9911796707
TMI Blog2017 (3) TMI 1862X X X X Extracts X X X X X X X X Extracts X X X X ..... irs was ever filed, the same being an unexplained jewellery is liable to be taxed u/s 69B - HELD THAT:- The assessee is a qualified Chartered Accountant being Executive Director (Commercial) of the listed company, Ispat Industries Limited which is flagship company of the Ispat Group of companies. The assessee belonged to Hindu Marwari family. The Marwari community in India is a respected community most of whom are successfully engaged in various spectrum of businesses . The assessee has not filed any wealth tax returns with the Revenue despite having taxable wealth which is undisputed. It is also admitted position that no statement of affairs had also been filed by the assessee before the authorities below prior to the date of search on 30-11-2010. Assessee was a man of means having substantial income declared to Revenue in last 7 years. The assessee has also filed copy of income tax return of the wife of the assesssee for assessment year 2009-10 ( which included income till her death on 26-112008 in Mumbai terror attack on Oberoi Hotel as thereafter , income is included in the hands of the assessee being a legal heirs of wife of the assessee as stated in ITR) wherein returned inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Appeals)- 51, Mumbai (hereinafter called "the CIT(A)"), for the assessment year 2011-12, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 28th March, 2013 passed by the learned Assessing Officer (hereinafter called "the AO") u/s 143(3) of the Income-tax Act,1961 (Hereinafter called "the Act"). 2. The grounds of appeal raised by the assessee in ITA No. 2249/Mum/2015 for assessment year 2011-12 in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called "the tribunal") read as under:- "(1) That the order of the Dy. Commissioner of Income Tax, Central Circle 18 & 19, Mumbai is bad in law and wrong on facts and the learned PR. Commissioner of Income Tax (OSD) further erred in law and on facts in partly confirming the action of the AO. (2) That the learned Dy. Commissioner of Income-tax erred in law and on facts in making addition of ₹ 42,00,650/- on account of unexplained investments u/s.69B of the Income Tax Act and the learned Pr. CIT (OSD) erred in only partly allowing the appeal by holding that gold jewellery of 600 Gms. is considered as explained out of the total gold jewellery seized of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized by Revenue:- Sl No. Details of premises Seized Cash (Rs) Jewellery (In Rs) Others 1 Locker No. 272 State Bank of India, Shivaji Park Branch, Mumbai (Shri Vinod Garg) - 42,00,655 - The assessee could not explain afore-stated jewellery valued at ₹ 42,00,656/- seized from the above locker of the assessee. The assessee was asked by Revenue to explain the source of the jewellery so seized. However, the assessee could not produce any evidence as to the sources of the jewellery found in the locker. The A.O. observed that the assessee in his statement on oath dated 11th January, 2011 had admitted to this fact. The relevant questions and answers are reproduced below:- "Q.2 : You are hereby informed that during the statement of yours recorded on oath on 18.12.2010 you were asked to submit the purchase bills of your items of jewellery found in your locker which were valued and a copy of valuation report was provided to you. In reply to Q. No. 4 which was on the above subject you had stated to give the necessary reply by 10.01.2011. You were again informed that during the search of your locker no. 272 with State Bank of India, Shivaji Park Branch, Dadar, Mumbai, jewelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as were told by our tax consultant that we are not required to preserve the bills for more than 7 years. I would further like to inform that during last 2 decades I have sufficient withdrawals and since I have very small family consisting of me, my wife and one child. There were lots of savings which used to be spent by my wife in purchasing of jewellery since my wife is no more who was victim of terror attack held at Oberoi Hotel, Mumbai on 26.11.2008, I could not trace the purchase bills kept by my wife and could not tally few items of jewellery which was known to my wife only. I would further like to humbly inform that my wife brought some jewellery when she got married to me in 1986 but I could not identified such jewellery as it was known to her. Further, I would1ike to bring to your notice that jewellery which I could not tally are very small items, value of which is as low as ₹ 7,375/- (as per present market value) which obviously must have been purchased by my wife in cash. Total numbers of such items are 64. Q-4: Please tell had you or your late wife ever filed W. T. Returns considering that the value of jewellery items as per valuation report, for which you have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 years for which there were no bills. The assessee submitted that they had purchased jewellery worth ₹ 18 lakhs as appearing in their books of accounts as on 31st March, 2004 for which also the bills were not available. It was submitted that the present value of jewellery which was found recorded in books of accounts as on 3103-2004 , is more than ₹ 50 lacs i.e. more than jewellery un-explained. The A.O., however, rejected the contentions of the assessee and held that the explanation offered by the assessee was not found satisfactory in the absence of any supporting evidences and the assessee has merely given general explanation . It was held by the AO that the assessee has not filed bills for purchase of jewellery /valuation report by the valuer. It was also observed by the AO that the assessee has also not filed wealth tax return with the Revenue despite having taxable wealth , and sources for purchase of jewellery and diamond to the tune of ₹ 42,00,656/- remained un-explained by the assessee as per provisions of Section 69B of the 1961 Act. The AO brought to tax the unexplained jewellery worth ₹ 42,00,656/- which was seized by Revenue during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee since her childhood and at the time of marriage and other functions whose bills were not available with the assessee. It was submitted that the Investigation wing seized items of jewellery valuing ₹ 42,00,656/- and the remaining jewellery items were returned back to the assessee. It was submitted that during the post search assessment proceedings, the AO asked the assessee to explain the source of the jewellery items which were seized and in reply the assessee filed his reply again explaining that what he had explained to the Investigation officer while the statement was recorded. The A.O., however, held that the assessee's explanation was general in nature and not supported by bills. The details of jewellery found during the course of search in the bank locker belonging to the assessee and his deceased wife are as under:- Particulars Jewellery found (in gms) Jewellery supported by bills (in gms) Old jewellery whose bills are not found (in gms) Gold Jewellery 2962.40 2240.50 707.80 Diamond Jewellery 2556.10 1619.14 936.96 Total of the above 5518.50 3859.64 1644.76 Value of the above jewellery whose purchase bills were not found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ives of the bride generously gift her precious jewellery at the time of her marriage and even after that on various occasions. Thus, the conclusion drawn by the A.O. that old jewellery which is not supported by bill is un-explained was completely erroneous which is not sustainable in law. It was submitted that the AO accepted recently purchased jewellery by the assessee and his wife which are supported by bills. It was submitted that the AO made additions of the entire old jewellery which was acquired over years. It was submitted that if AO observations are to be accepted, then the assessee and his wife never received any jewellery during their marriage and other occasions from their parents and other relatives, which is absolutely perverse and is an incorrect finding of the AO. It was also submitted that no incriminating material was found during the course of search operations u/s 132(1) of 1961 Act to implicate the assessee of having made investment in unexplained jewellery and ornaments. It was submitted that additions have been made based on surmises and conjectures. It was submitted that details were duly furnished including jewellery of ₹ 18 lacs as per books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 500 gms. per married lady and 100 gms. per male member was considered by him to be deemed as explained , thereby a total of 600 gms. of gold jewellery was considered as explained in the hands of the assessee by learned CIT(A) towards assessee wife and the assessee, and the AO was directed by learned CIT(A) to give relief to the extent of 600 gms. of value of gold jewellery in the hands of the assessee as being explained , vide appellate order dated 02-022015 passed by learned CIT(A). 6. The Revenue has challenged part relief given to the assessee by learned CIT(A) to the tune of 600 gms of gold jewellery relying on CBDT instructions dated 11-05-1994 which was considered as deemed explained, while the assessee has challenged additions of ₹ 42,00,650/- made by the A.O. to the extent confirmed by ld. CIT(A). Thus, both assessee and Revenue are in appeal before the tribunal wherein cross appeals are filed before the tribunal. 7. The ld. Counsel for the assessee argued strenuously before the tribunal and reiterated the contentions made before the authorities below. The learned counsel submitted that jewellery to the tune of ₹ 42,00,656/- was seized by Revenue during sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed with the tribunal pages 50-64 , wherein the returns of income filed by the assessee with the Revenue are placed. It is submitted by learned counsel for the assessee that the assessee has an income of more than ₹ 1 crore from salary received from Ispat Industries Limited which has been duly declared and disclosed in the income tax returns filed with the Revenue. It was submitted that wife of the assessee was also having income from house property and other sources and returns were filed with the Revenue regularly. The return of income filed by her for assessment year 2009-10 is placed on record in paper book/page 66-67. It was submitted that the assessee is habitual of investing in jewellery as also his wife when she was alive, which can be evidenced by purchase bills of ₹ 1.30 crores produced by the assessee for last seven years prior to the date of search. It is submitted that neither wealth tax returns nor statement of affairs were filed by the assessee and his wife with the Revenue. It is submitted that the assessee wife died in terror attack in Mumbai at Oberoi Hotel on 26-11-2008, death certificate is placed in paper book filed with the tribunal at page no 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d jewellery in the hands of the assessee but it was submitted that as per CBDT instructions no 1916 dated 11-05-1994, CBDT had clarified that even higher amount of jewellery found during the search need not be seized keeping in view status of the family, the customs and practices of the community to the which the family belongs, as provided in CBDT instruction dated 11-05-1994. Our attention was drawn to CBDT instructions no. 1916 dated 11-5-1994 which is placed in paper book of case laws/page 1. The ld. Counsel also relied upon following judicial decisions in support of his claim:- 1. CBDT Instruction No. 1916 dated 11-5-1994 2. Ashok Chaddha v. ITO (2012) 69 DTR 82 (Del) 3. CIT v. Ratanlal Vyaparilal Jain (2011) 339 ITR 351(Guj.) 4. CIT v. P.K. Noorjahan (1999) 237 ITR 570 (SC) It was also submitted that no documents were seized during the search operations by Revenue which incriminates assessee. It was submitted that the AO erred in invoking Section 69B of 1961 Act while making additions, while the applicable section is 69A of 1961 Act , if at all additions were to be made by the AO. It was submitted that since wife of the assessee had died in Mumbai terror attack on Ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed for the first time before the tribunal. It was submitted that the assessee is now by filing this appeal is seeking benefit which even goes beyond CBDT instruction no. 1916 dated 11-05-1994 which is not permissible at all. 9. We have considered rival contentions and also perused the material available on record including the case laws relied upon by the rival parties . There was a search & seizure action u/s.132(1) of the 1961 Act carried out by the Dy. Director of Income Tax (Intelligence)- I, New Delhi in the case of Ispat Industries Limited and its Group Companies, Promoters & Executives on 30th November, 2010. The assessee is Executive Director (Commercial) of M/s. Ispat Industries Ltd., flagship company of Ispat Group. The assessee was also covered under the search & seizure action u/s.132(1) of the 1961 Act on the Ispat Group. During the course of search and seizure action at the residential premises of the assessee at, 1101, Rameshwaram Apartment, Kirti K. Dhruba Marg, Prabhadevi, Mumbai and the bank locker standing in the name of the assessee, following jewellery , cash and other valuables were seized:- Sl No. Details of premises Seized Cash(Rs) Jewellery (In Rs) Ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same was not declared to Revenue by the assessee in past as no wealth tax returns were filed or otherwise it was also not declared as no statement of affairs was ever filed, the same being an unexplained jewellery is liable to be taxed u/s 69B of 1961 Act and the learned CIT(A) relying on the CBDT instruction no 1916 dated 11-05-1994 has allowed benefit/relief to the assessee of jewellery to the tune of 600 gms of gold jewellery , while the additions made by the AO with respect to the rest of the jewellery was upheld by learned CIT(A). It is the say of assessee throughout consistently that it is incomprehensible to hold that the assessee did not held any jewellery prior to seven years from the date of search on 30-11-2010 while the assessee was married in 1986 and the acquisitions through several modes such as streedhan to wife at the time of marriage , gift to the assessee at the time of marriage in 1986, acquisition of the jewellery since marriage in 1986 over a period of time for which bills were not retained, gifts to wife and the assessee since 1986 by relatives, gift to son on his birth and also during several birthdays over the years was explained to the authorities below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax return of the wife of the assesssee for assessment year 2009-10 ( which included income till her death on 26-112008 in Mumbai terror attack on Oberoi Hotel as thereafter , income is included in the hands of the assessee being a legal heirs of wife of the assessee as stated in ITR) wherein returned income was 16,14,540/- . The assessee being legal heir of wife after her death on 26-11-2008, the jewellery owned and possessed by wife at the time of her death on 26-11-2008 is also to be considered in the hands of the assessee being a legal heir of wife. The instant assessment year under appeal is assessment year 2011-12. The assessee was married in 1986 and has one son also. The assessee has one HUF also. The assessee has recorded jewellery of ₹ 18.51 lacs in ledger accounts as on 31-03-2004 which ledger accounts were part of seized material as stated by learned counsel of the assessee which was seized by Revenue on the date of search on 30-11-2010. The said period ending 31-032004 is prior to the period covered by search proceedings. The assessee has contended that revenue has not given credit for the said jewellery of 18.51 lacs which was found recorded in the ledger account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to the tune of ₹ 1.30 cores which is his obligation to keep for the period as stipulated under the provisions of 1961 Act be it reopening provisions as provided u/s 147/148 of 1961 Act (as the section then was ) or search provisions as are contemplated under Section 153A of 1961 Act and also nothing incriminating has been found by Revenue during search and seizure operations u/s 132 of 1961 Act incriminating assessee , further leads to irresistible conclusion from afore-stated assessee's conduct and behavior pattern that for all the jewellery purchased even prior to seven years from the date of search as was bought by the assessee and his wife and HUF, the relevant persons had purchased jewellery after obtaining proper bills as was demonstrated by their conduct of last seven years prior to search . The ledger extract as on 31-03-2004 which was seized by Revenue during the course of search on 30-11-2010 as stated by learned counsel reflecting jewellery of ₹ 18.51 lacs in the name of assessee wife and HUF was acquired prior to seven year period from search cannot be brushed aside lightly and appropriate credit has to be necessarily given while determining jewellery own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Ashok Chaddha v. ITO (2011) 202 Taxman 0395(Del. HC) , wherein Hon'ble delhi High Court held as under: "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. The jewellery in question is not very substantial. The learned counsel for the appellant/assessee is correct in her submission that it is a normal custom for woman to receive jewellery in the form of "stree dhan" or on other occasions such as birth of a child etc. Collecting jewellery of 906.900 grams by a woman in a married life of 25-30 years is not abnormal. Furthermore, there was no valid and/or proper yardstick adopted by the Assessing Officer to treat only 400 grams as "reasonable allowance" and treat the other as "unexplained". Matter would have been different if the quantum and value of the jewellery found was substantial. 4. We are, therefore, of the opinion that the findi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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