Mrs Padmini Shrikrishna Gadgil, Pune V. ACIT, Pune

ITA 1339/PUN/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3297 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 23-10-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DHARESHWAR SHARMA
• Keywords: Unexplained investment; Opportunity of being heard; Deemed to accrue or arise in india; Additional evidence; Corroborative evidences; Set aside
• Section: 271(1)(c); 153A; 69A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 1339/PN/08 (ASSTT. YEAR 2006-07) MRS. PADMINI SHRIKRISHNA GADGIL 693, NARAYAN PETH, KUNTHE CHOWK PUNE-411030 PAN NO. ADIPG2293E .... APPELLANT VS. ACIT CENTRAL CIRCLE 1(2), PUNE . RESPONDENT 1544/PN/08 (ASSTT. YEAR 2006-07) ACIT CENTRAL CIRCLE 1(2), PUNE .... APPELLANT VS. MRS. GADGIL PADMINI SHRIKRISHNA 693, NARAYAN PETH, KUNTHE CHOWK PUNE-411030 PAN NO. ADIPG2293E . RESPONDENT ASSESSEE BY : SHRI M.R. BHAGWAT DEPARTMENT BY : SHRI DHARESHWAR SHARMA ORDER PER D. KARUNAKARA RAO AM THESE ARE THE CROSS APPEALS, ASSESSEE AS WELL AS REVE NUE ARE IN CROSS APPEALS AGAINST A CONSOLIDATED ORDER OF CIT(A)-I, PU NE DATED 05/09/2008 FOR A.Y 2006-07. ITA NO. 1339 & 1544/PN/08 A.Y 2006-07 PAGE 2 OF 6 ITA NO. 1339/PN/08 (ASSESSEES APPEAL): 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS FOLLOWS:- 1) THE LEARNED COMMISSIONER (APPEALS) I ERRED IN S USTAINING AN ADDITION OF RS. 401254/- BEING THE DIFFERENCE IN V ALUATION OF GOLD ORNAMENTS ON GROSS WEIGHT AND NET WEIGHT BASIS. 2) THE LEARNED COMMISSIONER (APPEALS) I ERRED IN SU STAINING THE VALUATION ON NET WEIGHT BASIS ADOPTED BY THE ASSESS ING OFFICER EVEN THOUGH IT WAS AN UNSCIENTIFIC AND UNRELIABLE B ASIS OF VALUATION AND THEREBY UPHOLDING ADDITION OF RS. 401254/- AS U NEXPLAINED INVESTMENT IN GOLD ORNAMENTS. 3) THE LEARNED COMMISSIONER (APPEALS) ERRED IN SUST AINING ADDITION OF RS. 30521/- ON ACCOUNT OF UNEXPLAINED CASH. 4) THE ADDITIONS AS MADE ABOVE BE DELETED AND THE I NCOME OF THE ASSESSEE BE REDUCED TO THAT EXTENT. 5) SUCH OTHER ORDERS BE PASSED AS DEEMED FIT AND PR OPER. 6) THE APPELLANT PRAYS FOR LEAVE TO ADD FRESH GROUND S OF APPEAL AND LEAD EVIDENCE 3. GROUND NO. 1 AND 2 OF THE ASSESSEES APPEAL AND G ROUND NO. 1 TO 4 OF THE REVENUES APPEAL RELATE TO THE SAME ISSUE, THEREFORE, THESE GROUNDS ARE DISPOSED OFF IN A CONSOLIDATED MANNER. THE RELEVANT F ACTS IN THIS CASE ARE THAT ASSESSEE WAS COVERED U/S. 132 OF THE INCOME TAX ACT AND ASSESSMENT WAS MADE U/S. 153A OF THE ACT. ASSESSEE FILED THE RETURN OF IN COME OF RS. 44,47,040/- AND THE ASSESSED INCOME IS RS. 58,98,620/-. A.O MADE TH E ADDITION OF RS. 14,51,584/- ON ACCOUNTS OF UNEXPLAINED / ADDITIONAL INVESTMENT IN GOLDEN JEWELLERY AND UNEXPLAINED CASH FOUND DURING THE SEARC H. GROUND NO. 1 AND 2 OF REVENUE AND ASSESSEES APPEAL REVOLVES AROUND THE ADD ITION OF RS. 14,20,763/-, WHICH IS THE VALUE OF THE DIFFERENCE (2130.08 GMS) O F THE GOLD JEWELLERY BETWEEN THE PHYSICALLY FOUND GOLD JEWELLERY OF 3870. 080 GMS AFTER NETTING WITH THE DISCLOSED GOLD JEWELLERY IN THE WEALTH TAX RETURN OF LATE SHRI VISHWANATH GADGI (BOTH NET WEIGHT). THIS DIFFERENCE OF 2130.08 GMS WAS VALUED AT THE RATE OF 667/- PER GRAM. THIS AMOUNT OF GOLD OF 2130.08 GM S HAS TWO COMPONENTS I.E., 601.58 GMS WHICH IS THE DIFFERENCE IN NET WEIG HT I.E, 3870.08 3268.5 GMS AND ITS VALUE WORKS OUT TO RS. 4,01,254/-. A.O MADE THIS ADDITION CONSIDERING THE NET WEIGHT DIFFERENCE BETWEEN THE ACCOUNTED AND UNAC COUNTED JEWELLERY. RELEVANT DISCUSSION AS PER AO IS AS UNDER:- ITA NO. 1339 & 1544/PN/08 A.Y 2006-07 PAGE 3 OF 6 ACCORDINGLY, WITHOUT CONSIDERING THE VERACITY OF THE EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS (WHICH WERE NOT PRODUCED DURING THE COURSE OF SEARC H BEFORE THE ADIT), THE EXCESS JEWELER OF 601.58 GRAMS (AS WORKED OUT A BOVE ON NET WEIGHT BASIS) VALUED AT RS. 4,01,254/- HAS BEEN FOUND, FOR WHICH NO SATISFACTORY EXPLANATION HAS BEEN FURNISHED BY THE ASSESSEE. ACC ORDINGLY, THE SAID AMOUNT OF RS. 4,01,254/- HAS BEEN TREATED AS UNEXPL AINED INVESTMENT IN JEWELER AND TAXED U/S. 69A OF THE I.T. ACT, 1961 AS ADDITIONAL INCOME OF THE ASSESSEE. SINCE, THE ASSESSEE HAS CONCEALED THE SE PARTICULARS OF HER INCOME BY FURNISHING INACCURATE PARTICULARS THEREOF , I AM SATISFIED THAT SHE HAS COMMITTED DEFAULT WITHIN THE MEANING OF SEC TION 271(1)(C) R.W. EXPLANATION-1 OF THE I.T. ACT, 1961. PENALTY PROCEE DINGS U/S. 271(1)(C) R.W. EXPLANATION-1 OF THE I.T. ACT, 1961 HAS, THERE FORE, BEEN INITIATED SEPARATELY. 4. THE SAME WAS CONFIRMED BY THE CIT(A) HAS PER THE DISCUSSION GIVEN IN PARA 2.3 OF THE IMPUGNED ORDER. 2.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE APPELLANT AND PERUSED MATERIAL ON RECORD. AS REGARDS ADDITION ON ACCOUNT 601 GRAMS OF NET JEWELLERY RETAINED AS UNEXPLAINED, IT IS NOTABL E THAT THE ASSESSEE IS A MEMBER OF FAMILY WHICH IS ENGAGED IN JEWELRY BUSINES S. IN VIEW OF THIS, GIVING BENEFIT OF GROSS WEIGHT TO THE APPELLANT WOU LD NOT BE PROPER BECAUSE WHAT IS MORE IMPORTANT IS GOLD CONTENT AND NOT ALLOW. TAKING INTO ACCOUNT THIS ASPECT AND THE ASPECTS BROUGHT OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, I AM OF THE CONSIDERED VIEW THAT IN THE PRESENT CASE IT WOULD BE REASONABLE TO PROCEED FROM THE NET WEIG HT ANGLE AND EXAMINE THE NATURE OF POSSESSION AND SOURCE OF ACQUISITION OF JEWELLERY FOUND AT THE TIME OF SEARCH. IF THIS CRIT ERION IS ADOPTED, APPELLANT HAS