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TMI Blog2016 (5) TMI 1571X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search and the ld. CIT(A) accepted the remaining jewellery of 93.600 gms against which the department had not preferred any appeal. When the gold jewellery in which the diamonds were studded has been accepted by the department as the jewellery received at the time of marriage or other occasion, then, it cannot be said that the diamond studded in the said jewellery were out of the undisclosed income of the assessee. It is well settled that the assessment proceedings and the penalty are two different and distinct proceedings and that the addition made in the assessment may be relevant but not a conclusive proof of concealment of income or furnishing of inaccurate particulars of income. Therefore the impugned order passed by the ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,14,717/- was seized. The AO made the addition of ₹ 5,57,375/- by observing in paras 8 9 of the assessment order dated 27.12.2007 as under: 8. In view of above facts and legal position and also considering the assessee s reply, the working of unexplained investment in jewellery is given as under:- Gold Gold Total jewellery 793.600 gms 4,09,386 6,78,375 Less: jewellery purchased on 20.3.2005 by Prashant Bhalla 2,05,000 Balance 793.600 gms 4,09,386 4,73,375 Out of above gold jewell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition as discussed above 1,23,000 Addition as discussed 5,57,375 Total taxable income 12,44,185 Assessed: Issue necessary forms. Charge interest u/s 234B 234C of IT Act. Issue penalty notice u/s 271(1)(c) of the I.T. Act for concealing/wrong/inaccurate particulars of income of ₹ 6,80,375/- (1,23,000 + 5,57,375) 5. The assessee carried the matter to the ld. CIT(A) who deleted the addition of ₹ 84,000/- made in respect of gold jewellery and sustained the addition of ₹ 4,73,375/- on account of diamond jewellery. Therefore, the AO initiated the penalty u/s 271(1)(c) of the Act by considering this fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and this jewellery is deemed income of the appellant. (iv) The explanation 5A to section 271(1)(c) of the Act thus would apply against the assessee for levy of penalty and it would be a case of deemed concealment of the particulars of income or furnishing inaccurate particulars of income. In view of the above, the AO was justified in imposing penalty. However, the AO is directed to restrict penalty on undisclosed investment in jewellery at ₹ 2,00,000/- only. 7. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the addition sustained by the ITAT was only on estimate basis. He referred to page nos. 33 to 38 of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material available on the record. In the present case, it is noticed that the ld. CIT(A) sustained the penalty in respect of the estimated addition of ₹ 2,00,000/- which was restricted by the ITAT by observing in para 11 of the order dated 31.03.2011 in ITA No. 550/Del/2010 which read as under: 11. In our view, in the given facts and circumstances, i.e. VDIS declaration and assessee search statement at the most, the diamonds which are studded in the gold jewellery may be held to be unexplained. Since no details of diamonds have been argued by assessee before us and the amount being small, it will not be desirable of justice to set aside the issue again to AO. In these facts and circumstances, ends of justice will be met if an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he peculiar facts of the present case, I am of the view that the penalty u/s 271(1)(c) of the Act, sustained by the ld. CIT(A) was not justified, particularly when the department had accepted the gold jewellery in which the diamond were studded. Accordingly, the impugned order passed by the ld. CIT(A) is set aside and the penalty sustained u/s 271(1)(c) of the Act is deleted. 11. As regards to the appeal of Smt. Satya Bhalla in ITA 5714/Del/2015 is concerned. The facts are similar as were involved in the case of Smt. Deepika Bhalla, the only difference is that the addition sustained in this case was of ₹ 3,23,900/- on account of diamond jewellery instead of ₹ 2,00,000/- sustained in the case of Smt. Satya Bhalla (supra). Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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