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TMI Blog2020 (1) TMI 1660X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee that part of the diamond jewellery found in the course of the search proceedings belonged to his NRI son and daughter-in-law - We find no infirmity in the view taken by the CIT(A). In our considered view, though the assessee had placed on record supporting documentary evidence in the form of 'valuation reports' pertaining to the jewellery owned by NRI son and NRI daughter-in-law which was stated to have been kept by the said respective persons with him for safe custody during their absence from India, the A.O. on the other hand had summarily discarded the said claim of the assessee and had without placing on record any material which could evidence the falsity of the said claim, had drawn adverse inferences. In fact, we find that the A.O. had not even recorded any reasoning for disbelieving the aforesaid claim of the assessee. As such, we are unable to persuade ourselves to subscribe to the aforesaid view taken by the A.O. and uphold the observations of the CIT(A) in context of the issue under consideration. For balance diamond jewellery CIT(A) in all fairness, in the totality of the facts of the case, adopting a balanced approach had fairly concluded that 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Rakesh Manekchand Kothari (son of the assessee) was recorded on 08.08.2013 i.e at the time of revocation of the prohibitory order in the presence of other family members. On being confronted with the details of the diamond jewellery which was found in the course of the search proceedings, it was submitted by him that the same belonged to him and his family members. As regards the source of acquisition of the aforesaid diamond jewellery, it was submitted by him viz. (i) that, diamond jewellery of a value aggregating to Rs. 1,23,95,850/- was sourced out of the cut and polished diamonds which were purchased in the month of May, 2013 in the name of Smt. Dimple Kothari and Nikki Kothari (daughters-in-law of the assessee) and Smt. Devuben Kothari (wife of the assessee) from certain jewellers viz. M/s. Opulent Jewels Pvt. Ltd., M/s. H.D.K. international Pvt. Ltd. and M/s. Shree Shyam International; (ii) that, the old diamond jewellery found during the search proceedings was duly disclosed in the wealth tax returns of his family members; (iii) that, certain diamond jewellery belonged to Shri Rajesh Kothari and his wife Smt. Shilpa Kothari (non-resident son and daughter-in-law of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the purchase value of diamonds had witnessed a fall. However, the A.O. was not satisfied with the genuineness of the aforesaid claim of the assessee. Observing, that the assessee in his attempt to justify his unexplained investment in the diamond jewellery that was found in the course of the search proceedings had came up with a concocted story, the A.O. declined to accept the same. As such, the explanation of the assessee that he had purchased cut and polished diamonds before the search proceedings in the name of his family members viz. (i) Smt. Devuben Kothari: Rs. 63,09,275/-; (ii) Smt. Dimple Kothari: Rs. 25,18,081/-; and (iii) Smt. Nikki Kothari: Rs. 35,68,494/-, which thereafter were given to certain jewellers for making of diamond jewellery was rejected by the A.O. As regards the claim of the assessee that part of the diamond jewellery belonged to his NRI son and daughter-in-law viz. Shri Rajesh Kothari (Rs. 10,15,373/-) and Smt. Shilpa Kothari (Rs. 12,39,346/-), who in their absence from India had kept their jewellery with him, also did not find favour with the A.O. Further, as the assessee was unable to substantiate on the basis of supporting documentary evidence that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he unsubstantiated explanation of the assessee. It was further submitted by the ld. D.R that the fact that no purchase bills evidencing any such purchase of diamond jewellery were found in the course of the search proceedings further evidenced the falsity of the claim of the assessee. Further, it was submitted by the ld. D.R that the claim of the assessee that certain diamond jewellery found in the course of the search proceedings belonged to Mr. Rajesh Kothari (NRI-son) and Smt. Shilpa Kothari (NRI-daughter in law), being an unsubstantiated claim was also rightly rejected by the A.O. As regards the claim of the assessee that the purchase of the balance diamond jewellery of Rs. 49,37,444/- was sourced from his withdrawals made over the years, it was submitted by the ld. D.R that as the assessee had failed to corroborate his aforesaid claim on the basis of any supporting documentary evidence, therefore, the A.O. had rightly held the same as an unexplained investment of the assessee under Sec. 69A of the Act. 7. Per contra, the ld. Authorized Representative (for short A.R ) for the assessee took us through the facts of the case. It was submitted by the ld. A.R that it was incor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18, dated 09.04.2019. It was the claim of the ld. A.R that the CIT(A) after appreciating the facts of the case had in all fairness sustained the addition on an estimate basis to the extent of Rs. 24,68,722/- [50% of Rs. 49,37,444/-]. It was averred by the ld. A.R that as the appeal of the revenue was devoid of any merit, therefore, the same may be dismissed. 8. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. Admittedly, diamond jewellery of a value aggregating to Rs. 2,70,72,255/- was found in the course of the search proceedings conducted at the premises of the assessee and his family members. As is discernible from the assessment order, the A.O. did not find favour with the explanation of the assessee as regards the source of acquisition of diamond jewellery of a value of Rs. 1,95,88,013/-. As observed by us hereinabove, the explanation of the assessee as regards the source of the aforesaid diamond jewellery of a value of Rs. 1,95,88,013/- comprised of three parts viz.(i) that, diamond jewellery of a value of Rs. 1,23, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Shreepati Arcade, 31 749698 Safe of Devkumari Kothari, Shreepati Arcade, 32 491380 Total 2518081 Devkumari Kothari Premise Sr. No. of diamond jewellery valuation report Value (Rs.) Bed Room of Dimple Kothari Shreepati Arcade, Nana Chowk 2 109115 -do- 10 457465 -do- 13 199885 -do- 15 104556 -do- 16 99488 -do- 17 149895 -do- 41 116493 Bed Room of Dimple Kothari Shreepati Arcade, Nana Chowk 2 384820 -do- 4 435470 -do- 6 811689 -do- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diamonds (on credit) was beyond comprehension; (v) that, no payments were made to the jewellers from whom the cut and polished diamonds were claimed to have been purchased till the date of search; and (vi) that, the claim of the assessee of having given the cut and polished diamonds for making of diamond jewellery to the jewellers was an afterthought. 10. We have deliberated at length on the observations of the lower authorities and are unable to persuade ourselves to subscribe to the unsubstantiated view arrived at by the A.O. Admittedly, in the course of the search and seizure proceedings conducted on the assessee diamond jewellery of a value of Rs. 2,70,72,255/- was found. As observed by us hereinabove, on account of non-availability of the main persons at the time when the search proceedings were conducted, their statements could not be then so recorded under Sec. 132(4) of the Act. However, the statement of Shri Rakesh Manekchand Kothari (son of the assessee) was recorded on 08.08.2013 i.e at the time of revocation of the prohibitory order in the presence of other family members. On being called upon to explain the source of acquisition of the diamond jewellery of a value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 0 0 12 Jewellery found in the case of Bhanwarlal Kothari Rakesh M. Kothari at shop No. 8, 257 Bapty Road, Mumbai. 295.6 51.72 1817701 Total of jewellery found 4344.514 642.54 27072255 it was submitted by him that the same belonged to him and his family members. On a perusal of his statement, we find, that while explaining the source of acquisition of the aforesaid diamond jewellery it was submitted by him viz. (I) that, diamond jewellery of a value aggregating to Rs. 1,23,95,850/- was sourced out of the cut and polished diamonds which were purchased in the month of May, 2013 in the name of Smt. Dimple Kothari and Nikki Kothari (daughters-in- law of the assessee) and Smt. Devuben Kothari (wife of the assessee) from certain jewellers viz. M/s. Opulent Jewels Pvt. Ltd., M/s. H.D.K. international Pvt. Ltd. and M/s. Shree Shyam International; (ii) that, old diamond jewellery found in the course of the search proceedings was duly disclosed in the wealth tax returns of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fications from the aforesaid jewellers, despite the fact that their complete details were furnished by the assessee with him. In other words, the claim of the assessee that he had purchased cut and polished diamonds from the aforementioned jewellers viz. M/s. Opulent Jewellers Pvt. Ltd., M/s. H.D.K. International Pvt. Ltd. and M/s. Shyam International in the month of May, 2013, was rejected by the A.O. without dislodging or disproving the documentary evidence that was filed by the assessee before him. In fact, the AO instead of verifying the factual position had rather harped on certain assumptions, presumptions, surmises and conjectures for arriving at a self suiting inference that no genuine purchase of diamonds was made by the assessee from the aforementioned jewellers. In our considered view, the aforesaid approach that was adopted by the A.O. for dislodging the substantiated claim of the assessee without making necessary verifications as regards the genuineness of the documentary evidence which was filed by him, cannot be subscribed on our part. On a perusal of the Sec. 69A of the Act, we find, that it is only where the assessee is found to be the owner of any money, bullion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry verifications that the assessee had not made any genuine purchases of cut and polished diamonds in the month of May, 2013 i.e prior to the search proceedings. As the assessee had supported his aforesaid claim on the basis of documentary evidence viz. purchase bills of the aforesaid jewellers, which evidenced that cut and polished diamonds were purchased by him on the dates therein specified, therefore, a very heavy onus was cast upon the A.O. to prove the falsity of the aforesaid claim of the assessee, which we are afraid he had failed to do. As such, the aforesaid serious infirmity on the part of the A.O. to dislodge the authenticity of the aforesaid claim of the assessee that he had purchased cut and polished diamonds in the month of May, 2013 cannot be subscribed on our part. In fact, the ld. A.R in the course of the proceedings before us had drawn our attention to the aforesaid purchase bills of the jewellers, which duly evidenced the factum of purchase of cut and polished diamonds by the assessee from the aforesaid jewellers. Apart from that, we find, that the assessee had claimed that after purchasing the aforesaid cut and polished diamonds from the aforementioned jeweller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said extent. 12. We shall now advert to the claim of the assessee that part of the diamond jewellery found in the course of the search proceedings belonged to his NRI son and daughter-in-law viz. Shri Rajesh Kothari (Rs. 10,15,373/-) and Smt. Shilpa Kothari (Rs. 1,39,346/-), who had kept the same with him for safe custody during their absence from India. As observed by us hereinabove, the aforesaid explanation of the assessee did not find favour with the A.O. and was rejected by him. On appeal, the CIT(A) had observed that the assessee on the basis of the respective valuation reports of wealth that were prepared way back in the year 1994 and 2005 of Shri Rajesh Kothari (NRI Son) and Smt. Shilpa Kothari (NRI Daughter-in-law), respectively, had substantiated the fact that certain jewellery found in the course of the search proceedings belonged to the aforesaid persons. On the basis of the aforesaid facts the CIT(A) held a conviction that now when the assessee had duly evidenced his aforesaid claim, therefore, the A.O. was in error in dislodging the same without proving to the contrary. We have given a thoughtful consideration and find no infirmity in the view taken by the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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