FAILED TO EXPLAIN NET JEWELER OF 601 GRAMS AND THEREFORE, THE ASSESSING OFFICERS CONCLUSION IN TAXING THE VALUE OF JEWELLERY OF 601 GRAMS AS DEEMED INCOME OF THE APPELLANT FOR THE ASSE SSMENT YEAR UNDER APPEAL IS HELD TO BE JUSTIFIED ON FACTS AND IN ACCO RDANCE WITH LAW. 5. IN OUR OPINION, NET WEIGHT METHOD CONSTITUTES A RE ALISTIC ONE AS THE NET WEIGHT REFERS TO THE NET WEIGHT OF THE GOLD JEWELLARY. THUS, WE AFFIRM THE ORDER OF THE CIT(A) IN THIS REGARD. WE FIND NO REASON TO INT ERFERE WITH THE SAME. ACCORDINGLY THIS PART OF THE ADDITION IS CONFIRMED. REGARDING THE BALANCE OF THE DISCREPANCY OF GOLD JEWE LLERY (2130.08 GMS 601.58 GMS), THE ASSESSEE COULD NOT EXPLAIN THE SOU RCES THEREOF. THE RELEVANT DISCUSSION IS GIVEN IN PARA 5 OF THE IMPUGNED ORDER REA DS AS FOLLOWS:- I VIEW OF THE SAID FACTS THE EXPLANATION NOW GIVE N BY THE ASSESSEE IS NOT AT ALL SATISFACTORY AND THEREFORE CANNOT BE ACCEPTE D. ACCORDINGLY, THE SAID INVESTMENT OF RS. 14,20,763/- IN GOLD ORNAMENT IS T REATED AS UNEXPLAINED INVESTMENT AND PROPOSED TO BE ADDED TO THE TOTAL IN COME DECLARED BY THE ASSESSEE BEING HEAD OF THE FAMILY U/S. 69 A OF THE I.T. ACT, 1961. HOWEVER, SINCE AN ADDITION OF RS. 4,01,254/- HAS AL READY BEEN MADE ON ITA NO. 1339 & 1544/PN/08 A.Y 2006-07 PAGE 4 OF 6 ACCOUNT OF EXCESS JEWELER FOUND DURING THE COURSE O F SEARCH (WITHOUT PREJUDICE TO THE ADDITIONAL EVIDENCES BROUGHT ON RE CORD DURING THE COURSE OF ASSESSMENT PROCEEDINGS), THE FURTHER NET ADDITIO N OF RS. 10,19,509/- HAS BEEN MADE ON ACCOUNT OF EXCESS JEWELLERY FOUND DURING THE COURSE OF SEARCH, THE EVIDENCES SUBMITTED BY THE ASSESSEE FOR THE SAM E BEING FOUND TO BE NOT RELIABLE AND NOT ACCEPTED . .. 6. THE ABOVE DECISION OF THE A.O WAS EXAMINED BY T HE CIT(A) AND AT THE END OF FIRST APPELLATE PROCEEDINGS IN THE ABSENCE OF POWERS TO SET ASIDE THIS ISSUE TO THE FILES OF THE A.O, THE CIT(A) GAVE A D IRECTION TO VERIFY THE CLAIM OF THE ASSESSEE, RELEVANT DISCUSSION IS IN PARA 2.3.1 WH ICH READS AS FOLLOWS:- 2.3.1 AS REGARDS BALANCE JEWELER ON ACCOUNT OF WHICH ADDITION OF RS. 10,19,509/- IS MADE, IT IS CONTENTION OF THE APPELL ANT THAT THE PAYMENT ON ACCOUNT OF THIS JEWELLERY HAS BEEN MADE THROUGH ACC OUNT PAYEE CHEQUE AND IT IS DULY REFLECTED IN BOOKS OF ACCOUNTS AND D EBITED TO CAPITAL ACCOUNT WHICH HAS BEEN SUBMITTED IN THE RETURN OF INCOME FI LED BEFORE SEARCH. IT IS SUBMITTED THAT ORIGINAL BILLS IN RESPECT OF SUCH PU RCHASES ARE AVAILABLE WITH THE APPELLANT. IT IS SUBMITTED THAT THE OBSERVATION OF THE ASSESSING OFFICER THAT BECAUSE BILLS ARE ISSUED BY BUSINESS CONCERNS OF THE APPELLANT AND THEREFORE, THEY ARE NOT BELIEVABLE IS NOT ACCEPTABL E. AFTER CAREFUL CONSIDERATION OF THE MATERIAL ON RECORD, I AM OF TH E CONSIDERED VIEW THAT THIS IS A FIT CASE FOR ISSUE OF DIRECTION TO THE ASSESSING OFFICER. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO V ERIFY THE CLAIM OF THE APPELLANT THAT IN RESPECT OF JEWELLERY WHICH IS TRE ATED AS UNEXPLAINED BY THE LEARNED ASSESSING OFFICER, THE CLAIM OF THE APP ELLANT REGARDING EXPLAINABILITY OF SAID JEWELLERY IS VERIFIABLE WITH REFERENCE TO ORIGINAL BILLS/VOUCHERS AND THE PAYMENT FOR WHICH HAS BEEN M ADE THROUGH ACCOUNT PAYEE CHEQUES DULY DEBITED IN CAPITAL ACCOUNT OF TH E APPELLANT. IF THIS CLAIM OF THE APPELLANT IS FOUND TO BE CORRECT , ADDITION OF RS. 10,19,509 /- SHALL STAND DELETED. 7. DURING THE PROCEEDINGS BEFORE US, LD. COUNSEL FOR TH E ASSESSEE MENTIONED THAT THIS ISSUE IS EFFECTIVELY A CASE OF REMAND ORDERED TO THE FILES OF THE A.O BY THE CIT(A) AND THE SAME IS PENDING FOR THE LAST TWO YEARS . IN THE ABSENCE OF FINALITY OF THE REFERRAL, IT IS NOT POSSIBLE TO CO ME TO THE EXTENT OF UNACCOUNTED GOLDEN JEWELLERY. THEREFORE, THE COUNSEL REQUESTED FO R SETTING ASIDE THIS ISSUE TO THE FILES OF THE AO FOR COMPREHENSIVE DECISION IN THI S REGARD. ON THE OTHER HAND LD. DR FOR THE REVENUE VEHEMENTLY ARGUED STATING THAT THE CIT(A) IN EFFECT SET ASIDE THIS ISSUE TO THE FILES OF THE A.O WITHOUT AN Y AUTHORITY U/S. 251(1) OF THE INCOME TAX ACT. HE IS OF THE OPINION THAT HE SHOULD HAVE CALLED FOR REMAND REPORT AND DECIDE THE ISSUE AT HIS LEVEL INSTEAD OF D ELEGATING TO THE A.O. FURTHER, LD. DR FAIRLY MENTIONS THAT IT MAY BE CORRECT TO REFER T HE FILES TO THE A.O. CONSIDERING THE ONENESS OF THE PARTIES IN SENDING THE SE FILES TO THE A.O WE FIND ITA NO. 1339 & 1544/PN/08 A.Y 2006-07 PAGE 5 OF 6 NO REASON TO REJECT THE SAME. A.O IS DIRECTED TO COMPL Y WITH THE DIRECTIONS OF THE CIT(A) AND ARRIVE AT THE DECISION ON THE UNEXPLAINED NATURE OF THE DISPUTE OF INVESTMENT IN GOLDEN JEWELLERY. A.O IS FREE TO ADMIT ANY EVIDENCES FILED BY THE ASSESSEE FOR SUBSTANTIATING THE CLAIMS AND HE SHALL GRANT THE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, RELEVANT GROUNDS ARE SET ASIDE TO THE FILES OF THE A.O. AT THE END, THE GROUND NO. 1 & 2 OF THE ASS ESSEES APPEAL ARE DISMISSED AND GROUND NO. 1 TO 4 OF THE REVENUES APPEAL ARE SET ASIDE . 8. THE GROUND NO. 3 OF THE ASSESSEES APPEAL LEFT FO R, RELATES TO SUSTAINING THE ADDITION OF RS. 30521/- ON ACCOUNT OF UNEXPLAIN ED CASH. BOTH THE PARTIES HAVE LEFT THIS ISSUE TO THE BEST JUDGEMENT OF THE T RIBUNAL AFTER CONSIDERING THE FACTS AVAILABLE ON RECORD. RELEVANT FACTS ARE THAT THE SEARCH PARTY FOUND THE CASH DIFFERENCE OF RS. 30,521/- AT THE RESIDENCE OF THE AS SESSEE. ASSESSEE COULD NOT RECONCILE THE DIFFERENCE AND ALSO COULD NOT SUBSTANTI ATE WITH SPECIFIC EXPLANATION RELYING ON THE DAILY CASH BOOK MAINTAINED BY HIM. DU RING THE FIRST THE ASSESSEE FURNISHED THE SUBMISSIONS WHICH ARE REPRODUCED IN PARA 3.1 OF THE IMPUGNED ORDER WHICH READS AS FOLLOWS:- IT IS SUBMITTED THAT DURING THE ASSESSMENT PROCEE DINGS THE ASSESSEE PRODUCED A ROUGH CASH BOOK MAINTAINED BY H ER ON TALLY PACKAGE IN THE COMPUTER WHICH SHOWS CASH BALANCE OF RS. 835 62/- TILL 6 TH OCTOBER 2005. THE ASSESSING OFFICER HAS REJECTED THIS EVIDE NCE AS IN HIS OPINION THE CASH BOOK WAS ONLY ON AN ESTIMATED BASIS WITHOUT AN Y SUPPORTING EVIDENCES. IT IS SUBMITTED THAT THE ASSESSING OFFIC ER OUGHT TO HAVE ACCEPTED THIS AMOUNT AS HOUSEHOLD CASH OF THE ASSES SEE. THE ASSESSEE HAS SHOWN TOTAL INCOME OF RS. 44,47,040/- FOR ASSES SMENT YEAR 2006-2007 AND TO CONCLUDE THAT SUCH A PERSON IS INCAPABLE OF HAVING EVEN RS.30000/- AT HER RESIDENCE IN CASH IN SURELY RIDIC ULOUS. THE INTERFERENCE DRAWN BY THE ASSESSING OFFICER MEA NS THAT THERE CAN NOT BE A SINGLE RUPEE OF HOUSEHOLD CASH WITH A PERSON WHO IS SUCH A HIGH TAX PAYER. THE ADDITION MADE BY THE ASSESSING OFFICER IS THUS DEVOID OF ANY MERIT AND DESERVES TO BE DELETED. 9. AFTER CONSIDERING THE ABOVE SUBMISSIONS, THE CIT(A ) OBSERVED THAT THE CASH BOOK FURNISHED BY THE ASSESSEE IS PREPARED ON TH E BASIS OF THE ESTIMATE AND THE SOURCES FOR THE DEPOSITS IN CASH BOOK ARE UNEXPLAINED . AS PER THE ASSESSEES EXPLANATION, THE SOURCES OF THE CASH DEPO SITED IN THE IMPUGNED CASH BOOK IS OUT OF THE SAVINGS OF WITHDRAWALS MEANT FOR T HE HOUSEHOLD EXPENDITURE. ACCORDINGLY, REJECTING THE SAID EXPLANATION, THE CIT( A) CONFIRMED THE ADDITION MADE BY THE A.O IN THIS REGARD. ITA NO. 1339 & 1544/PN/08 A.Y 2006-07 PAGE 6 OF 6 AFTER HEARING THE PARTIES, WE HAVE FOUND THE IMPUGNED ADDITION HAS EFFECTIVELY MATERIALIZED IN VIEW OF THE ASSESSEES FAILURE TO DEM ONSTRATE THE GENUINENESS OF THE SOURCES OF THE CASH DEPOSITED IN THE CASH BOOK. THE IMPUGNED CASH BOOK BELONGS TO THE ASSESSEE AND THE ONUS IS ON HIM TO D EMONSTRATE THE SAME WITH EVIDENCES. IN OUR OPINION, THE SAME IS NOT DONE BY T HE ASSESSEE. IN THE ABSENCE OF THE SAME, THE REVENUE IS JUSTIFIED IN MAKING THE ADDITIONS. WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A). IN THE RESULT, GROUN D 3 OF THE ASSESSEES APPEAL IS DISMISSED . 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED AND THE APPEAL OF THE REVENUE IS SET ASIDE . ORDER PRONOUNCED ON 08 TH OCTOBER, 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 08 TH OCTOBER, 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ACIT, CENTRAL CIRCLE 1(2), PUNE 3. CIT(A)-I, PUNE 4. CIT(CENTRAL), PUNE 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE