kept some jewellery with the assessee so that the same could be used whenever they visit India. The Ld. A.R. referred to the statement recorded of these above individuals the copies whereof were filed in the paper book. The Ld. A.R. also sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instruction No.1916 is applicable to diamond jewellery as well as to gold jewellery as has been laid in the following decisions : a) Nawaz Singhania vs. DCIT 51 CCH 0723,191 TTJ 650 (Mumbai) b) Kumkum Kanodia Vs. DCIT, Central Circle-11, ITA No.5260/Del/2014 (Circular no 1916 dated 11/4/1994 covers Diamond Jewellery also) 6.2. The third argument of the Ld. A.R. was that in terms of instruction No.1916 dated 11.05.1994 at least 350 gms (250 gms for his wife and 100 gms for assessee) of jewellery should have been allowed by referring to the family chart which is filed at page No.151 of the paper book and also the computation of eligible jewellery to be allowed to the family members. The Ld. A.R. in defense of his argument relied on the following decisions: a) CIT vs. Ratanlal Atanlal Vyaparilal Jain 78 CCH 0569 Guj HC 235 CTR 0568 45 DTR 0290 339 ITR 0351 b) Ahok Chaddha vs. ITO (2012) 69 DTR 82 (Del) c) Ritu Bajaj vs. DCIT 52 CCH 0166 63 ITR (Trib) 0594 (Delhi) d) Vibhu Aggarwal vs. DCIT 53 CCH 0355, (2018) 170 ITD 0580 (Delhi) e) Kumkum Kanodia vs. DCIT, Central Circle-11, ITA No.5260/Del/2014 A.Y. 2011-12 (Circular No.1916 dated 11/4/1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llery during the marriage of their two daughters and the bills whereof are placed at page No.157 to 185 of the paper book with the bills for making the charges as enclosed at page No.42 to 45. Besides considering the net worth of the family which is approximately ₹ 314 crores as on 31.03.2016, we are quite convinced that the amount of addition is negligible and can not be justified in view of the financial strength and status of the family as well as the foreign residents Ms. Sangeeta Mehta and Mr. Manoj Mehta. Even considering the jewellery found with the family as per circular instruction No.1916 dated 11.05.1994, the addition as sustained by Ld. CIT(A) seems to be fallacious and without any cogent reasons. Considering all these facts and various case laws relied by the Ld. A.R., we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. 9. Another issue raised by the assessee is against the confirmation of addition of ₹ 13,90,000/- by Ld. CIT(A) under section 69C of the Act upholding the order of AO on this issue. 10. The facts in brief are that during the course of search action, some emails were found having attachments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the material on record including the various documents filed by the assessee in the paper book. We note that the total withdrawal from 01.04.2014 to 20.09.2015 were ₹ 26,13,319/- besides opening balances of cash as on 01.04.2014 and 01.04.2015 of ₹ 52,819/- ₹ 2,39,529/- respectively. Thus the available cash for the construction was ₹ 29,05,667/- while the actual expenditure on the renovation of bungalow at Navasari, Gujarat were ₹ 37,57,721/-. We find that the difference of ₹ 8,52,054/- was made up out of cash withdrawals after 21.09.2016 till 31.03.2016 were ₹ 27,55,000/-. Therefore, we find merit in the contention of the assessee that ₹ 8,52,054/- were paid out of withdrawal made after 21.09.2019. We also note from the copies of ledger accounts that ₹ 5 lakhs was accounted for on 02.12.2015 whereas ₹ 3 lakhs was accounted for on 18.12.2015. Therefore, we are not in agreement with the conclusion of Ld. CIT(A) that the assessee has offered general explanation not supported with the bills, vouchers and bank statement. We find that the confirmation of addition to the extent of ₹ 13,90,000/- as unexplained expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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