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TMI Blog2023 (4) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... reof for purchase /construction of residential house. Therefore, the argument of the Ld. DR and objection of the Ld. AO that sale consideration obtained from the old property has not been utilised by the assessee has no legal basis and cannot be a hindrance to the assessee for claiming exemption under section 54F of the Act. Decided in favour of assessee. Surrendered income - Surrender by the son of the assessee during the course of survey - difference of stock and unexplained cash found during survey - Whether surrender was voluntary ? - Surrender was made on 30.05.2018 and the assessee retracted on 05.01.2021 - CIT-A deleted the addition - HELD THAT:- The difference of stock mentioned by the AO was only due to the fact that the approved valuer valued the stock on the basis of market price whereas the assessee had valued the closing stock as per accounting policy, namely cost or realisable value whichever is lower which method the assessee had followed year after year consistently. Since it is not a case where excess stock in quantity was found in survey, difference on account of valuation cannot form the basis of any addition. The assessee had produced before the Ld. AO al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, and the surrendered was based on the difference of stock and unexplained cash found during the course of survey proceedings. 3. On facts and circumstances of the case and in law, the CIT(A) failed to allude to the relevant facts circumstances and misread the facts to arrive at the conclusion. 3. The assessee is an individual engaged in the business of purchase and sale of gold, silver and diamond jewellery in the name style M/s. Pushpanjali Jewels. Survey under section 133A of the Income Tax Act, 1961 (the Act ) was conducted at her business premises on 30.05.2018. During the course of survey, the stock was got valued by an approved valuer who valued the stock at Rs. 5,57,34,223/- as against the value as per books at Rs. 4,63,31,680/-. During survey, statement of Shri Himanshu Mittal, Son of the assessee was recorded. He surrendered an amount of Rs. 1 crore as undisclosed income for the previous year relevant to AY 2018-19. 4. For AY 2018-19 the assessee e-filed her return on 31.10.2018 declaring income of Rs. 23,44,850/-. The case was selected for scrutiny. Statutory notices along with questionnaire were issued and complied with. The assessee submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000/- and for computation of capital gain, she claimed Indexed Cost of Acquisition of Rs 29, 55,243/-, thus capital gain has been computed at Rs. 28,94,757/-. Further the appellant purchased a residential property vide sale deed dated 19.09.2018 and the payments for the same are made as under: Date Amount Remarks 17.10.2012 3, 28,000/- Ch No 281071 by Sharad Chand Mittal HUF (Karta is Husband) 17.10.2012 4,21,000/- Ch No 281070 by Sharad Chand Mittal HUF (Karta is Husband) 09.01.2013 4, 21,000/- Ch No 15141 by Sh Sharad Chand Mittal (Husband) 18.01.2013 3,28,000/- Ch No 285804 by Sh. Himanshu Mittal (Son) 19. 10.2016 6, 00, 000/- Ch. No 106321 by Sh. Himanshu Mittal (Son) 21.05.2018 9,05,478/- Ch No. 830172 by Smt. Anjali Mittal (Assessee) From the above it is clear that the total payment of Rs. 30, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where (a) the assesses, - b) owns more than one residential house, other than the new asset on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cash in hand as per books maintained in laptop and reason of physical cash found in the premises of Rs. 4,80,450/-, 7.8 In this regard it is observed that this has been directed by Hon'ble CBDT vide circular F. No. 236/2/2003-IT (lnv.) dt. 10.03.2003 that the confessions of additional income during the course of search and seizure and survey operations must be backed by credible evidences. Further vide circular F. Mo. 286/98/2013-!T (lnv. II) dt 18.12.2014 it has been directed that there should be no coercion to admit the undisclosed income during searches/ surveys and the admissions should be backed by credible evidences. The appellant has relied on various judicial pronouncements as produced above, to make a claim that the disclosure by the son of the appellant was not backed by credible evidences and hence she should not be forced to pay taxes on Rs, 1,00,00,000/-. 7.9 In the light of above observations, the addition of Rs. 1,00,00,000/- on account of difference on valuation of stock and the excess cash as claimed by the AO is hereby deleted and relief is allowed to the appellant. 7. The Revenue is aggrieved and is before the Tribunal. All the grounds relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulfilled. The Ld. CIT(A) accepted the above contention of the assessee and rightly so as there is legal backing. It is held by Hon ble Bombay High Court in Prakash Vs. ITO 173 Taxman 311 (Bom) that for qualifying for the exemption under section 54F it is necessary and obligatory to have the investment made in residential house in the name of the assessee only. This criteria has been fulfilled in the case of the assessee. Moreover, Hon ble Punjab Haryana High Court has held in the case of Kapil Kumar Agarwal (supra) that section 54F nowhere envisages that the sale consideration obtained by the assessee from original capital asset is mandatorily required to be utilised for purposes of meeting cost of new asset. Therefore, where investment made by the assessee, although not entirely sourced from capital gain, but was within stipulated time and more than capital gain earned by him, the assessee was entitled to exemption under section 54F. The assessee brought on record evidence to show that the family members paid the amounts from their respective bank accounts to meet the cost of the new property purchased by the assessee. It may not be out of place to mention that the decision of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee during assessment and appellate proceedings was that no difference was found in the quantity of stock. The difference of stock mentioned by the Ld. AO was only due to the fact that the approved valuer valued the stock on the basis of market price whereas the assessee had valued the closing stock as per accounting policy, namely cost or realisable value whichever is lower which method the assessee had followed year after year consistently. Since it is not a case where excess stock in quantity was found in survey, difference on account of valuation cannot form the basis of any addition. The assessee had produced before the Ld. AO all the bills which constituted the stock as on the date of survey which has not been considered and reliance was placed on the value adopted by the approved valuer as prevailing on the date of survey. This approach is not correct. 12. Before the Ld. CIT(A) the assessee challenged the authority of the son to the impugned surrender without her written authority and in her absence when she was hospitalised and her son too was under influence of medication. Copy of discharge summary of the assessee and medical prescription of her son was brought on record ..... X X X X Extracts X X X X X X X X Extracts X X X X
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