DY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, LUDHIANA , LUDHIANA V. MEENA SINGLA, FOCAL POINT, KHANNA

ITA 660/CHANDI/2023

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted an addition of Rs.83,72,312 to the income of Smt. Meena Singla for the assessment year 2018-19. This addition was initially made by the Assessing Officer (AO) following a search operation under Section 132(1) of the Income Tax Act, 1961, which uncovered unexplained jewellery. The assessee contended that the jewellery was purchased from funds withdrawn from M/s Sheetal Industries, which had declared additional income and assets. The CIT(A) accepted the assessee's explanation, leading to the Revenue's appeal to the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 35570 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Assessee Lawyers: ROHIT KAPOOR
• Keywords: Unexplained expenditure
• Section: 143(2); 139(1); 22

Judgement Text

"आयकर अपील य अ धकरण,च\u0010डीगढ़ \u0014यायपीठ, च\u0010डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 660/CHD/2023 नधा\u0011रण वष\u0011 / Assessment Year: 2017-18 The DCIT, Central Circle-1, Ludhiana. Vs Smt. Meena Singla, C-47, C/o Avinash Industries, Focal Point, Khanna. \u0016थायी लेखा सं./PAN NO: AFIPS6555F अपीलाथ\u001a/Appellant \u001b यथ\u001a/Respondent Assessee by : Shri Rohit Kapoor, Advocate and Shri Virsain Aggarwal Revenue by : Smt. Kusum Bansal,CIT, DR Date of Hearing : 02.12.2024 Date of Pronouncement : 09.01.2025 PHYSICAL HEARING O R D E R PER RAJ PAL YADAV, VP The Revenue is in appeal before the Tribunal against the order of the Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 11.08.2023 passed for assessment year 2018-19. 2. Though the Revenue has taken three grounds of appeal but its substantial grievance is confined to one issue namely, ITA No.660/CHD/2023 A.Y.2018-19 2 CIT(A) has erred in deleting the addition of Rs.83,72,312/- which was added by the AO on the ground that unexplained jewellery having value equivalent to this amount was found during the course of search. 3. The brief facts of the case are that a search & seizure operation was carried out at the residential premises of the assessee and business premises of the Group under Section 132(1) of the Income Tax Act, 1961 on 25.04.2018. The assessee has filed her return of income under Section 139(1) on 19.06.2018 declaring total income of Rs.2,11,160/-. The case of the assessee was selected for scrutiny and a notice under Section 143(2) was issued on 17.09.2020. The AO thereafter issued number of questionnaires vide notice under Section 142(1). The AO has observed that during the course of search, a locker was opened out of which gold and diamond jewellery was found. While explaining the source of acquisition, assessee had contended that Shri Abhishek Singla has withdrawn a sum of Rs.83,80,000/- from M/s Sheetal Industries. It was further submitted that in the hands of M/s Sheetal Industries, the income of ITA No.660/CHD/2023 A.Y.2018-19 3 Rs.2,80,00,000/- was surrendered which has been assessed to tax. Shri Anmol Singla withdrew Rs.10,70,000/-, thus this amount was available with the assessee for application against recovery of jewellery. The ld. CIT(A) has noticed the details regarding surrendered amount in the hands of M/s Sheetal Industries and as to how such amount has been allocated towards different items, which read as under : A.Y. Income Surrendered (in Rs.) Particulars Amount (in Rs.) 2018-19 2,80,00,000/- Building 26,60,998.00 Land 72,43,000.00 Withdrawals by partners Anmol Singla= 1070000/- Abhishek Singla=8380000/- 94,50,000.00 Difference in stock 84,30,002.00 Miscellaneous fixed assets 2,16,000.00 4. The stand of the assessee was that Rs.83,80,000/- was withdrawn from M/s Sheetal Industries and it was available with her and out of that, this jewellery was purchased. The AO did not accept this contention of the assessee and made the addition. 5. Dissatisfied with the above, the assessee carried the matter in appeal before CIT(A). Assessee has demonstrated the details vide which amount was surrendered and how that ITA No.660/CHD/2023 A.Y.2018-19 4 income was allocated to different items of assets. The ld. CIT(A) was satisfied with the explanation of the assessee and deleted it. The First Appellate Authority has reproduced all the seized material and discussed the issue elaborately. Her finding is contained in page No. 16 to 22 of the impugned order. 6. With the assistance of ld. Representative we have gone through the record carefully. It is pertinent to note that income cannot be assumed in the air. It is always to be represented, either by assets or by expenditure. If during the course of search, neither unexplained expenditure was found nor any asset was found, then there could not be any assumption of unexplained income. In the present case, M/s Sheetal Industries is one of the stakeholder, has declared an extra income of Rs.2,80,00,000/-. This Rs.2,80,00,000/- is to be represented either by unexplained expenditure or by unexplained assets. The assessee has allocated this against the building, land, withdrawals by partners, difference stock etc. This amount which was withdrawn by the partners, it is available in their hands. The Department cannot lay its ITA No.660/CHD/2023 A.Y.2018-19 5 hand on discovery of cash to the extent of Rs.94,50,000/-. We could appreciate the case of the AO had a cash was recovered or unexplained expenditure was discovered during the search. If both things are not there, then what happened to that cash which has been declared extra in M/s Sheetal Industries. It is to be set off against the unexplained jewellery as submitted by the assessee. Therefore, ld. First Appellate Authority has rightly deleted the addition and no interference is called for. 7. In the result, appeal of the Revenue is dismissed. Order pronounced on 09.01.2025. Sd/- Sd/- (KRINWANT SAHAY) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” आदेश क\u0002 \u0003ितिलिप अ ेिषत/ Copy of the order forwarded to : 1. अपीलाथ\u000f/ The Appellant 2. \u0003\u0010यथ\u000f/ The Respondent 3. आयकर आयु\u0014/ CIT 4. िवभागीय \u0003ितिनिध, आयकर अपीलीय आिधकरण, च\u0018डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "