M. Sunil Kumar, KGF V. DCIT, Bangalore

ITA 1144/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8418 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 28-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 31-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: H N KHINCHA
• Keywords: Gift
• Section: 6

Judgement Text

ITA.1144/BANG/2016 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER I.T.A NO.1144/BANG/2016 (ASSESSMENT YEAR : 2012-13) SHRI. M. SUNIL KUMAR, C/O. M/S. MANGALCHAND PHOOLCHAND & CO., ROBERTSONPET, K. G. F 563 122 .. APPELLANT PAN : AJQPS4697C V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. H. N. KHINCHA, CA REVENUE BY : SHRI. M.K. BIJU, JCIT HEARD ON : 28.02.2017 PRONOUNCED ON : 28.03.2017 O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER PASSED BY THE CIT (A)-11, BENGALURU, DT.26.12.2016, FOR T HE ASSESSMENT YEAR 2012-13. 02. ON A SEARCH & SEIZURE ACTION CONDUCTED AT THE RESIDENCE OF THE ASSESSEE, AMONG OTHER THINGS, GOLD JEWELLERY OF 259 4.70 GMS (NET) AND SILVER BARS OF 18 KGS WERE FOUND. DURING THE POS T SEARCH ITA.1144/BANG/2016 PAGE - 2 PROCEEDINGS, HE WAS ASKED TO EXPLAIN THEM . THE ASSESSEE EXPLAINED AS UNDER: 'IN THE COURSE OF SEARCH, GOLD JEWELLERY OF 2594.70 GRAMS WAS FOUND. OUT OF WHICH 1341.40 GRAMS WAS SEIZED. MY FA MILY CONSISTS OF MYSELF, MY WIFE NEETA KUMARI, MY DAUGHTER APEKSHA A ND ANCHAL AND MY SON SHIOK. MY WIFE NEETA KUMARI WAS DECLARED GOL D JEWELLERY OF 1050 GRAMS AND 7 CARATS OF DIAMOND AND SILVER OF 12 KGS BEFORE THE DEPARTMENT. FURTHER, CREDIT IS TO BE GIVEN FOR JEWE LLERY OF OTHER 4 MEMBERS OF ABOUT 900 GRAMS (250 + 250 + 200 + 200 GRAMS). ALSO I HAD RECEIVED A GIFT OF 100 GRAMS GOLD ON 29.09.20 09 FROM PRAMEELA SINGH THE GIFT IS DULY DOCUMENTED. FURTHER AS EXPLA INED BY SRI. MAHENDRA KUMAR MY ELDER BROTHER IN THE LETTER JEWEL LERY OF ABOUT 600 GMS OF SMT. RAJKUMARI W/O. MAHENDRA KUMAR WAS BROUG HT TO MY RESIDENCE ON THE OCCASION OF ENGAGEMENT OF MY DAUGH TER APEKSHA ON 27.02.2012. THUS THERE IS NO EXCESS GOLD PERSONAL JEWELLERY.' 03. THE SUMMARY OF ASSESSEES EXPLANATION IS UNDE R : QUANTITY IN GRAMS A) NEETA KUMARI 1050 B) CREDIT IN TERMS OF INSTRUCTION NO. 1916DATED LL.05.1994, 900 C) GIFT FROM PRAMEELA SINGH 100 D) GOLD JEWELLERY BELONG TO SMT. RAJKUMARI 600 2650 04. ON VERIFICATION OF WEALTH TAX RETURNS, THE A O FOUND THAT THE ASSESSEES WIFE HAD DECLARED 900 GRAMS OF GOLD AND 10 KGS OF SILVER ONLY . ITA.1144/BANG/2016 PAGE - 3 ACCORDINGLY, HE HAS ALLOWED THAT MUCH QUANTITY O NLY AS AN EXPLAINED ONE. THE A O HAS ALSO ACCEPTED THE GIFT FROM PR EMEELA SINGH OF 100 GRAMS AND GOLD JEWELLERY BELONGED TO SMT. RAJ KUMA RI OF 600GRAMS. THUS, HE HAS GIVEN CREDIT FOR 1600 GRAMS OF GOLD AN D 10 KGS OF SILVER AND ADDED THE DIFFERENTIAL QUANTITY OF GOLD AT 994.70 GRAMS (2594.70 - 1600 GRAMS) AND 8 KGS OF SILVER (18-10) AS AN UNEXPLAINE D INVESTMENT. THE A O HAS NOT ACCEPTED THE ASSESSEES RELIANCE ON THE D ECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN PATI DEVI 240 ITR 727 TO THE EFFECT THAT 'THE SOURCE OF QUANTUM OF JEWELLERY MENTIONED IN THE CIR CULAR NO 1916 IS DEEMED TO HAVE BEEN EXPLAINED AND IS TO BE ACCEPTED AS SUCH FOR THE REASON THAT THE CIRCULAR HIGHLIGHTS ONLY 'NON-S EIZURE' OF CERTAIN MINIMUM AMOUNT OF GOLD JEWELLERY ONLY. NO WHERE, THE CIRCUL AR MENTIONS THAT THE ASSESSEE IS IMMUNE FROM EXPLAINING THE TOTAL QUANTU M OF GOLD OR SILVER ITEMS FOUND. THE CIRCULAR CLEARLY STATES THE CERTAI N AMOUNT OF JEWELLERY NOT TO BE SEIZED AND CREDIT TO BE GIVEN TO MARRIED WOME N IN THE FAMILY, UNMARRIED WOMEN AND MEN OF THE FAMILY. THIS CREDIT DOES NOT MEAN THE ASSESSEE SHOULD NOT EXPLAIN THE SOURCES FOR THE TO TAL QUANTUM AND ACCOUNT THE ENTIRE GOLD AND SILVER FOUND IN HIS BOOKS. 05. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). THE CIT (A) UPHELD THE ACTION OF THE AO. IN VIEW OF T HAT THE ASSESSEE FILED THIS APPEAL WITH FOLLOWING GROUNDS OF APPEAL: ITA.1144/BANG/2016 PAGE - 4 06. THE AR SUBMITTED THAT THE ASSESSEES WIFE SMT NEETA BAI, INTER ALIA, HAD DECLARED GOLD ABOUT 1050 GRAMS AND SILVER ARTICLES & VESSELS ABOUT 12 KGS IN HER INCOME TAX RETURN FOR AY 2006-07 A LTHOUGH IN HER WT RETURNS IN AYS 1991-92 & 92-93 SHE HAD DECLARED 90 0 GRAMS OF GOLD AND 10 KGS OF SILVER ALONE. HE PLEADED THAT THE PARTICU LARS CONTAINED IN THE EARLIER YEAR RETURN SHOULD BE CONSIDERED IN FAVOUR OF THE ASSESSEE. FURTHER, PLEADED THAT THE ASSESSEE BELONG TO MARWADI BUSINE SS FAMILY. IT IS A TRADITION IN FAMILY LIKE THEM TO GET GOLD JEWELLE RY AND SILVER ITEMS ON VARIOUS FESTIVE OCCASION AND OTHER OCCASIONS LIKE M ARRIAGE, BETROTHAL, CHILD BIRTH, ETC., IT IS COMMON FOR EVERY HINDU FAM ILY TO HAVE SOME GOLD, SILVER, ETC. THE REASONABILITY OF THE QUANTUM HAS T O BE DECIDED ON THE BASIS OF STATUS AND BACKGROUND OF THE FAMILY. IN THIS CON NECTION, RELIED ON THE ORDER OF THE DELHI HIGH COURT IN ITA 274/2011. THE CBDT HAS ISSUED A CIRCULAR NO. 1916 DATED 11. 05.94 PROVIDING FOR NON -SEIZURE OF CERTAIN MINIMUM AMOUNT OF GOLD JEWELLERY, ETC. THOUGH IT IS TRUE THAT THE ABOVE MENTIONED CIRCULAR IS WITH REFERENCE TO SEIZURE OF JEWELLERY, THE SAME IS ITA.1144/BANG/2016 PAGE - 5 TAKEN INTO ACCOUNT THE QUANTITY OF JEWELLERY WHI CH WOULD GENERALLY BE HELD BY THE FAMILY MEMBERS AS UPHELD BY THE KARNATAKA HIGH COURT IN THE CASE OF PATI DEVI (240 ITR 727). SIMILAR VIEW HAS A LSO BEEN HELD BY THE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF I NCOME-TAX VS. RATANLAL VYPARILAL JAIN IN 339 ITR 351, PARA 10 IS RELEVANT TO THIS ISSUE. THE AHMEDABAD TRIBUNAL IN THE CASE OF HARISH S. PATEL V S. DCIT (2012) 6 TAXCORP (A. T) 28617 HAS ENDORSED THE SAME VIEW. F INALLY, THE AR RELIED ON THIS TRIBUNAL DECISION IN ITA NOS 642 & 643/BANG/20 15 FOR AY 2012-13 DT 14.8.2015 IN THE CASES OF S/SHRI M VIMAL KUMAR & M SANJAY KUMAR & ITA NO 737/BANG/2016 FOR AY 2012-13 DT 28.11.2016 IN TH E CASE OF MR P GOUTHAM CHAND. PER CONTRA, THE DR RELIED ON THE CI T (A) ORDER. 07. WE HEARD THE RIVAL SUBMISSIONS AND GONE THR OUGH RELEVANT MATERIAL. IT IS CLEAR THAT SMT NEETA BAI HAD DE CLARED 900 GRAMS OF GOLD AND 10 KGS OF SILVER ONLY IN HER WT RETURNS FILED FOR A YS 1991-92 & 1992- 93. HENCE , THE ASSESSEES PLEA CAN NOT BE AC CEPTED. WITH REGARD TO THE BENEFIT CLAIMED ON THE BASIS OF CIRCULAR, THE REL EVANT PORTION OF THIS TRIBUNAL ORDER FROM ITA NOS 642 & 643/BANG/2015 FOR AY 2012-13 DT 14.8.2015 IN THE CASES OF S/SHRI M VIMAL KUMAR & M SANJAY KUMAR IS EXTRACTED AS UNDER: 08. WE ARE THEREFORE OF THE OPINION THAT ASSESSEE CAN ALWAYS CLAIM EXCLUSION FROM UNDISCLOSED JEWELLERY THE QUANTUM OF JEWELLERY MENTIONED IN THE SAID CIRCULAR. HOWEVER, THE CIRCULAR ALLOWS ON LY 100 GMS PER MALE ITA.1144/BANG/2016 PAGE - 6 MEMBER, 250 GMS FOR UNMARRIED LADY AND 500 GMS FOR MARRIED LADY IN THE FAMILY. THE LIST MENTIONED BY THE ASSESSEE CLAIMS 200 GMS EACH FOR HIMSELF AND HIS SON AND 250 GMS FOR THE HUF. AS PER THE CIRCULAR WHAT COULD BE GIVEN CREDIT FOR A MALE MEMBER IS ONLY 100 GMS. NO CREDIT COULD BE GIVEN FOR HUF, FOR THE SIMPLE REASON THAT AN HUF CANNOT W EAR ANY JEWELLERY BY ITSELF. IN OUR OPINION, THE MAXIMUM RELIEF THAT CO ULD BE GIVEN TO THE ASSESSEE IN ADDITION TO WHAT WAS GIVEN BY THE AO WA S 950 GMS, VIZ., 100 GMS FOR ASSESSEE, 100 GMS FOR ASSESSEES SON, 250 G MS FOR ASSESSEES DAUGHTER AND 500 GMS FOR ASSESSEES DAUGHTER-IN-LAW . CONTENTION OF THE LD. AR THAT STATUS OF THE ASSESSEE HAD TO BE CONSIDERED AND HIGHER RELIEF SHOULD BE GIVEN CANNOT BE ACCEPTED FOR THE SIMPLE REASON T HAT NOTHING WAS PRODUCED TO SHOW ANY SPECIAL SOCIAL STATUS ENJOYED BY THE ASSESSEE, EXCEPT FOR STATING THAT ASSESSEE BELONGED TO A MARWARI BUS INESS FAMILY. 09. VIS-A-VIS SILVER, CIRCULAR DOES NOT MENTION ANY THING ABOUT HOLDING OF SILVER OR DIAMONDS. THEREFORE, WE ARE OF THE OP INION THAT THE MAXIMUM RELIEF THAT COULD BE GIVEN TO THE ASSESSEE IS ONLY ON THE VALUE OF GOLD JEWELLERY TO THE EXTENT OF HOLDING MENTIONED AT PAR A 8 ABOVE. ADDITION MADE FOR UNEXPLAINED SILVER FOUND AT THE TIME OF SE ARCH WAS IN OUR OPINION WAS JUSTIFIED. AO IS DIRECTED TO GIVE RELIEF TO TH E ASSESSEE FOR 950 GMS OF GOLD JEWELLERY AND REWORK THE ADDITION ACCORDINGLY. APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED. 08. CONSIDERING ALL THE ABOVE AND FOLLOWING THE ABO VE DECISION, THE AO IS DIRECTED TO GIVE RELIEF TO THE ASSESSEE AS UNDER : ITA.1144/BANG/2016 PAGE - 7 A) SELF 100 GRAMS B) DAUGHTER (APEKSHA) 250 GRAMS C) DAUGHTER (AANCHAL - MINOR) 200 GRAMS E) SON (SHLOK - MINOR) 100 GRAMS 650 GRAMS. THUS, THE MAXIMUM RELIEF THAT COULD BE GIVEN T O THE ASSESSEE IN ADDITION TO WHAT WAS GIVEN BY THE AO WAS 650 GR AMS OF GOLD ONLY AND ACCORDINGLY , WE DIRECT THE AO TO GIVE SUCH RELIEF ALONE. 09. IN THE RESULT, THE ASSESSEES APPEAL IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF MARCH, 2017. SD/- SD/- (SUNIL KUMAR YADAV) (S. JAYARAMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME TAX 4. THE COMMISSIONER OF INCOME TAX (A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR