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TMI Blog2018 (4) TMI 1988X X X X Extracts X X X X X X X X Extracts X X X X ..... t emerging from the facts on record and therefore, the same cannot be accepted. In absence of any specific identification of the jewellery belonging to the assessee and to the other family members, it would be reasonable that if the addition has to be made, it should be made equally in hands of all the family members staying with him at the relevant point in time and the assessee's HUF. The contention regarding the overall valuation of the explainable jewellery amounting to Rs 60,16,749/- being higher than the value of Rs 55,65,762 as determined by the approved valuer is not found acceptable as there is a clear cut finding by the AO that jewellery weighing 2595.72 grams was found as against explainable jewellery of 2212.04 grams. We confirm the findings of the AO to the extent that the jewellery worth Rs 55,65,762 remains unexplained. The addition, towards the unexplained investment in the jewellery so found during the course of search, should be made equally in hands of all the family members staying with him at the relevant point in time. The proportionate addition in the hands of the assessee comes to Rs 245,422 (1/5 of Rs. 12,27,109/-). The balance addition of Rs 981,687 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank details for transfer of US $ 100,000 to the Oceanix International FZE. It is again not clear and there is nothing on record which suggest that there is any remittance which has actually happened in this regard. In light of the same, the mere fact that certain email communications have been addressed and forwarded to Dr. B.S.Tomar regarding the foreign remittances, to our mind, the same is not sufficient enough to hold that the remittance have been made either by Dr. B.S.Tomar or on his behalf from the undisclosed sources of income. We find that the Settlement Commission has also reached at the same conclusion as we have arrived above that the mere fact that certain email communications have been addressed and forwarded to Dr. B.S.Tomar regarding the foreign remittances, the same is not sufficient enough to hold that the remittance have been made either by Dr. B.S.Tomar or on his behalf from his undisclosed sources of income. No basis for making the addition in the hands of the assessee. The said addition is hereby directed to be deleted. The ground of appeal taken by the assessee is thus allowed. Foreign travel expenses - as based on various seized documents and details collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of search, at the residential premises of the assessee, being one of the trustees, situated at B-4, Govind Marg, Adarsh Nagar, Jaipur, from the Bedroom of Smt. Shobha Tomar, wife of the assessee, Dr. BS Tomar, Bedroom of Dr. Anurag Tomar and Dr. Swati Tomar, the son and daughter-in-law of the assessee, gold weighing 2595.72 grams, diamond weighing 19.3 cts and 714 grams of silver was found which was valued at Rs. 55,80,042/-. 3. In his statement recorded during the course of search u/s 132(4) of the Act, the assessee was asked a specific question i.e. question No. 39 to explain the source of the jewellery so found and valued at Rs. 55,80,042/-. In response, the assessee submitted that the jewellery and the silver so found belong to him, his wife, son, daughter in law and his HUF namely, B.S Tomar (HUF). It was further submitted that the jewellery and silver so found has been reflected in the Wealth tax returns and the wealth tax has been duly paid on such jewellery and the silver items. 4. During the course of assessment proceedings, the assessee was again asked to provide the necessary explanation in respect of the jewellery so found at his residential premises during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond totaling to Rs. 12,27,108/- was made and brought to tax in the hands of the assessee. 6. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) and reiterated the submissions made before the Assessing Officer. It was further contended before the ld CIT(A) that when the jewellery which was found during the course of search was owned by all the family members, then why the addition is made in the hands of the assessee alone and not in the hands of the other family members. It was further contended that there was no loose diamonds which were found during the course of search and these were studded diamond and gold jewellery which was belonging to female members of his family. It was further submitted that the assesse's own jewellery as per his wealth tax return was just 99.14 grams(net) which is gold chain, rings and other minor items used by male members in the society. 7. The ld. CIT(A) however confirmed the action of the AO and while doing so, observed that the assessee has given inconsistent explanation before the Assessing Officer and further such explanation is at variance with the initial statement recorded u/s 132(4) of the Act. It was held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer that since the assessee is the head of family, the whole of the addition shall be made in his hand is not emerging from the facts on record and therefore, the same cannot be accepted. In absence of any specific identification of the jewellery belonging to the assessee and to the other family members, it would be reasonable that if the addition has to be made, it should be made equally in hands of all the family members staying with him at the relevant point in time and the assessee's HUF. 11. Now, coming to the explanation and the contentions so raised by the ld. AR. Firstly, the contention regarding the overall valuation of the explainable jewellery amounting to Rs 60,16,749/- being higher than the value of Rs 55,65,762 as determined by the approved valuer is not found acceptable as there is a clear cut finding by the AO that jewellery weighing 2595.72 grams was found as against explainable jewellery of 2212.04 grams. Similarly, the other contention raised by the ld. AR regarding 15% reduction done by the asseessee for impurity whereas the approved valuer has allowed reduction which was lower than 15% in majority of items of jewellery and which has resulted in calculati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO further observed that Mr Bitthal Maheshwari is not an Indian citizen and is believed to live in Germany since many years. The AO further observed that the Statement of Mr. Bitthal Maheshwari's real brother Mr. Goverdhan Maheshwari, who lives in Jaipur and who also escorted Mr. B. S. Tomar and his wife to Africa was recorded u/s 131 of the Income Tax Act. Mr. Goverdhan Maheshwari submitted that he will ask about the above transactions from his brother, however, till date, no details have been furnished by him. The AO accordingly comes to a conclusion that it is clear that the HSBC bank account in Hong Kong from which the transfer of USD 1,00,000/- took place, and the receipt of which was sent by Mr. Bitthal Maheshwari, was made on behalf of Dr. B.S.Tomar as all the emails have been addressed to Dr. B. S. Tomar and not Mr. Bitthal Maheshwari. It was accordingly held by the AO that it was on behalf of Dr. B. S. Tomar that money was transferred from the HSBC bank account to the Dubai bank account by Mr. Bitthal Maheshwari or his relative/associate who had a bank account in HSBC Hong Kong. 14. Further, AO referred to page No. 180-182 of the same annexure i.e. Annexure 27 which s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- or more been paid by Mr. Maheshari from his bank account with HSBC Bank on behalf of Dr. Tomar, evidence for repayment in India or foreign currency to Mr. Maheshwari of his relatives in India would have been found during the course of search whereas not a iota of any such evidence or entry in diary or other document was found. The allegation of the ld. Pr.CIT(C) appears to be on the basis of her own presumptions, conjectures and guess work. Since conjectures, guess work and possible stories have no place in search cases, the request of the ld. Pr.CIT(C) to this Hon'ble ITSC to allow the Department to make necessary reference to FT and TR divisions of CBDT will be meaningless. When no remittance was made by Dr. B.S. Tomar or by IMT, one cannot understand, how the sources of such transaction could be explained? Had there been any merit in such query, the Investigation Wing of the Department was competent enough in making investigation during more than a year after the search . In response to query raised in respect of exhibit AS-27, in comments of IMT under Rule 9A of 1TSC Procedure Rules, it was submitted as under: Neither any remittance was made by Trustees of IMT or their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial justifying any investment by the assessee himself, no addition could be made. There must be some material substance either in form of documents or the like to arrive at a ground for addition of income. The assessee has been requesting time and again to Department to make necessary enquiry from bank for the ownership of the money sent in terms of US$ to Gulf countries. Even the recipient or the bank where the money was transferred as per account number given in notice could be enquired. Moreover had the Assessee remitted the money, why and how Bitthal Maheshwari could be said to have issued receipt as against the assessee himself as given in your said notice dated 1St December 2016 u/s 142(1) of IT Act. On the facts, neither any incriminating document nor any evidence was found during course of search for the ownership of US $, remitted to gulf countries from the HSBC bank account of one Shri Bitthal Maheshwari as being sent by assessee, the amount in no case could be considered as assessee's undisclosed income nor any evidence was found during course of search or thereafter that assessee had made payment of equal sum either to Shri Bitthal Maheshwari or to his relative eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Maheshwari sent an endorsement of payment by email to Dr. B. S. Tomar, it is not possible to derive any adverse inference in the case of the applicant trust . The issue of foreign remittance was already examined by the Hon'ble Income tax Settlement Commission (ITSC) from the material places before it by the Ld. Pr.CIT (C) and also by Indian Medical Trust. After considering material placed by both the parties, the Hon'ble ITSC has arrived at the following finding (Repeated from above findings of Hon'ble ITSC): However, from the clarifications given and the facts places before us it is clear that the name of the applicant Trust does not figure on any of the papers relied upon by the Department and the payments have been made by a third party outside India and there is no material on record to show that any such funds were provided by Dr. B.S. Tomar . Therefore when the remittances were found to have been made by third party (Sh. Bitthal Maheshwari - who is NRI) outside India and there is no material on record to suggest that Appellant had provided such fund, the addition of Rs. 1,84,35,000/- is totally unjustified. 19. The ld. CIT(A) however didn't agree with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was found during course of search evidencing any payment by the assessee either to Mozambique or to Mr. Maheshwari or his relations in India even in post search proceedings but both the lower authorities preferred to make/sustain the unjustified addition of Rs. 1,84,35,000/- in hands of assessee. All these facts and documents relating to remittance of US$3,00,000/- were also examined by the Hon'ble Settlement Commission, Addl. Bench, New Delhi in case of M/s. Indian Medical Trust. The finding of the Hon'ble Income Tax Settlement Commission on this issue is appearing at page 123 order dated 30.06.2017 u/s. 245D(4)of IT Act in case of India Medical Trust which is repeated hereunder. During the hearing the A.R. requested us to allow the Department to make a reference to FT TR Division of CBDT to make enquiries through the Competent Authority. However, as the payments in question have been made by Sh. Bitthal Maheshwari and not by IMT or Dr. Tomar no such permission needs to be given by us. The Department is free to take any action in case of Sh. Bitthal Maheshwari. However, from the clarifications given and the facts places before us it is clear that the name of the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been conducted by the Revenue and as to how the Revenue has come to such a finding. Therefore, in absence of any material on record in terms of the nature of such enquiries, the person from whom such inquiries have been made, any documentation which has been found and what is the exact findings arising out of such inquiries, we do not find there is any basic to hold that the so called discreet inquiries anyway establishes the fact that Dr. B.S.Tomar has made any investments in countries outside India and the impunged remittances are in connection thereto. 24. Now coming to the statement of Dr. B. S. Tomar recorded during the course of search u/s 132(4). In response to Question No. 28 wherein the assessee was specifically asked to state whether he or any member of his family or his institute has any foreign bank account, the assessee had submitted that neither he nor any members of his family has any foreign bank account. In Question No. 29, the assessee was specifically asked whether he or any members of his family or the institute has made any foreign investment and the sources of such foreign investment. In response, the assessee submitted that neither he nor his family or hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l communication confirming the remittance having been and the said communication is by Shri Bitthal Maheshwari addressed to Shri B.S.Tomar. Based on the seized documents, it is an admitted position of the Revenue as emerging from the assessment order that the payment has been made by Shri Bitthal Maheshwari. However, given the fact that all the email communications have been addressed to Dr. B.S.Tomar and not to Mr Bitthal Maheshwari, the AO has come to a conclusion that the payment has been made on behalf of Dr. B.S.Tomar from the HSBC bank account to the Dubai bank account by Shri Bitthal Maheshwari or his relative/associate who had a bank account in HSBC Hong Kong. In our view, these documents on first blush might create some suspicion or apprehension in mind of the Assessing officer that there is some involvement of Dr B.S Tomar in these transactions. However, relying merely on these email communications and without bringing any further evidence on record as to the nature and extent of involvement of Dr B.S Tomar, it is too premature to hold that the remittance of USD 1 lac has been made by Shri Bitthal Maheshwari on behalf of Dr. Tomar. There is nothing on record which prove t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... close friend of Dr. B.S.Tomar had accompanied him to Mozambique and he was trying to take advantage of acquaintance of Dr. B.S.Tomar to further his own business interest. It was submitted that Dr. B.S Tomar has nothing to do with the remittance so made by Shri Bitthal Maheswari and the remittance were made by Shri Bitthal Maheswari from his own bank account for his own business dealings. It was further submitted that no incriminating material or other evidence whatsoever was found during the course of search evidencing any payment by the assessee either to Shri Bitthal Maheswari or his relatives in India/outside India even in post search proceedings. We find that the said contentions and explanation so furnished were raised/made before the lower authorities as well and the same remain uncontroverted before us. As we have noted above, the Revenue has admitted the fact that the remittance has been made by Shri Bitthal Maheswari and the assessee having denied making such remittances or any direct/indirect involvement in such remittances, what is apparent has to be treated as real unless the Revenue brings on record any evidence which establishes his linkages with remittance having be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther mine in Africa. According to the applicant the allegation made by CIT are therefore based merely on guesswork and surmises. During the hearing the A.R requested us to allow the Department to make a reference to FT TR Division of CBDT to make enquiries through the Competent Authority. However as the payments in question have been made by Sh. Bitthal Maheswari and not by IMT or Dr. Tomar no such permission needs to be given by us. The Department is free to take any action in the case of Sh. Bitthal Maheswari. However, from the clarifications given and the facts placed before us it is clear that the name of the applicant Trust does not figure on any of the papers relied upon by the Department and the payments have been made by a third party outside India and there is no material on record to show that any such funds were provided by Dr. B. S Tomar. Therefore - merely on the basis of the fact that Sh Maheswari sent an endorsement of payment by email to Dr. B. S Tomar it is not possible to derive any adverse inference in the case of the applicant trust. 29. We find that the Settlement Commission has also reached at the same conclusion as we have arrived above that the mere fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. The ld. CIT(A) however confirmed the addition relying on the finding of the AO that the expenses of foreign tour on foreign travel is not relatable to drawings and no cash flow or evidence is submitted to show that such cash payment has been made out of the cumulative drawings made during the year. Further, ld. CIT(A) referred to the decision of the Settlement Commission which has also refused to recognize that expenses on such trips have been made from the accounts of IMT. 33. Now, the assessee is in appeal against the said findings of the ld CIT(A). During the course of hearing, the ld. AR reiterated the submissions made before the lower authorities and submitted that additions have been made on mere estimation and guess work without any incriminating material found during the course of search. It was further submitted that the assessee lives in a joint family in a house jointly owned by him and his wife, therefore, no rent is payable for residence. Besides, the assessee and the family members have drawn substantial amount of drawings in FY 2014-15 duly disclosed in their respective income tax returns. It was further submitted that the individual drawings of the assessee du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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