9911796707
TMI Blog2023 (2) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income Tax (Appeals) without appreciating the facts of the case correctly hence the assessment is invalid. 3. That in any view of the matter undisclosed income/investment was not determined on the basis of any search material and the assessing officer simply proceeded to make the additions arbitrarily as if it is a normal assessment and his action as partly confirmed by the first appellate authority is also highly unjustified and illegal. 4. That in any view of the matter a part sum of Rs. 6,95,541.00 out of the addition of Rs. 9,49,003.00 made by the assessing officer on count jewelleries as maintained by the Commissioner of Income Tax (Appeals) is highly unjustified, incorrect and illegal in the facts and circumstances of the case. Because the addition was made based on pure conjectures and surmises ignoring the status of appellant's family, social/religious customs and traditions prevailing in community and without supporting any search material, hence the part of the addition so maintained is liable to be deleted. 5. That in any view of the matter addition of Rs. 1,07,651.00 made by the assessing officer by alleging unexplained cash found in search and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized material. In response to the notice issued under section 142(1), the assessee explained the source of acquisition of gold jewellery as it belongs to the assessee, her two daughters and some of the jewellery belongs to her mother Smt. Indra Devi. The assessee further explained that she married in the year 1995 with Sh. Ramesh Kumar s/o Mata Saran Kesarwani. Her husband belongs to a respectable business family of Allahabad. The assessee received jewellery from both sides at the time of marriage as well as on subsequent occasions namely birthdays of children and on other occasion. The assessee further stated that her husband deposited 623 gram gold under tax free gold bond scheme and received back the same on 29.12.1998. The said declared gold was found at the time of search and mentioned at Sr. No. 13 of jewellery inventory in panchnama. Similarly, there was disclosure under VDIS-97 of 796.150 grams of jewellery. The rest of the jewellery was claimed as stridhan of the assessee as well as her two daughters. The AO did not accept the explanation of the assessee and after allowing the jewellery of 500 grams as stridhan of the assessee, the AO treated jewellery of 682 grams as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an identical issue has been considered and decided by the Bench in favour of the assessee. He has also relied upon the judgment of Hon'ble Rajasthan High Court in the case of CIT vs. Satya Narain Patni 106 DTR 436 and submitted that the Hon'ble High Court has held that as per the CBDT instruction dated 11th May, 1994, the jewellery 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 and therefore, to that extent, the jewellery found in the possession of the assessee cannot be questioned about its source and acquisition. Thus, the learned AR has submitted that the addition sustained by the CIT(A) is not justified and same may be deleted. 5. On the other hand, learned DR has submitted that the explanation of the assessee cannot be accepted as the quantities of the jewellery explained by the assessee are not tallying with the actual jewellery found during the course of search. He has relied upon the orders of the authorities below. 6. We have considered the rival submissions as well as relevant material on record. The facts are not in dispute so far as jewellery weighted 1,796 grams found during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The main arguments of the appellant against the said addition in her written submissions was that the assessee got married in the year 1975 with Shri Ramesh Kumar Son of Late Shri Mata Saran Kesarwani. Her husband belongs to respectable business family of Allahabad and at the time of marriage she received the jewellery from both side of her relation / relatives and on subsequent occasion which is her STRIDHAN and thus the addition as made is unwarranted. The fact that the appellant belongs to a status family and that gold is given at the time of marriage and other occasions as stated by the appellant on social and religious occasions as per practice prevailing in the community is not in doubt and accepted. Even as per the board's circular, benefit with regard to possession of jewellery was not allowed to the assessee. Therefore considering the stated facts I hold and allow the benefit of 500 gms of jewellery to the appellant on account of her Stridhan. The appellant had argued that regarding the source of acquisition of gold jewellery - weighing 1796 gm, the said jewelry belongs to the assessee, her two daughters and some items belong to her mother Smt. Indira ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms on the same basis as valued by the AO comes to Rs 695,541/-, which addition is confirmed. The appellant get relief of Rs (949,003- 695,541)= Rs 253,461/-. (v) The ground of appeal no.8 is against the addition of Rs 107,651/- made by the AO u/s 69Aof the Act. The cash amounting to Rs 107,100/- was found during search the appellant claimed that Rs 24,000/- belonged to her husband, Rs 53,451/- belonged to her firm M/s Gupta Traders and Rs 30,200/- belonged to her children. The AO rejected the contention of the assessee in this regard and made the addition of Rs 107,651/-." 9. Without going into the controversy regarding the jewellery belonging to the mother of the assessee first we consider the explanation supported by undisputed evidences such as the gold bar weighting 623 grams which were received by the husband of the assessee under tax free Gold Bond Scheme, 1998 for which the assessee has produced a certificate issued by the Reserve Bank of India giving the details of gold bond for 623 grams of 0.995 purity. These certificates at page nos. 40 to 42 are as under:- 10. Therefore, once the assessee explained the acquisition of the gold bar weighting 623 grams belonging to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it has been observed as under:- Belongs to/Found from Smt. Anita W/o Satyendra Patni (self) Smt. Aparna W/o Chandra Prakash Patni (Eldest son) Smt. Priyanka W/o Pushpendra Patni (2nd son) Smt. Ruchi W/o Girish Patni (3rd son) Bank Locker Bed 139.5 240.3 210.8 137.6 Bed rooms 315 163.2 195.1 Bed room of Satyendra patni 395 232.4 229.7 246.5 Found one person 40 15 19 32 Total gross wt. 574.5 802.7 622.7 611.2 Total net wt. 500.5 722.5 529.5 449.764 In the statements recorded on 25th Aug.. 2004 during search under s. 132(4) the assessee and various family members stated as below: Satyendra Patni: In reply to question No. 5 he stated that he possesses one gold ring and 2 gold chains and his wife possesses 30 Tola gold jewellery. He further stated that all his 3 daughter-in-law also possess 30 Tola gold jewelry each which they received from their parental side at the time of marriage and subsequently at the time of birth of children. Chandraprakash Patni (eldest son): In reply to question No. 12 regarding jewellry lying with him at that time, he stated that around 10 Total of jewellery is lying with him belong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record that the statements of various family members were recorded and none has stated that these are not personal wearing jewellery and same were received by the respective ladies/daughter-in- law on/or at the time of their marriages either from the parental side or in-laws side and even subsequently at the time of birth of their children. 11. On perusal of the circular of the Board. quoted supra, it is clear that in the case of wealth-tax assessee, whatever gold jewellery and ornaments have been found and declared in the WT return, need not be seized. However, sub cl. to prescribes that in 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. Sub-el, it also prescribes that the authorised officer may, having regard to the status of the family and the custom and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. 12. It is true that the circular of the CBDT, referred to supra dt. 11th May. 1994 only refers to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Board and thus, in our view, subsequent addition is also not justificable on the part of the AO and rightly deleted by both the two appellate authorities namely CIT(A) as well as the Tribunal. 14. It can also be observed here that prior to 1992. when the exemption limit under the WT Act was about Rs. 1.00.000 or Rs. 1.50.000, then in most of the cases, returns were filed under the WT Act because even in case of possession of 500 gms per lady and the other assets namely: capital investments in firms/shares, landed property etc. etc. being taxable return of wealth were invariably filed by the assessees. However, by the Finance Act, 1992, w.e.f. 1st April. 1993, drastic change was introduced under the WT Act where only some assets under s. 2(ea) came within the perview of the definition of an "asset" under the wealth-tax and by and large, the other assets namely: liquid capital investments in firms/shares, one house property, commercial assets were exempt and even the limit of other assets was raised to 15 lacs (for the asst. yr. 1993-94 to 2009-10) and thereafter, by and large even the assessees, who were furnishing returns prior to 1st April. 1992, in view of the drastic a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellery to be belonging to his wife, son and himself and he further explained that he and his wife had received the jewellery on the occasion of his marriage from his father-in-law and mother and their statements were recorded by the authorities below. We further find that assessee's mother Smt. Urmila Kewarwani had declared jewellery under VDIS scheme, a copy of which is placed at page No. 185 of the paper book. The mother of the assessee had also stated in her statement that the jewellery declared by her in the VDIS Scheme was used for making certain jewellery which she had given to his son. Copy of letter written by the mother of the assessee is placed at page 181 of the paper book. We further find that the grand-father of the assessee Shri Vishwanath Prasad had also declared jewellery under VDIS Scheme, a copy of which is placed at page 187 of the paper book. We further find that grand-father of the assessee Shri Vishwanath Prasad Kewarwani had invested 1168 gms gold in Gold Bond Scheme, the repayment of which was made on 30/09/98 in the form of gold. A certificate to this effect is placed at page 188 of the paper book. All these documents suggest that the assessee's fam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dren as a saving for want of any supporting evidence. The CIT(A) confirmed the addition made by the AO on this account. 14. Before the Tribunal, the learned AR of the assessee has submitted that the assessee explained the source of cash in her statement recorded under section 132(4) in reply to question no. 4 and submitted that the assessee has explained that a sum of Rs. 30,200/- was found from the purse of assessee and her daughter which is the money for the household expenditure. The balance was explained by the assessee as belongs to the business entity of M/s Gupta Traders and a sum of Rs. 24,000/- belong to the husband of the assessee Shri. Ramesh Kumar. The learned AR has referred to the assessee's reply before the CIT(A) and submitted that the assessee has clearly explained the source of Rs. 53,451/- which belongs to M/s Gupta Traders and submitted that there was a sale through cash memo to the extent of Rs. 28,006/- and also collection from a debtors of Rs. 20,000/- alongwith the balance which was already found in the books of Rs. 5475.50 on 26.8.2009, the total comes to Rs. 53,481.50 paisa. Therefore, to the extent of the said amount, the assessee has explained the sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to the extent of Rs. 5,475.50 paisa. Therefore, to that extent, there is a mistake in the impugned order of the CIT(A). The CIT(A) has dealt with this issue in para (v) as under:- (v) The ground of appeal no.8 is against the addition of Rs 107,651/- made by the AO u/s 69Aof the Act. The cash amounting to Rs 107,100/- was found during search the appellant claimed that Rs 24,000/- belonged to her husband, Rs 53,451/- belonged to her firm M/s Gupta Traders and Rs 30,200/- belonged to her children. The AO rejected the contention of the assessee in this regard and made the addition of Rs 107,651/-. The AO observed in the assessment order that with regard to the source of cash amounting to Rs 53,451/- claimed to belong to her Firm M/s Gupta Traders, the cash book of the Firm was written upto 25-08-2009. The AO observed that cash balance as on 25-08-2009 was Rs 5475.50, and on the date of search it was found that the last bill for sale of goods issued was bill no. 168 dated 22-08-2009. Therefore it implied that no bill was issued after 22-08-2009 till the date of search. Therefore the AO held that the cash amounting to Rs (51,900 5475.50) = Rs 46,425/- was from undisclosed sources ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng any adverse inference does not arise. In this connection it is also necessary to mention here that on 24.08.2009 there was opening cash balance of Rs. 85,978/- and earlier also on different dates there was sufficient cash balance. In these background declared cash balance as on 26.08.2009 may please be accepted in the facts and circumstances of the case." The above explanation of the appellant about the source of cash found during the course of search is considered. As regards the explanation about the source of cash amounting to Rs 53,451/- belonging to M/s Gupta Traders, there is no evidence of sale through cash memo to the extent of Rs 28,006/. Though the appellant claimed that necessary entry of sale was passed in the stock register, but the copy of the relevant page of the stock register was not produced before the undersigned by the appellant. Hence the claim is not substantiated and hence dismissed. Likewise, the claim of collection of Rs 20,000/- from Debtors is not proved. In her written submissions, the appellant has not furnished even the names of debtors from whom collection of Rs 20,000/- was made, and also did not furnish the copy of account of those debtors fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in comparison to the stock recorded in the stock register and the books of accounts. After considering the reply of the assessee, the AO has decided this issue as under:- "Issue of excess stock of kimam: The reply of assessee with regard to 260Kg. Kimam lying and found at the platform on the date of survey in the factory premises (Idgah Road) is not convincing. It is a fact that the assessee manufactures Kimam from raw tobacco and this process will take certain period of time. As per stock register found and seized as annexure "A 12" there was only 1160 kg of Kimam which was shown as opening stock as on 27-08-2009. Manufacturing process of Kimam takes three to four days. As per said stock register 470 Kg. of raw tobacco was taken for manufacturing of Kimam on 22-08-2009. So whatever yield would have come out of consumption of 470 Kg. of raw tobacco, it should have been taken in this stock register. It is worth mentioning here that just before the date of search that i.e. on 26-08-2009, 320 Kg. of Kimam was entered in the said stock register. Thus opening stock of finished Kimam as on date of search includes the yield of 470 Kg of raw tobacco taken on 22-08-2009. Further from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f kimam of 260 kg and the same was not recorded in the books of accounts. The AO doubted the explanation of the assessee for the unfinished product as to cover the excess stock of kimam of 260 kg found at the time of search and survey. He has thus contended that without verifying the correct position of the stock of kimam, the AO has made the addition by treating the entire stock as finished product. On the other hand, the learned DR has submitted that the Assessing Officer has made the addition on the basis of the seized / impounded material as per annexure A-11 and 12 which is the stock inventory as well as stock register, respectively. He has relied upon the orders of the authorities below. 22. We have considered the rival submissions as well as the relevant material on record. The Assessing Officer has made the addition on account of excess stock of 260 kg of kimam found at the time of survey at the factory premises which was out of stock register. Though, the assessee explained before the AO that the said stock was not finished stock but it was unfinished under process stock and would be recorded in the stock register only when converted into finished product of kimam. Theref ..... 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