Laxmi Nandan, Hyderabad, Hyderabad V. ITO, Ward-7(2), Hyderabad, Hyderabad

ITA 1314/HYD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6487 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-05-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 13-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D PRASAD RAO
• Assessee Lawyers: KISHORE KUMAR KABRA
• Keywords: Unexplained investment; Valuation report
• Section: 143(3); 132

Judgement Text

;P IN 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. 1314/HYD/2016 ASSESSMENT YEAR: 2009-10 LAXMI NANDAN, HYDERABAD. PAN AAJPL55054A VS. INCOME TAX OFFICER, WARD 7(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KISHORE KUMAR KABRA REVENUE BY : SHRI D. PRASAD RAO DATE OF HEARING 31/05/2018 DATE OF PRONOUNCEMENT 20/07/2018 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER DATED 04/07/2016 OF CIT(A) 3, HYDERABAD FOR AY 2 009-10. 2. BRIEFLY THE FACTS OF THE CASE ARE, THE ASSESSEE FILED HIS RETURN OF INCOME OF RS.8,03,630/- FOR THE ASST. YEAR 2009- 10 ON 27-3-2009. THERE WAS SEARCH & SEIZURE OPERATION U/S. 132 IN MO HANLAL AGARWAL GROUP OF CASES ON 29-01-2009. DURING THE SEARCH PRO CEEDINGS, THE JEWELLERY OF THE FAMILY MEMBERS WAS VALUED AT RS.41 7,30,073/-. HOWEVER, AS PER WEALTH TAX RETURNS FILED FOR ASST. YEAR 2008-09, THE VALUE OF THE JEWELLERY WAS RS.114,32,771/- STANDING IN THE NAME OF LAXMINANDAN AGARWAL INDIVIDUAL AND SHRI SUNIL KUMA R AND SMT. RICHA. THEREFORE, THE DIFFERENCE OF RS. 3,02,97,302 /- WAS ADDED IN THE ASSESSMENT U/S 143(3) DATED 31/12/2010. 2 ITA NO. 1314/HYD/16 LAXMI NANDAN, HYD. 2.1 ON APPEAL, THE CIT(APPEALS)-7, HYDERABAD DIREC TED THE ASSESSING OFFICER TO CONSIDER THE JEWELLERY ADMITTE D IN THE HANDS OF OTHER FAMILY MEMBERS IN THEIR WEALTH TAX RETURNS. F URTHER, THE CIT(APPEALS) - 7, GAVE FURTHER RELIEF TO THE EXTENT OF RS.50,59,236/- ON THE GROUND THAT THE SUBSTANTIAL PORTION OF THE JEWE LLERY WAS OF PRECIOUS STONES AND THERE CAN BE TOO MUCH OF SUBJEC TIVITY IN VALUING THE SAME. 2.2 BOTH THE ASSESSEE AND THE DEPARTMENT WENT IN A PPEAL TO THE HON'BLE ITAT-A BENCH. THE HON'BLE ITAT IN ITS ORDER ITA NO'S 1597/HYD/12 & ITA NO.1655/HYD/12 DT.13-12-2013 REMI TTED THE ISSUE TO THE ASSESSING OFFICER STATING THAT CIT(APPEAL) S HOULD HAVE GIVEN OPPORTUNITY TO THE ASSESSING OFFICER BEFORE GIVING RELIEF TO THE ASSESSEE AS THE ASSESSEE DID NOT SUBMIT ANY BASIS F OR VALUATION OF GOLD JEWELLERY, STONES, DIAMONDS ETC. THE HON'BLE I TAT ALSO DIRECTED THE ASSESSING OFFICER TO TAKE INTO ACCOUNT THE GOLD RATE AS ON 31-3- 2009 AGAINST THE VALUE ADOPTED BY THE ASSESSING OFF ICER AS ON 31-3- 2008. THE HON'BLE ITAT ALSO DIRECTED THE ASSESSING OFFICER TO TAKE INTO ACCOUNT THE JEWELLERY DECLARED IN THE HANDS OF THE OTHER FAMILY MEMBERS AS PER WEALTH TAX RETURNS WHILE ARRIVING AT UNDISCLOSED INVESTMENT IN JEWELLERY. 2.3 IN PROCEEDINGS U/S. 143(3) R.W.S. 254, THE A.O . CONSIDERED THE JEWELLERY DECLARED IN WEALTH-TAX RETURNS FOR A.Y. 2 008-09 IN THE HANDS OF ALL FAMILY MEMBERS OF SRI LAXMINANDAN, ADO PTED THE RATE OF GOLD AS ON 31-03-2009 AND ASSESSED THE INCOME AS UN DER: VALUE OF JEWELLERY: VALUE AS ON 19/01/2009 ARRIVED AT BY THE REGISTERED VALUER 4,17,30,073 LESS: NET WEALTH DECLARED BY THE ASSESSEE AND HIS FAMILY MEMBERS AS ON 31/03/2008 2,70,77,656 ADD: RATE DIFFERENCE (AS ON 31/03/2009 & 31/03/2008) 39,63,945 3 ITA NO. 1314/HYD/16 LAXMI NANDAN, HYD. 3,10,41,601 3,10,41,601 NET DIFFERENCE 1,06,88,472 INCOME RETURNED BY THE ASSESSEE RS. 8,03,630 ADD: 1. UNEXPLAINED INVESTMENT IN JEWELLERY AS DISCUSSED ABOVE RS. 1,06,88,472 2. UNEXPLAINED INVESTMENT IN SILVERWARE AS ABOVE RS. 3,68,856 TOTAL INCOME RS. 1,18,60,958 ============ 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A). 4. AS REGARDS THE UNEXPLAINED INVESTMENT IN JEWELLE RY OF RS. 1,06,88,472/-, THE CIT(A) CONFIRMED THE SAME BY OBS ERVING AS UNDER: 5.1 THE MAIN CONTENTION OF THE APPELLANT WAS THAT T HERE IS NO CHANGE IN THE QUANTUM OF JEWELLERY SINCE THE ASST.Y EAR 2002- 03. FURTHER THE A.R. CLAIMS THAT THE SAME QUANTITY OF JEWELLERY WAS INCREASED EVERY YEAR BY 5 TO 15%, THEREFORE NO ADDITION CAN BE MADE. HOWEVER THIS PLEA CANNOT BE ACCEPTED A S THE APPELLANT FAILED TO SHOW ANY EVIDENCE THAT QUANTITA TIVE DETAILS OF JEWELLERY WERE FILED ALONG WITH ANY WEALTH TAX R ETURNS FILED EARLIER. 5.2 THE A.R. ALSO PLEADED THAT SINCE MUCH OF THE JE WELLERY WAS OF DIAMOND AND PRECIOUS STONES, THE VALUATION BECOM ES VERY SUBJECTIVE, THEREFORE THE DIFFERENCE IN VALUATION. THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.1,06,8 8,472/- HAS NO 'MERIT. EVEN THIS CONTENTION OF THE APPELLANT AL SO DOES NOT HAVE ANY MERIT, AS THE VALUATION OF WEALTH WAS MADE BY THE APPELLANT HIMSELF IN WEALTH TAX RETURNS AND THE SAM E WAS REDUCED WHILE ARRIVING AT UNDISCLOSED WEALTH. THERE FORE THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.1,06,8 8,472/- IS CONFIRMED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 IS ERRONEOUS IN LAW AND ON FACTS OF T HE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 3, ERRED IN SUSTAINING THE ADDITION OF RS.1,06,88,472/ - BEING THE DIFFERENCE IN THE VALUATION OF JEWELLERY AS ON THE DATE OF SEARCH I.E. 29TH JANUARY 2009 AND AS ADMITTED IN WEALTH TA X RETURN 4 ITA NO. 1314/HYD/16 LAXMI NANDAN, HYD. WITHOUT APPRECIATING THE FACT THAT THE DIFFERENCE I S ONLY ON ACCOUNT OF VALUATION AND WITHOUT FULLY APPRECIATING THE DIRECTIONS OF THE HON'BLE INCOME TAX APPELLATE TRIB UNAL AND WITH TOTAL DISREGARD TO EARLIER ORDER OF COMMISSION ER OF INCOME TAX (APPEALS). 3. ANY OTHER GROUND/S THAT MAY BE URGED AT THE TIME OF HEARING. 6. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT SIMILAR ISSUE CAME UP FOR CONS IDERATION BEFORE THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE O F KRISHNA KUMAR IN ITA NO. 1075/HYD/2016, ORDER DATED 27/09/2017 WHERE IN THE TRIBUNAL HAS HELD AS UNDER: 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. LD. AR SUBMITTED BEFORE US A STATEMENT WHIC H GIVES INFORMATION OF VALUATION OF JEWELLERY AND PRECIOUS STONES ADOPTED BY ASSESSEE FOR THE PURPOSE OF WEALTH TAX FOR THE PERIOD 2001-02 TO 200 7-08. HE COMPARED THE PERIODICAL DATA AND THE VALUATION REPORT AS ON THE DATE OF SEARCH. HE MADE THE SUBMISSION THAT THERE IS NO DIFFERENCE IN THE Q UANTITY BUT THERE IS CONSIDERABLE DIFFERENCE IN VALUATION OF THE JEWELLE RY. WE HAVE GONE THROUGH THE STATEMENT AND FOR THE SAKE OF CLARITY, THE SAME IS EXTRACTED BELOW: ERIOD NET GOLD QTY/WEIGHT RATE PER 10 GM OF GOLD NET GOLD VALUE IN RS. 2001 - 02 4,465.45 5,010.00 2,237,196.00 2002 - 03 5,291.60 5,310.00 2,809,845.00 2003 - 04 5,291.60 6081.00 3,217,828.00 2004 - 05 5,291.60 6150.00 3,254,340.00 2005 - 06 5,291.60 8,560.00 4,529,618.00 2006 - 07 5,291.60 9,510.00 5,032,322.00 2007 - 08 5,321.61 12,280.00 6,534,471.00 DATE OF SEARCH 5321.61 13,900 73,97,024 FROM THE ABOVE STATEMENT, IT IS CLEAR THAT THE VALU ATION OF GOLD IS PROPERLY EVALUATED AND THERE IS NO MUCH VARIATION, WHEREVER THERE IS VARIATION IN THE QUANTITY, IT WAS EXPLAINED BEFORE THE LOWER AUT HORITIES. WHEN WE ANALYSE THE PRECIOUS STONE VALUATION, THE VALUATION SUBMITTED BY THE ASSESSEE AS PER THE WEALTH TAX RETURNS IS REPRODUCE D BELOW: PERIOD WT. OF DIAMONDS IN CT/GRAM PRECIOUS STONES AND DIAMONDS 2001 - 02 1058 12,545,771.00 5 ITA NO. 1314/HYD/16 LAXMI NANDAN, HYD. 2002 - 03 1225 16,893,617.00 2003 - 04 1225 17,528,506.00 2004 - 05 1225 18,813,634.00 2005 - 06 1225 20,685,632.00 2006 - 07 1225 22,711,119.00 2007 - 08 1225 25,861,959.00 DATE OF SEARCH 1230 3,17,23,300 FROM THE ABOVE STATEMENT, IT IS OBSERVED THAT IN TH E PERIOD 2007-08, QUANTITY OF PRECIOUS STONE IS 1225 CRT AND WAS VALU ED AT RS. 2,58,61,959, WHEREAS ON THE DATE OF SEARCH, THE QUANTITY STATED BY ASSESSEE IS 1230 CRT WHICH WAS VALUED BY VALUER AT RS. 3,17,23,300/- . THUS, IT IS EVIDENT THAT THERE IS SUBSTANTIAL VARIATION IN THE VALUATIO N OF THE PRECIOUS STONES. FURTHER, WE HAVE ALSO ANALYSED THE VALUATION REPOR T OF THE REGISTERED VALUER ON THE DATE OF SEARCH AND FOUND THAT THE QU ANTITY VALUED WAS 1789.10 CRT AND NOT 1230 CRT AS STATED BY THE ASSES SEE AND, THEREFORE, THERE IS A DIFFERENCE IN QUANTITY AS WELL, WHICH SU BSTANTIATES THE DIFFERENCE IN VALUATION OF PRECIOUS STONES. IN OUR CONSIDERED VIEW, IT IS NOT ONLY VARIATION IN VALUATION, BUT ALSO, VARIATION OF QUAN TITY. 8.1 IT IS ALSO PERTINENT TO NOTE THAT IN THE FIRST ROUND OF APPEAL, THE LD. CIT(A) HAS FOUND EXCESS OF VALUATION TO THE EXTENT OF RS. 14,88,694/- AND DISALLOWED TO THE EXTENT OF 50% AMOUNTING TO RS. 7, 44,347/-. AT THAT STAGE, THE FINDINGS OF CIT(A) WERE ACCEPTABLE TO AS SESSEE. THE REVENUE CAME IN APPEAL AND ITAT HAD SET ASIDE THE MATTER BA CK TO AO FOR VERIFICATION. NOW, THE ASSESSEE CANNOT ARGUE THAT I T IS ONLY VALUATION DIFFERENCE AND THAT THERE IS NO DIFFERENCE IN QUANT ITY. 8.2 CONSIDERING THE VARIATIONS IN THE QUANTITY OF P RECIOUS STONES AS INDICATED ABOVE, IN OUR CONSIDERED VIEW, THE VALUAT ION REPORT AS ON THE DATE OF SEARCH IS PROPER AND THE DIFFERENCE IN THE VALUATION REPORT AND THE WEALTH TAX RETURN, AS DETERMINED BY THE AO IS PROP ER AND ACCORDINGLY, THE CONTENTION OF THE ASSESSEE IS REJECTED AND GROUND R AISED BY THE ASSESSEE IS DISMISSED. THOUGH THE ISSUE IN THE PRESENT CASE IS MATERIALLY IDENTICAL TO THE ABOVE CASE, BUT, IN THE ABOVE CASE, THE BENCH CAME TO SUCH A CONCLUSION AFTER COMPARING THE QUANTITY OF PRECIOUS METALS DECLARED BY THE ASSESSEE IN THE WEALTH TAX ASSESSMENT AND TH E VALUATION REPORT SUBMITTED BY REVENUE DEPARTMENT. THE BENCH N OTED THAT THERE WAS CONSIDERABLE VARIATION. BUT, IN THE CASE ON HAN D, WE COMPARED THE QUANTITY DETAILS AS PER WEALTH TAX RETURN SUBMI TTED BY LD. AR (WHICH IS PART OF RECORD) AND THE VALUATION REPORT SUBMITTED BY 6 ITA NO. 1314/HYD/16 LAXMI NANDAN, HYD. DEPARTMENT. FOR THE SAKE OF CONVENIENCE, WE REPRODU CE THE DETAILS IN TABULAR FORM AS UNDER: DESCRIPTION AS PER VALUATION REPORT AS ON 29/01/2009 AS PER WEALTH TAX RETURN GOLD 5958.70 5865.70 DIAMONDS 837.05 840.05 WAX, PEARLS, ETC. 779.00 786.50 FROM THE ABOVE TABLE, WE NOTICE THAT THERE IS NO VA RIATION IN TERMS OF QUANTITY DECLARED BY THE ASSESSEE IN WEALTH TAX RET URN AND VALUATION REPORT AS ON 29/01/2009. SINCE, THERE IS NO VARIATION IN THE QUANTITY DECLARED BY THE ASSESSEE, NO ADDITION CAN BE MADE ON MERE VALUATION DIFFERENCE. THEREFORE, THE ADDITION MADE BY THE AO IS ACCORDINGLY, DELETED. THEREFORE, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2018. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 20 TH JULY, 2018 KV COPY TO:- 1) SHRI LAXMINANDAN, 13-6-433/157, NETAJI NAGAR COL ONY, MEHDIPATNAM, HYDERABAD. 2) ITO, WARD 7(2),HYDERABAD. 3) CIT(A) 3, HYDERABAD. 4) PR. CIT - 3, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE