P.Sumanth, Hyderabad V. Dy.CIT, Central Circle-5, Hyderabad

ITA 1123/HYD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6008 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 13-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 04-06-2014
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: C S SUBRAMANYAM
• Keywords: Unexplained investment; Gift; Valuation report
• Section: 143(3); 153A; 132

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1123/HYD/2014 ASSESSMENT YEAR: 2010-11 SHRI P SUMANTH, HYDERABAD. PAN AHHPP4992N VS. THE DCIT CENTRAL CIRCLE-5, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C.S. SUBRAMANYAM REVENUE BY : SMT SUMAN MALIK DATE OF HEARING : 13-03-2017 DATE OF PRONOUNCEMENT : 31-03-2017 ORDER PER P. MADHAVI DEVI, J.M.: IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT 1, HYDERABAD, DATED 05-03-2013. THE GROUNDS OF THE APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE ORDER OF THE LD. CIT(A) IS AGAINST LAW, WEIGHT OF EVIDENCE AND PROBABILITIES OF THE CASE. 2. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 2,26,600/- MADE BY THE A.O BY TREATING THE CASH FOUND DURING THE COURSE OF SEARCH AS UNEXPLAINED. 3. THE LD. CIT(A) OUGHT TO HAVE DELETED THE ADDITION OF RS. 2,26,000/- IN THE LIGHT OF THE EXPLANATIONS OFFERED BY THE ASSESSEE. 4. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 42,23,700/- MADE BY THE A.O BY TREATING THE VALUE OF THE ENTIRE JEWELLERY AT THE RATES RELEVANT TO ASSESSMENT YEAR, FOUND DURING THE COURSE OF SEARCH, AS UNEXPLAINED INVESTMENT. 5. THE LD. CIT(A) OUGHT TO HAVE HELD THAT IN THE LIGHT OF THE EXPLANATIONS OFFERED BY THE ASSESSEE, AFFIDAVITS FILED BY THE CLOSE RELATIVES OF THE ASSESSEES FAMILY MEMBERS, THE STATUS OF THE ASSESSEE AND HIS FAMILY MEMBERS AND GUIDELINES LAID DOWN IN CBDT CIRCULAR NO. 1916 DATED 11-05-1994, THE QUANTITY OF 2 ITA NO. 1123/HYD/2014 SHRI P. SUMANTH, HYDERABAD. JEWELLARY FOUND AT THE TIME OF SEARCH WAS WITHIN REASONABLE LIMITS OF JEWELLARY THAT COULD HAVE BEEN HELD BY THE ASSESSEE AND HIS FAMILY MEMBERS AND CONSEQUENTLY, THE LD. CIT(A) OUGHT TO HAVE DELETED THE ADDITION. 6. FOR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THERE WAS SEARCH & SEIZURE OPERATION U/S 132 OF THE IT ACT IN THE CASE OF M/S ICOMM TELE LTD., AND ITS GROUP ON 24-09-2009. ACCORDINGLY, A WARRANT OF AUTHORIZATION U/S 132(1) OF THE IT ACT WAS EXECUTED IN THE NAME OF THE ASSESSEE. THEREAFTER, THE NOTICE U/S 153A WAS ISSUED TO THE ASSESSEE IN RESPONSE TO WHICH THE ASSESSEE FILED ITS RETURN OF INCOME. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE IT ACT, IT WAS NOTICED THAT THE TOTAL VALUE OF THE GOLD JEWELLERY AND DIAMONDS FOUND AT THE TIME OF SEARCH WAS RS. 42,23,700/- AS VALUED BY AN APPROVED REGISTERED VALUER IN THE PRESENCE OF THE ASSESSEE. AS PER THE VALUATION REPORT, THE GOLD JEWELLERY OF 487.78 GRAMS OF VALUE OF RS. 7,02,000/- AND DIAMONDS OF 83.6 CARATS OF VALUE OF RS. 15,05,000/- WERE FOUND TO BE IN EXCESS AS PER THE FAMILY NORMS AND CUSTOMS. THE ASSESSEE WAS DIRECTED TO EXPLAIN THE SOURCE FOR THE ENTIRE VALUE OF GOLD JEWELLARY AND DIAMONDS FOUND DURING THE COURSE OF SEARCH WITH RELEVANT PROOFS OF BILLS SOURCE ETC. THE ASSESSEE EXPRESSED HIS IN-ABILITY TO PRODUCE BILLS ETC., AND REQUESTED TO CONSIDER THE JEWELLARY AS ACCUMULATED BY HIS MOTHER AND WIFE ON VARIOUS OCCASIONS OF FAMILY FUNCTIONS LIKE MARRIAGES ETC. THE A.O WAS HOWEVER NOT CONVINCED AND HELD THAT THE ENTIRE AMOUNT OF 3 ITA NO. 1123/HYD/2014 SHRI P. SUMANTH, HYDERABAD. RS. 42,23,700/- IS TO BE TREATED AS UN-ACCOUNTED INVESTMENT MADE BY THE ASSESSEE. FURTHER, UN-ACCOUNTED CASH OF RS. 2,26,600/- WAS ALSO FOUND DURING THE COURSE OF SEARCH AND AS THE ASSESSEE COULD NOT EXPLAIN THE SOURCE FOR THE SAME, THE A.O TREATED IT AS UNEXPLAINED INCOME OF THE ASSESSEE, AND ACCORDINGLY BROUGHT THE ENTIRE SUM OF RS. 44,50,300/- TO TAX AS UNEXPLAINED INVESTMENT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE A.O AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE AND HIS WIFE STAY ALONG WITH HIS FATHER AND MOTHER, AT THE PREMISES WHICH WAS SEARCHED U/S 132(1) OF THE IT ACT AND THAT THE GOLD JEWELLARY AND DIAMONDS FOUND AT THE TIME OF SEARCH BELONG TO ALL THE FOUR FAMILY MEMBERS. HE SUBMITTED THAT AS IS CUSTOMARY IN HINDU FAMILIES, HIS MOTHER AND WIFE WERE GIVEN JEWELLARY AT THE TIME OF THEIR MARRIAGES AND OTHER FAMILY FUNCTIONS SUCH AS BIRTHDAYS, ANNIVERSARIES ETC., AND THE JEWELLARY FOUND AT THE TIME OF SEARCH WAS NOT IN EXCESS OF ORDINARY HOLDINGS IN FAMILIES SUCH AS THE ASSESSEE AT ALL. HE HAS ALSO DRAWN OUR ATTENTION TO THE CBDT GUIDE LINES FOR SEIZURE OF JEWELLARY AND ORNAMENTS IN COURSE OF SEARCH DATED 11-05-1994, WHEREIN IT WAS DIRECTED THAT 500 GRAMS FOR MARRIED LADY AND 100 GRAMS FOR MALE MEMBER NEED NOT BE SEIZED. ACCORDING TO THE LD. COUNSEL, IF THE CBDT CIRCULAR IS TAKEN INTO CONSIDERATION, THE JEWELLARY FOUND IS NOT EXCESSIVE AT ALL. HE ALSO PLACED RELIANCE UPON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME 4 ITA NO. 1123/HYD/2014 SHRI P. SUMANTH, HYDERABAD. TAX VS. RATANLAL VYAPARILAL JAIN REPORTED IN [2010] 235 CTR 568 (GUJ) WHEREIN THE ABOVE CBDT GUIDE LINES WERE TAKEN INTO CONSIDERATION, AND IT WAS HELD THAT IT WAS GENERAL PRACTICE IN THE INDIAN FAMILIES WHERE JEWELLARY IS GIFTED BY THE RELATIVES AND FRIENDS AT THE TIME OF SOCIAL FUNCTIONS SUCH AS MARRIAGE, BIRTHDAYS AND OTHER FESTIVALS ETC. HE ALSO RELIED UPON THE JUDGMENT OF THE TRIBUNAL AT MUMBAI IN THE CASE OF ACIT/DCIT VS RAFIQ MOHD. NAZIR SHAIK IN ITA NO. 465/MUM/2012 DATED 17.05.2013 WHERE 1696.9 GRAMS OF GOLD FOUND WAS ACCEPTED AS EXPLAINED. HE ALSO RELIED UPON THE AFFIDAVITS GIVEN BY THE BROTHER OF ASSESSEES MOTHER AS WELL AS FATHER OF THE ASSESSEES WIFE WHERE THEY HAVE CONFIRMED THAT THEY HAVE GIFTED GOLD JEWELLARY AT THE TIME OF MARRIAGE AND OTHER FUNCTIONS. WITH REGARD TO THE CASH FOUND AT THE TIME OF SEARCH, THE LD. COUNSEL FOR THE ASSESSEE HAS FILED BEFORE US, THE CASH BOOK OF ASSESSEE AS WELL AS HIS FATHER TO DEMONSTRATE THAT THEY HAD THE CASH BALANCE AS ON THAT DATE WHICH WAS MORE THAN THE AMOUNT FOUND AND SEIZED I.E TO RS. 2,26,000/-. THUS, HE PRAYED THAT THE ADDITION BE DELETED. 4. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT ACCORDING TO THE A.O HIMSELF THE EXCESS OF GOLD FOUND DURING THE COURSE OF SEARCH WHICH IS OVER AND ABOVE THE ACCEPTED NORMS OR QUANTITY WAS ONLY 487.78 GRAMS. WHAT IS THE ACCEPTED NORM IS NOT SPELT OUT BY THE A.O. THE ASSESSEES FAMILY CONSISTS OF FOUR PEOPLE AND AS PER THE GUIDE LINES OF THE 5 ITA NO. 1123/HYD/2014 SHRI P. SUMANTH, HYDERABAD. CBDT ITSELF, THEY ARE ALLOWED TO HOLD NEARLY 1200 GRAMS OF GOLD. HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RATANLAL VYAPARILAL JAIN [2010] 235 CTR 568 (GUJ) HAS ALSO TAKEN NOTE OF SOCIAL CUSTOMS AND NORMS OF HINDU FAMILIES WHERE THE GOLD OR DIAMOND JEWELLARY IS USUALLY GIFTED BY CLOSE RELATIVES AT THE TIME OF FUNCTIONS SUCH AS MARRIAGES, BIRTHDAYS ETC. THE FINDINGS OF THE CIT(A) THAT THE AFFIDAVITS OF THE ASSESSEES UNCLE AND ALSO FATHER-IN-LAW DOES NOT CONTAIN SPECIFIC ITEMS OF JEWELLARY MAY NOT HOLD MUCH WATER AS THE PARTIES WERE NOT EXAMINED AS TO EXACT NATURE OF GOLD ITEMS PRESENTED BY THEM. THE VALUE OF THE EXCESS OF GOLD FOR WHICH THE SECURITY OF CASH WAS ACCEPTED WAS RS. 22,10,000/-, WHICH IS ACTUALLY 50% OF THE GOLD FOUND AND SEIZED. IF THE PERMITTED OR ACCEPTED QUANTITY OF GOLD BY THE A.O IS TAKEN AT 500 GRAMS EXCESS OF GOLD FOUND WITH THE ASSESSEE AT 487 GRAMS IS WELL WITHIN THE NORMS PRESCRIBED BY THE CBDT. THEREFORE, WE ARE OF THE OPINION THAT IT CANNOT BE TREATED AS UNEXPLAINED INVESTMENT. 6. AS REGARDS CASH FOUND AT THE TIME OF SEARCH, THE ASSESSEE HAS FILED THE COPIES OF THE CASH BOOK OF BOTH THE ASSESSEE AND HIS FATHER TO DEMONSTRATE THAT BOTH HE AND HIS FATHER HAD SUFFICIENT CASH BALANCE ON THE DATE OF SEARCH. HOWEVER, THIS WAS NOT VERIFIED BY THE A.O OR CIT(A). IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO REMAND THIS ISSUE TO THE FILE OF THE A.O ONLY FOR VERIFICATION OF THE AVAILABILITY OF CASH BALANCE IN THE ASSESSEES AND HIS FATHERS BOOKS OF ACCOUNT AND IF IT IS FOUND THAT THE ASSESSEE AND HIS FATHER HAD SUCH CASH BALANCE, THEN THE 6 ITA NO. 1123/HYD/2014 SHRI P. SUMANTH, HYDERABAD. ADDITION SHALL NOT BE MADE. ACCORDINGLY, THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH , 2017. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 31 ST MARCH, 2017 KRK 1) P. SUMANTH, C-10 & 11, 2-2-20-21A, DUGABAI DESHMUKH COLONY, HYDERABAD. 2) DCIT, CENTRAL CIRCLE-5, HYDERABAD 3) CIT(A) -I, HYDERABAD 4) ACIT, CENTRAL RANGE-2, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE