HARISH CHANDRA JAISWAL,KANPUR V. DY. COMMISSIONER OF INCOME TAX (CENTRAL CIRCLE-1), KANPUR

ITSSA 258/LKW/2018

AI Insights

The case involves appeals by Harish Chandra Jaiswal against the orders of the Commissioner of Income Tax (Appeals)-IV, Kanpur, which confirmed various additions to the assessee's income for the assessment years 2011-12, 2012-13, and 2015-16. These additions were primarily based on unexplained income and transactions noted in loose papers seized during a search operation under section 132 of the Income Tax Act, 1961. The Tribunal found that the lower authorities had not adequately addressed the assessee's arguments and the legal precedents cited, leading to a decision to delete some of the additions while confirming others due to insufficient explanation from the assessee.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 38083 (ITAT-LUCKNOW)
• Duration Of Justice: 6 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-09-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 09-04-2018
• Other Referred Cases: CIT Vs. Anil Bhalla (2010) 322 ITR 191, CIT Vs. Ved Prakash Choudhary (2008) 305 ITR 245/169 Taxman 130 (Delhi), Asst. CIT Vs. Sharad Chaudhary (2014) 165 TTJ 145 (Delhi- Trib), S.P. Goyal Vs. DCIT (2002) 82 ITD 85 (Mumbai), CIT Vs. Ravi Kumar (2007) 294 ITR 75 (P&H), CIT Vs. Lubtec India Ltd (2009) 311 ITR 175 (Delhi), CIT Vs. Atam Valves (P) Ltd. (2011) 332 ITR 468/(2009) 184 Taxman 6 (Punj & Har.), CIT Vs. Dolphin Builder (P) Ltd. (2013) 356 ITR 420/216 Taxman 116/35 taxmann.com 3 (MP), ITO Vs. Twinkle Papers (P) Ltd. (2005) 95 ITD 235/147 Taxman 43 (Mag)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANU CHAURASIA
• Keywords: Unexplained investment; Gift; Search and seizure; Loose papers
• Section: 250; 132; 153A; 43; 69; 13; 191

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “B”, LUCKNOW BEFORE SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER AND SHRI SUBHASH MALGURIA, JUDICIAL MEMBER IT(SS) Nos.256/LKW/2018 to 258/LKW/2018 Assessment Years: 2011-12, 2012-13 & 2015-16 Harish Chandra Jaiswal 8/276, Opposite Gangaghat Thana, Shuklaganj, Unnao. C/o Anil Jaiswal & Company, 24/4, The Mall Kanpur. v. DCIT, Central Circle-1, Kanpur. PAN:AAOPJ7810P (Appellant) (Respondent) Appellant by: None (Adj. Application filed by Sh. Ashish Jaiswal, Adv.) Respondent by: Shri. Manu Chaurasia,CIT(DR) Date of hearing: 30 09 2024 Date of pronouncement: 05 11 2024 O R D E R PER SUBHASH MALGURIA, J.M.: These are appeals preferred by the assessee against the action of the Ld. Commissioner of Income Tax (Appeals)-IV, Kanpur [hereinafter referred as to “Ld. CIT(A)”] dated 01.02.2018 for the AY. 2011-12, AY. 2012-13 & AY. 2015-16 since issues involved are common, all the appeals for all the assessment year/years (hereinafter referred to as “AY”) were heard together. Accordingly, for the sake of convenience and brevity, these three appeals heard on 30/09/2024 are being disposed of through this consolidated order. 2. The grounds of appeal of the Assessee for IT(SS) A. No.256/LKW/2018 for AY. 2011-12 are as under: - IT(SS) A Nos.256 to 258/LKW/2018 Page 2 of 13 “1. That the Ld. CIT(Appeals) has erred in confirming the addition of Rs.16,320,00 out of unexplained income based on LP-6 page no. 52. 2. That the Ld. CIT(Appeals) has erred in confirming the addition of Rs.94,00,00.00 out of unexplained transaction based on LP-5 page no. 62. 3. That the addition as well as assessment order is bad-in-law as well as on facts and appropriate relief deserves to be allowed.” 3. The grounds of appeal of the Assessee for IT(SS) A. No.257/LKW/2018 for AY. 2012-13 are as under: - “1. That the Ld. CIT(Appeals) has erred in confirming the addition of Rs.5,93,545.00 out of unexplained transaction based on LP-5 page no. 62. 2. That the assessment order is bad-in-law as well as on facts and appropriate relief deserves to be deleted.” 4. The grounds of appeal of the Assessee for IT(SS) A. No.258/LKW/2018 for AY. 2015-16 are as under: - “1. That the Ld. CIT(Appeals) has erred in law and on facts in confirming the addition of Rs.1,27,98,057/- on account of unexplained transaction as per loose papers found in search. 2. That the Ld. CIT(Appeals) has erred in law and on facts in confirming the addition of Rs.32,16,478/- on account of alleged unexplained investment in jewellery. 3. That the Ld. CIT(Appeals) has erred in law and on facts in confirming the addition without any corroborative evidence. 4. That the assessment order as well as assessment is bad-in-law as well on facts.” 5. In addition to the above grounds of appeal, the additional ground was also filed together assessee’s side as under: - (For AY. 2011-12) “That assessment framed u/s 153A for the period under consideration is void ab initio and without jurisdiction as the mandatory approval of the Additional CIT, Central, Kanpur as required under the provision of law u/s 153D of the Act is invalid and unlawful being purely mechanical and without application of mind making the assessment order passed u/s 153A as nullity and deserve to be quashed or any other appropriate relief by your honour.” (For AY. 2012-13) IT(SS) A Nos.256 to 258/LKW/2018 Page 3 of 13 “That assessment framed u/s 153A for the period under consideration is void ab initio and without jurisdiction as the mandatory approval of the Additional CIT, Central, Kanpur as required under the provision of law u/s 153D of the Act is invalid and unlawful being purely mechanical and without application of mind making the assessment order passed u/s 153A as nullity and deserve to be quashed or any other appropriate relief by your honour.” (For AY. 2015-16) “That assessment framed u/s 153A for the period under consideration is void ab initio and without jurisdiction as the mandatory approval of the Additional CIT, Central, Kanpur as required under the provision of law u/s 153D of the Act is invalid and unlawful being purely mechanical and without application of mind making the assessment order passed u/s 153A as nullity and deserve to be quashed or any other appropriate relief by your honour.” 6. None appeared on behalf of the Assessee. However, finding that the matter can be decided in the absence of the Assessee/on behalf of the assessee, we have decided to dispose of the appeal exparte qua the assessee after hearing the ld. CIT (D.R.) and after perusing the material on record. The Ld. CIT-DR has relied upon the order of the lower authorities. 7. We take up the ground no. 2 of appeal in A.Y. 2011-12 (regarding addition of Rs.9,40,000/-). The ground no. 1 in A.Y. 2012-13 (regarding addition of Rs.5,93,545/-). And ground no. 1 of appeal in A.Y. 2015-16 (pertaining to addition of Rs.1,27,98,057/-). These additions have been made on the basis of seized papers found in the course of search u/s 132 of the Income Tax Act, 1961 (hereinafter “the Act”). The Ld. CIT(A) has confirmed the aforesaid additions in the common impugned appellate order dated 01/02/2018 for the AY. 2011-12, AY. 2012-13 and AY. 2015-16. During the assessment proceedings and during appellate proceedings in the office of the Ld. CIT(A), the assessee contended that the aforesaid papers seized during the course of u/s 132 of the Act are undated and unsigned. The assessee contended that ‘rough paper’ was not to the assessee. IT(SS) A Nos.256 to 258/LKW/2018 Page 4 of 13 The assessee further submitted that these papers did not carry in description of these transactions. In the assessee’s contention that the additions cannot be made on the basis of aforesaid ‘dumb papers’ is not justified. The assessee also contended that no additions can be made on the basis of these ‘rough papers’ in the nature of dumb papers. The assessee placed reliance on the following cases: - 1. CIT Vs. Anil Bhalla (2010) 322 ITR 191 2. CIT Vs. Ved Prakash Choudhary (2008) 305 ITR 245/169 Taxman 130 (Delhi) 3. Asst. CIT Vs. Sharad Chaudhary (2014) 165 TTJ 145 (Delhi- Trib) 4. S.P. Goyal Vs. DCIT (2002) 82 ITD 85 (Mumbai) 5. CIT Vs. Ravi Kumar (2007) 294 ITR 75 (P&H) 6. CIT Vs. Lubtec India Ltd (2009) 311 ITR 175 (Delhi) 7. CIT Vs. Atam Valves (P) Ltd. (2011) 332 ITR 468/(2009) 184 Taxman 6 (Punj & Har.) 8. CIT Vs. Dolphin Builder (P) Ltd. (2013) 356 ITR 420/216 Taxman 116/35 taxmann.com 3 (MP) 9. ITO Vs. Twinkle Papers (P) Ltd. (2005) 95 ITD 235/147 Taxman 43 (Mag). 8. Further, the Assessing Officer (“AO”) and the Ld. CIT(A) have not dealt with these arguments in contention made by the assessee, in their respective orders. They rejected the assessee’s submissions and contention in a summary manner. The AO as well as the Ld. CIT(A) have not passed a speaking order on why this submissions and contention raised by the assessee during the assessment proceedings and appellate proceedings in the office of the Ld. CIT(A) were rejected. They have also not explained why the reliance placed by the assessee why various case laws as aforesaid were not given due consideration and why they were rejected in a summary manner stating that these case laws were not applicable to the assessee’s case. In view of the foregoing, the additions made by the Assessing Officer deserve to be deleted. The Assessing Officer is directed to delete these additions. 9. As far as the ground no. 2 of appeal in A.Y. 2015-16 is concerned, it is found that the assessee has submitted detailed IT(SS) A Nos.256 to 258/LKW/2018 Page 5 of 13 written submission relevant portion of which is reproduced as under: - 8.2 In this regard, appellant has filed his written submission, relevant portion is reproduced as under: - “Ground No. 4 related to Rs. 3216478/- Addition of jewellery, the Ld. A.O has asked the nature and source of acquisition of jewellery, Silver utensil and to file copy of wealth tax returns in which the value of jewelery belonging to found from the room of Harish Chand Jaiswal Smt. Savitri Jaiswal wife of assessee. The assessee filed reply which is being reproduced hereunder: \"Kindly refer to your query vide questionnaire dated 03-08-2016 issued in the name of assessee asking to explain the nature and source of investment in jewellery found and seized as per annexure – J1, J2, J3 & J4 during the course of action us 132 of the Act on 09-07-2014. In reply to this it is respectfully submitted as under. That during the course of search and seizure operation in the group case of Harish Chandra Jaiswal fowling jewellery were found. The details of jewellery found and seized are as under: S.l No. Items Found Seized Annexure No. Found from the room of 1 Gold Ornaments/Diamonds 1833.600 gms/18.20 cr J-1 Harish Chandra Jaiswal 2 Gold Ornaments/Diamonds 11529.900gms/3.20cr Item no. 8,9,11 & 13 weighing 143.000.54.910 60,600 & 81,100 gm J-2 Anil Jaiswal/Sonia Jaiswal 3 Gold Ornaments/Diamonds 1401.400 gm/1.60 cr Item no. 8.9 wighing 190.450 & 116.800 gm J-3 Sunil & Snageeta Jaiswal 4 Gold Ornaments/Diamonds 15.460 kg J-4 Harish Chandra Jaiswal The guidelines for seizure of jewellery and ornaments in the course of search vide CBDT Instruction: No. 1916, dated 11-5-1994. The content of Instruction is as under: \"Guidelines for seizure of jewellery and ornaments in course of search. Instances of seizure of jewellery of small quantity in course of operations under section 132 have come to the notice of the Board. The question of a common approach to situations where search parties come across items of jewellery has been examined by the Board and following guidelines are issued for strict compliance. (i) In the case of a wealth-tux assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need be seized. (ii) In the case of a person not assessed to wealth-tax gold jewellery and ornaments to the event of 500 gms. per married lady, 250 gms. per unmarried lady and 100 gm per mu e member of the family need not be seized. (iii) The authorized 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. Ths ) should be reported to the Director of Income-tax/ Commissioner authorizing the search at the time of furnishing the search report. IT(SS) A Nos.256 to 258/LKW/2018 Page 6 of 13 (iv) In all cases, a detailed inventory of the jewellery and ornaments found must have prepared to be used for assessment purposes. These guidelines may please be brought to the notice of the officers in your region.” As regards jewellery found it is submitted that the details of family members of the assessee is as under: All of them resident of 8/276, Shukla Ganj, Unnao and Rajesh Bhawan Chota Chauraha Unnao. That the assessee has following running business entities, details thereof with nature of business being run is as follows: - That the following are the details of the family members holding interest either as a partner, member of AOP. Directors in the companies: - IT(SS) A Nos.256 to 258/LKW/2018 Page 7 of 13 All the family members as well as above mentioned business entities are regular tax payer. A schedule is as under: - As regards jewellery and silver ornaments found and not seized from the possession of Shri Harish Chandra Jaiswal as per Annexure J-1 & J4 , Shri Harish Chandra Jaiswal along with his wife Snit. Savitri Jaiswal is living jointly with his childrens. Shri Harish Chandra Jaiswal got married in the year 1965. At the time of his marriage his father Late Shri Ram Kishore Jaiswal and his wife Smt. Shivkala Devi both were alive. Grand father of Shri Harish Chandra Jaiswal had been carrying on liquor business in U.P under the Govt. License issued in the name of Jaiswal Liquors in whole sale. He was king pin in Jaiswal samaj and was enjoying fabulous status in the society having number of ancestral immovable properties including agriculture farm house situated at Village Nandauli, IT(SS) A Nos.256 to 258/LKW/2018 Page 8 of 13 Unnao. On the death of his grandfather in the year 1999 enormous gold/silver jewellery as well as silver utensils and coins ete. were left by him along with huge immovable properties and agriculture land situated at Village Nandauli, Unao. The father of the assessee has also inherited the business of his grandfather as well as other assets left by him at the time of his death in the year 1999 and run ‘hold the same till his death in the year 1999. Father of the assessee has left huge gold’ silver utensils und coms along with huge immovable properties etc. which consisted of assets inherited from his father grandfather as well as assets generated by him in his life time. As an date of search my age is 68 years and I am also running the following business entities along with ay family member Anil and Sunil have been running following business entities. The details are as under: That as stated earlier that father in law of the assessee Late Shri Binda Prasad Jaiswal was also leading business man doing silver jewellery work and enjoying fabulous status in the socielv having daughter namely Savitri Devi Jaiswal. My mother in law also came from a respectable rich family of jaiswal. At the tine of marriage assessee's parents and relatives as well as parents of ussessee's wife and their relatives gifted the jewellery to his wife Smt. Savitri Devi Jaiswal. This forms her \"Stridhan\", The sworn in affidavits of the parents of his in laws is enclosed herewith. The details of the jewellery are mentioned in Annexure Jt found from the possession of my wife Smt. Savitri Devi Jaiswal. As regard silver utensils: ornaments as per Annexure J-4 found and released also, it is stated that it has been inherited by the assessee from his grandfather. He is enjoying a fabulous status in the Jaiswal samaj at the time of when he was alive. The A.O while making addition merely on the ground that they have not filed any wealth lax returns therefore jewellery as per CBD1 Circluar dt.11-5-1994 has to be accepted declining to considered assessee's status as well as other evidences in the form of affidavits he has held us under: - The assessee has not filed any evidence with regard to the filing of wealth tax return and source of acquisition of jewellery, therefore, the source of investment in the purchase of jewellery silver utensils could not be proved. Keeping in view the Board's Instruction No. 1916 dated 11.05.1994, the value of gold jewellery to the extent of 600 git. in respect of assessee and IT(SS) A Nos.256 to 258/LKW/2018 Page 9 of 13 his wife is treated as explained and the value of the remaining gold jewellery weighing 1025.460 gm. (@ Rs.2.256 - per gm. amounting to Rs.23, 13,438 & silver utensils weighing 15460 gm. amounting to Rs.5,62.740 and value of precious stones of Rs.3,40,300/- is treated as unexplained investments made by the assessee out of undisclosed sources which comes to Rs. 32,16,478/- is added to the total income of the assessee. Penalty proceedings u/s 271AAB of the LT. Act, 1961 is being initiated separately. It may be appreciated before your honour that the Id. A.O has not fully considered the evidences submitted by assessee in support of claim of jewellery found from the possession of Shri Harish Chand Jaiswal. He was simply guided himself by CBDT Circular dt. 11-05-1994 und hus allowed explained jewellery to the extent of 600gms (100+ 500 Husband & Wife) he hus also stated that since the assessee is not a wealth tax payer, therefore excess jewellerv will be treated as unexplained. The Id. A.o has not considered the status of assessee. The assessee belongs to a business family. The assessee has a manufacturing unit of liquor in the name of M/s. Unnue Distilleries & Breweries Lid., and at least 10 business associates doing several businesses like trading of Liquor. Brick Klin business, Cold Storage, Exhibition business. Petrol Pump and rental income etc. The average income of the assessee’s family has been reproduced in annexure which is at Rs. 3 crore p.a (family members and business associates). the average turnover of the business associates of assessee is at Rs, 14.35 crore, net worth of the assessee's business concern is at Rs. 6.69 crore therefore considering the status of assessee jewellery found and claim cannot said to be unexplained. Assessee must be given benefit of status. The assessee’s family members are old tax papers and assessed in highly bracket at income, Average withdrawal is at 24 lacs. It is therefore requested that your honour may please be very kindly deleted the addition made by the A.O on account of remaining jewellery weighing 1025.460 gins and Silver Utensil weighing at 15460 gins. The assessee re-iterated the whole subject and relied upon document which were placed on record of the A.O, he has not appreciated it and added it, because assessee is not a wealth tax paper. Similarly, documents submitted before him has been accepted by him without any Objection. It is therefore requested that the addition made by the +.O may please be very kindly deleted.” 8.3 The undersigned has gone through the assessment order, written Submission filed as well as verbal arguments of the Id. A.R. It is seen from the at the time of marriage of my children’s Anil Kumar Jaiswal and Sunil Kumar Jaiswal in year 1991 & 1998 respectively me and my wife both of them have also given gold ornaments my daughter in laws namely Smt. Sonia Jaiswal and Smt. Sangeeta Jaiswal weighing at 300gm, and 300gms respectively and also at the time of birthday of my grand sons and grand daughters, That during the course of search operation assets as per annexure J-1 & J4 was recovered from the room of his wife Smt. Savitri Devi Jaiswal and assessee has filed a bonafide explanation regarding its acquisition with source, therefore the same was release to the assessee, as all the items of annexure J-1 & J-4 were found of old make. It may be appreciated that at the time of life time of assessee's grandfather the silver and gold rate was 1500 per kg & 400 per 10 gms respectively, whereas at the life time of my father the silver and gold rate was 3000per kg & 700 per 10 gms similarly at the time of my marriage with Smt. Savitri Devi Jaiswal gold and silver IT(SS) A Nos.256 to 258/LKW/2018 Page 10 of 13 rate was at 900 per 10 gins ang 4000 per kg, whereas gold and silver rate as on date of search it was at Rs. 262435/per 10 gms & Rs. 37825 - per kg respectively. It is submitted that considering my status and family back ground the jewellery found and release is quite reasonable. It is therefore requested that no adverse action may be taken. It is humbly submitted that sec. 69 of the Act gives discretion of the officer to deem the same to be an income of assessee. However such discretion may please be very kindly exercised taking into account the surrounding circumstances in support of the explanation offered by the assessee. In the normal course of human conduct, on occasions such as marriages the parents and parents in law of a bride do normally gift jewellery to the bride. On occasions such as this, it is not possible to expect the bride to ask for evidence of bills / invoices in support at jewellery One has to proceed on the basis that it is genuine. Thus the explanation of assessee and his wife that jewellery in question they received us a gift from her father and in laws is sufficient explanation of the jewellery in her possession. In the year 1 have purchased pure gold coins weighing 700gms in the name of my family members from Bank. Later on these gold coins has been converted unto gold ornaments of 22C1. The net weight after conversion it comes to 880gms. These ornaments were also found from the room of my wife Smt. Savitri Devi Jaiswal. Copy of invoices are being furnished herewith. The following are the tax payer filing ITR taxable income. assessment order that AO has made addition “on “account of unexplained investment in jewellery on the basis of cogent reasoning. Before making addition, AO has considered the value of exempted jewellery as per CBDT Circular No. 1916, F. No. 286/63/93-IT(Inv-II) of 11.05.1994. It is also seen from the assessment order that during the assessment proceeding, assessee admitted that jewellery found and seized during the search belongs to him. However, appellant has neither produced bills/invoice evidencing purchase of jewellery, Silver armaments and precious stones nor filed evidence of wealth tax return. This shows that appellant has no basis to defend his ground of appeal and therefore, undersigned is of considered view that AO has rightly added the unexplained amount of jewellery of Rs. 32,16,478/- which is sustained. Therefore, this ground of appeal of the appellant is dismissed.” 10. However, the Ld. CIT(A) in his impugned appellate order did not consider the merits of the aforesaid detailed submissions made by the assessee. Further, the submissions made by IT(SS) A Nos.256 to 258/LKW/2018 Page 11 of 13 assessee were rejected by the Ld. CIT(A) in a summary manner without passing a speaking order on why the assessee’s submissions were not accepted. On perusal of these submissions made by the assessee during the appellate proceedings in the office of the Ld. CIT(A), it is found that the assessee and his family are well to do and economically sound. Having regard to the social status and economic standing of the assessee and his family as explained in detailed in the aforesaid written submissions filed by the assessee. In the office of the Ld. CIT(A), it is felt that the jewellery found in the course of search u/s 132 of the Act was reasonable and not excessive. The Assessing Officer and the Ld. CIT(A), both, have erred in not given the favourable consideration to the assessee’s submissions and in not passing a speaking order. Therefore, the Assessing Officer is directed to delete the aforesaid additions of Rs.32,16,478/- also. 11. As far as ground no. 1 of appeal in A.Y. 2011-12 is concerned, it is found that the assessee has not provided any explanation during the assessment proceedings and the impugned appellate proceedings in the office of the Ld. CIT(A). In the absence of any explanation furnished from the assessee’s side, the addition made amounting to Rs.16,320/- is confirmed. 12. In the additional ground of appeal, the assessee has contended that the approval given by the addl. CIT was invalid and unlawful being purely mechanical and without application of mind. However, on perusal of the record, we find that are no materials whatsoever to support this ground of appeal. The additional ground raised by the assessee in these appeals requires fresh investigations of facts to no relevant facts are available on record in Income Tax Appellate Tribunal (ITAT). IT(SS) A Nos.256 to 258/LKW/2018 Page 12 of 13 Therefore, the additional ground of appeal is rejected in all three appeals. 13. In the result, the ground no. 2 for A.Y. 2011-12, ground no. 1 for A.Y. 2012-13 & grounds no. 1 & 2 for A.Y. 2015-16 are allowed. And ground no. 1 for A.Y. 2011-12 is dismissed. 14. To sum-up the appeal of the assessee for A.Y. 2011-12 is partly allowed for statistical purposes and appeal of the assessee for A.Y. 2012-13 and A.Y. 2015-16 are allowed for statistical purposes. Order pronounced in the open Court on 05/11/2024. Sd/- Sd/- [ANADEE NATH MISSHRA] [SUBHASH MALGURIA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 05/11/2024 Vijay Pal Singh, (Sr. PS) IT(SS) A Nos.256 to 258/LKW/2018 Page 13 of 13 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard File By order //True Copy// Assistant Registrar //True Copy// "