Sri Laskshminandan, Hyderabad V. ACIT, Central Circle-4, Hyderabad

ITA 1597/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69979 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: B SAI PRASAD
• Keywords: Unexplained investment; Search and seizure; Opportunity of being heard; Additional evidence; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1597/HYD/12 ASST. YEAR: 2009-10 SRI LAKSHMINANDAN, HYDERABAD. PAN: AAJPL5054A VS. ACIT, CENTRAL CIR-4, HYDERABAD. APPELLANT ITANO.1655/HYD/12 ASST. YEAR: 2009-10 ACIT, CENTRAL CIR-4, -VS- HYDERABAD. (APPELLANT) (RESPONDENT) SRI LAKSHMINANDAN, HYDERABAD. PAN: AAJPL5054A (RESPONDENT) ASSESSEE BY: SRI B. SAI PRASAD DEPARTMENT BY: SRI P. SOMA SEKHAR REDDY DATE OF HEARING: 03-12-2013 DATE OF PRONOUNCEMENT: 13-12-2013 O R D E R PER CHANDRA POOJARI, AM: THESE ARE CROSS APPEALS DIRECTED AGAINST THE ORDER OF CIT (A) DATED 30-8-2012 PERTAINING TO THE ASSESSMEN T YEAR 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1) THE LD. CIT (A) ERRED IN CONFIRMING ADDITION TO THE EXTENT OF RS.50,59,236/- (OUT OF THE ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 2 ADDITION MADE OF RS.3,02,97,302/-) AS REPRESENTING VALUE OF UNACCOUNTED JEWELLERY. 2) THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THAT THE JEWELLERY BELONGED TO SEVERAL MEMBERS OF THE APPELLANTS FAMILY AS ALSO THE FAMILY MEMBERS OF THE APPELLANTS BROTHERS AS ADMITTED IN THE WEALTH TAX RETURNS FLED RIGHT FROM ASST. YEAR 2002-03. 3) THE LD. CIT (A) WHILE HOLDING THAT APPELLANTS CONTENTION TO FOLLOW THE METHOD OF CONVERSION OF VALUE INTO QUANTITY AS ADMITTED IN THE WT RETURN FOR A.Y.2002-03 HAS A POINT ERRED IN DISMISSING IT AS NOT DESERVED TO BE CONSIDERED AT THIS STAGE. 4) THE CIT (A) OUGHT TO HAVE APPRECIATED THAT THE JEWELLERY BELONGING TO SEVERAL MEMBERS OF THE APPELLANTS BROTHERS FAMILIES ALSO GOT MIXED UP WITH THAT OF THE APPELLANT WHICH POSITION IS EVIDENT FROM THE FACT THAT IN THE CASE OF ONE OF THE BROTHERS (SRI RAMPRASAD ALIAS MAHAVIR PRASAD) DEFICIT JEWELLERY WAS FOUND THAN WHAT WAS ADMITTED IN HIS WEALTH TAX RETURNS FILED. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS:- I) THE CIT (A) ERRED IN RELYING N THE ASSESSEES INFORMATION WHICH IS NOT IN POSSESSION OF THE ASSESSING OFFICER. II) THE CIT (A) ERRED IN NOT GIVING OPPORTUNITY TO THE ASSESSING OFFICER WHEN HE ADMITTED ADDITIONAL INFORMATION RELATING TO THE OTHER FAMILY MEMBERS OF THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE D ERIVES INCOME FROM HOUSE PROPERTY, BUSINESS AND OTHER SOUR S AND ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 3 SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED IN THI S CASE ON 29-1-2009 ALONG WITH SUNDER GROUP OF CASES. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED THE R ETURN OF INCOME ON 22-7-2009 DECLARING TOTAL INCOME AT RS.8,09,630/- INCLUDING AGRICULTURAL INCOME OF RS.6 ,000/-. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS.3,11,00,932/- BY THE ASSESSING OFFICER ON ACCOUN T OF TREATING THE EXCESS VALUE OF JEWELLERY AS UNEXPLAIN ED INVESTMENT. THE ASSESSEE HAS FILED THE APPEAL MAIN LY ON THE ABOVE ADDITION AND RAISED THE GROUNDS OF APPEAL ACCORDINGLY BEFORE THE CIT (A). 4. WITH REGARD TO ADDITION ON ACCOUNT OF UNEXPLAIN ED INVESTMENT IN JEWELLERY OF RS.3,02,97,302/-, THERE WAS SEARCH AND SEIZURE PROCEEDINGS TAKEN PLACE IN THIS GROUP ON 29-1-2009 COVERING THE RESIDENCES AND OTHER BUSINES S PREMISES OF THE ASSESSEE GROUP AND DURING THE COURS E OF THE PROCEEDINGS CONDUCTED AT RESIDENCE OF THE ASSES SEE, JEWELLERY BELONGING TO SRI LAXMIKNANDAN AND HIS FAM ILY MEMBERS WAS FOUND, INVENTORIED AND VALUED BY REGIS TERED VALUER. A S PER THE VALUATION REPORT DATED 29.01.2009, THE TOTAL VALUE OF THE JEWELLERY OF THE FAMILY WAS VALU ED AT RS.4, 17,30,073/-. AMONG THE FAMILY MEMBERS, SRI LAXMINAN DAN, (INDL), LAXMINANDAN (HUF), SMT. TARADEVI, SRI SUNIL KUMAR, MS.RICHA AND MS.NAMRATA WERE SHOWN TO HAVE BEEN ASS ESSED TO WEALTH TAX AND AS PER THE WEALTH TAX RETURNS FIL ED BY THEM FOR THE ASSESSMENT YEAR 2008-09,THE TOTAL VALUE OF THE JEWELLERY FURNISHED IN THE WEALTH TAX RETURNS, WAS QUANTIFIED AT RS.2,70, 77 ,656/-. HOWEVER, WHILE CO MPLETING THE ASSESSMENT AND COMPUTING THE TAXABLE INCOME OF THE APPELLANT FOR THE YEAR UNDER REFERENCE, THE ASSESSI NG OFFICER HAS MADE AN ADDITION OF RS.3,02,97,302/-, BEING THE DIFFERENCE BETWEEN THE VALUE OF THE JEWELLERY AS PE R THE VALUATION REPORT DATED 29.01.2009, WHICH WAS QUANTI FIED AT ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 4 RS.4,17,30,073/- AND RS.1,14,32,771/- WHICH IS THE VALUE OF THE JEWELLERY AS PER WEALTH TAX RETURNS STANDING IN THE NAMES OF FEW OF THE FAMILY MEMBERS, BUT HAS EXCLUDED THE JEWELLERY BELONGING TO SRI LAXMINANDAN (HUF), SMT. TARADEVI, AND MS NAMRATA. 5 . WHILE MAKING SUCH ADDITION, THE ASSESSING OFFICER H AS OBSERVED THAT THE JEWELLERY AS ON THE DATE OF SEARC H WAS PROPERLY INVENTORISED, QUANTIFIED AND VALUED BY A R EGISTERED VALUER AT RS.4, 17,30,073/- IN RESPECT OF SRI LAXMI NANDAN AND HIS FAMILY MEMBERS AND AT RS.11,32,77,199 IN RESPEC T OF THE ENTIRE GROUP CONSISTING OF THE FAMILIES OF SRI KRIS HNA KUMAR, SRI LAXMINANDAN AND SRI MAHAVIR PRASHAD. IT WAS ALS O OBSERVED BY THE ASSESSING OFFICER THAT THOUGH THE A PPELLANT WAS FILING THE WEALTH TAX RETURNS AND DECLARING THE VALUE OF THE JEWELLERY IN SUCH RETURNS SINCE ASSESSMENT YEAR 2001/02, THE VALUE SHAVE BEEN TAKEN ON ESTIMATION BASIS AND NO QUANTITATIVE DETAILS WERE INDICATED. THE ASSESSING OFFICER ALSO REJECTED THE SUBMISSION OF THE APPELLANT THAT THE J EWELLERY OF THE ENTIRE GROUP GOT MIXED UP DURING VALUATION AND BASED ON VALUATION WITHOUT REFERENCE TO THE QUANTITIES, THE TOTAL VALUE OF THE JEWELLERY OF THE GROUP WOULD BE RS.13,06,80, - 312,ASAGAINST RS.11,32,77,199 AS QUANTIFIED BY THE VALUER. THE ASSESSING OFFICER ALSO DID NOT ACCEPT THE THEO RY OF THE APPELLANT THAT DIFFERENT FAMILY MEMBERS RECEIVED GI FTS ON VARIOUS OCCASIONS AND THE SAME WERE OFFERED AS INCO ME IN THE RESPECTIVE HANDS, HOLDING THAT THE SAME WOUL D HAVE BEEN DECLARED IN THE WEALTH TAX RETURNS. ACCORDINGL Y, THE ASSESSING OFFICER DETERMINED THE EXCESS JEWELLERY IN THE HANDS OF SRI LAXMINANDAN AT RS.3,02,97,302/- TREATI NG IT AS THE UNEXPLAINED INVESTMENT. 6 . THE ASSESSEE OBJECTED TO THE ABOVE ADDITION BEFORE THE CIT (A). THE ASSESSEE HAS GIVEN A DETAILED NOTE ON THE FAMILY HISTORY OF THE GROUP CONSISTING OF THE FAMILIES OF SRI KRISHNA ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 5 KUMAR, SRI MAHAVIR PRASHAD ALIAS RAMPRAKASH AND SRI LAXMINANDAN. AS PER THE APPELLANT, THE JEWELLERY OF THE THREE FAMILIES GOT MIXED UP AS THE SAME IS BEING USED IN EXCHANGE BY ONE ANOTHER AND AS SUCH THE DIFFERENCE IN VALUAT ION NEED TO BE EXPLAINED AS A GROUP AND AS PER THE APPELLANT, T HE TOTAL JEWELLERY DECLARED IN WEALTH TAX RETURNS BY THE GRO UP WAS PUT AT RS.8,68,47,963 AS AGAINST THE VALUE OF RS.11,32, 77,199/- AS ARRIVED BY THE VALUER REGARDING THE GOLD JEWELLE RY, THEREBY LEAVING A GAP, WHICH NEEDS TO BE FURTHER EXPLAINED. THE APPELLANT ALSO POINTED OUT THAT WHILE GIVING THE CR EDIT FOR THE JEWELLERY DECLARED BY THE GROUP, THE VALUE OF JEWEL LERY STANDING IN THE NAMES OF SRI LAXMINANDAN (HUF) (900 1432), SMT. TARADEVI (6175700) AND MS. NAMRATA (467756), W ERE NOT CONSIDERED BY THE A.O. 7 THE ASSESSEE ALSO TRIED TO EXPLAIN BEFORE THE CIT ( A) THE EXCESS VALUE OF THE JEWELLERY WHICH WAS TREATED AS UNACCOUNTED INVESTMENT OF THE APPELLANT, WITH THE H ELP OF EXPLANATION, BASED ON THE FACT THAT NO QUANTITY PAR TICULARS ARE AVAILABLE IN THE WEALTH TAX RETURNS. THE SUMMARY OF THE EXPLANATION OF THE APPELLANT, RUN ON THESE LINES: (I) NO QUANTITY DETAILS ARE AVAILABLE IN WEALTH TA X RETURNS TO EXPLAIN THE EXCESS JEWELLERY IN TERMS OF QUANTITY. (II) DIFFERENCE IN VALUE OF THE JEWELLERY WAS ARRI VED BY THE ASSESSING OFFICER BASED ON THE VALUE AS PER THE VALUATION REPORT DT.29.01.2009 AS AGAINST THE VALUE OF THE JEWELLERY IN THE WEALTH TAX RETURNS AS ON 31.3. 2008, WHICH ARE NON- COMPATIBLE IN TERMS OF RATES, ON THE RESPECTIVE DATES. (III) THE VALUE OF THE PRECIOUS STONES IS VERY HIG H FOR THE VALUE OF THE JEWELLERY IN THE GROUP WHERE THERE IS A POSSIBILITY OF HIGHER ESTIMATION, IN VALUATION. (IV) ARITHMETICAL MISTAKES HAVE BEEN COMMITTED BY T HE VALUER. (V) THE CONVERSION OF THE VALUE INTO QUANTITY AS O N ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 6 31.3.2002 AND VALUATION IN TERMS OF THE SAME IN TER MS OF MARKET RATE AS ON 31.3.2008, WILL HELP THE APPEL LANT TO EXPLAIN THE GAP. 8 . WHILE EXPLAINING THE DEFICIT, THE APPELLANT ALSO FE LL ON THE HYPOTHETICAL PROPOSITION OF CONVERTING THE VALU E INTO QUANTITY AND VICE VERSA ON TWO IMPORTANT DATES OF 3 1.3.2002 AND 31.3.2008, SINCE QUANTITATIVE PARTICULARS ARE N OT MENTIONED IN THE WEALTH TAX RETURNS FILED BY THE GR OUP, WHOSE VALUE WAS ADOPTED AS BASIS BY THE ASSESSING OFFICER . AS PER APPELLANT, IF THE VALUE OF JEWELLERY CONVERTED INTO THE QUANTITY AT THE PREVAILING RATE OF RS.5010 PER 10 GRAMS AS O N 31.3.2002 AND THEN VALUED @ RS.13,900/- PER 10 GRAMS AS ON 29.01.2009 (VALUATION DATE), THE VALUE OF THE JE WELLERY EXCEEDS THE VALUE AS DETERMINED BY THE REGISTERED V ALUER. THE APPELLANT ALSO EXPLAINED THE DIFFERENCES ARRIVE D IN VALUES AS PER VALUATION REPORT AS ON THE DATE OF SEARCH AS COMPARED TO THE DATE OF 31.03.08, WHICH IS THE BASIS FOR ASS ESSING THE EXCESS VALUE TO TAX. REGARDING THE DIFFERENCE IN VA LUATION ON ACCOUNT OF RATES AS ON 31.3.2008 (RS.12,125 PER 10 GRAMS) AND 29.1.2009 (RS.13,900 PER 10 GRAMS), IT WAS POIN TED OUT THAT THE DIFFERENCE WOULD BE RS.39,63,945/-, BEING THE DIFFERENCE BETWEEN THE AMOUNTS OF RS.2,70, 77 ,656/ - I.E. THE VALUE OF THE JEWELLERY SHOWN IN THE WEALTH TAX RETU RNS OF THE ENTIRE FAMILY OF LAXMINANDAN, AS ON 31.03.08 AND RS.3,14,028/- I.E. THE VALUE OF THE JEWELLERY AS ON 29.0.09 I.E. THE DATE OF VALUATION/SEARCH (@ RS.3900/- PER 10GMS), WHICH WAS THE TAKEN AS THE BASIS BY THE AD IN HIS A SSESSMENT ORDER. AS FAR AS THE QUANTIFICATION OF EXCESS JEWEL LERY BY THE ASSESSING OFFICER WITH REFERENCE TO THE JEWELLERY D ECLARED IN WEALTH TAX RETURNS IS CONCERNED, IT WAS CONTENDED B Y THE APPELLANT THAT JEWELLERY TO THE TUNE OF RS.90,01,43 2/- STANDING IN THE NAME OF SRI LAXMINANDAN (HUF), RS.61 , 75, 700/- STANDING IN THE NAME OF SMT. TARADEVI AND RS. 4,67, 753/- STANDING IN THE NAME OF MS. NAMRATA, WERE NOT TAKEN ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 7 INTO CONSIDERATION BY THE A.O. WHILE QUANTIFYING T HE EXCESS JEWELLERY IN THE HANDS OF THE APPELLANT. IT WAS ALS O POINTED OUT BY THE APPELLANT THAT WHILE THE VALUE OF THE SILVER ARTICLES SHOWN IN THE HANDS OF SMT.TARADEVI AND RICHA TO THE EXTENT OF RS.5,70,OOO/-, WERE ALSO NOT CONSIDERED BY THE A .D. WHEREAS, THE VALUE OF THE SILVERWARE HAS FORMED PAR T OF THE VALUATION REPORT. 9. T HE APPELLANT SUBMITTED THAT DUE TO THE PROXIMITY OF THE RESIDENCE AND THE INTIMATE RELATIONSHIP AMONG T HE BROTHERS, THE JEWELLERY BELONGING TO ONE FAMILY IS BEING EXCHANGED/INTERMIXED WITH THAT OF THE OTHER AND SUC H CONTENTION WAS SHOWN TO HAVE PUT FORTH BEFORE THE A DIT AND THE A.D. CONCERNED. ACCORDINGLY, IT WAS SUBMITTED T HAT THE EXCESS JEWELLERY IS MAINLY ON ACCOUNT OF THE MIXING OF JEWELLERY OF FAMILY MEMBERS OF MAHAVIR PRASAD WITH THAT OF THE APPELLANT AND IN THIS REGARD THE APPELLANT POIN TED OUT THAT THE EXCESS ACCOUNTED JEWELLERY HAS BEEN QUANTIFIED IN THE HANDS OF MAHAVIR PRASAD. THE APPELLANT HAS CALCULAT ED THE NET DIFFERENCE OF RS.1,OL,18,472/- BETWEEN THE VALUE AS PER THE VALUATION REPORT AND VALUE ARRIVED ON THE BASIS OF THE EXPLANATIONS OFFERED, AND CLAIMED FOR SET OFF OF EX CESS ACCOUNTED JEWELLERY IN THE HANDS OF MAHAVIR PRASAD TO THE TUNE OF RS. 76, 73,441/- AGAINST THE EXCESS UNACCOU NTED JEWELLERY IN THE HANDS OF SRI LAXMINANDAN, THE APPE LLANT. THE CALCULATIONS ARE AS UNDER: VALUE AS PER VALUATION REPORT DATED 29.01.2009 R S.4,17,30,073 LESS: VALUE AS PER W.T. RETURNS CONSIDERED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDERS RS.1,14,32,771 DIFFERENCE CONSIDERED BY AO. FOR ADDITION RS.3,02,97,302/- LESS: (I) VALUE OF JEWELLERY SHORT ADOPTED ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 8 BY AO(27077656 - 11432771) RS.1,56,44,885 (II) VALUE OF SILVER ADMITTED IN W.T.RETURNS BY TARADEVI AND RICHA RS. 5,70,000 RS.1 ,62,14,885 RS.1,40,82,417 LESS: THE DIFFERENCE IN VALUE AS ON DATE OF VALUATION AND 31.03.2008 RELATED TO THE JEWELLERY DECLARED IN W.T.RETURNS, ON ACCOUNT OF RATE DIFFERENCE RS. 39,63,945 NET DIFFERENCE RS.1 ,01,18,472 ------- ------ 10 . AS COULD BE SEEN, THE ASSESSING OFFICER HAS ARRIVED AT THE CONCLUSION THAT THE AMOUNT OF RS.3,02,97,302/- REPRESENT S THE UNACCOUNTED INVESTMENT OF THE APPELLANT AND HIS FAMILY MEMBE RS AND ACCORDINGLY BROUGHT THE ENTIRE AMOUNT TO TAX TREATING IT AS THE INCOME OF SRI LAXMINANDAN. AS COULD BE SEEN FROM THE VALUATION REPORT DATED 29.01.2009, THE JEWELLERY OF THE FAMIL Y OF SRI LAXMINANDAN WAS QUANTIFIED AT RS,17,30,073/-, WHICH INCLU DE THE VALUE OF PRECIOUS STONES TO THE EXTENT OF RS.3,32,58,600/- AND SILVERWARE VALUED AT RS.24,09,580/-. WHILE ARRIVING AT THE FIGURE OF RS.3, 02,97,302/- WHICH WAS TREATED AS UNEXPLAINED INVESTMENT IN JEWELLERY, THE ASSESSING OFFICER HAS COMPARED THE VALUE OF THE JEWELLERY AT RSA,17,3 0,073/-, AS PER THE VALUATION REPORT DATED 29.01.2009 AS AGAINST THE VALUE OF THE JEWELLERY AS INDICATED IN THE WEALTH TAX RETURNS AS ON 31.3.2 008 TAKEN AT RS.1,14,32,771/- STANDING IN THE NAMES OF SRI LAXMINANDAN (INDL) , SRI SUNIL KUMAR AND MS. RICHA. HOWEVER, WHILE COMPUTING THE E XCESS JEWELLERY, THE A.O. HAS NOT CONSIDERED THE VALUE OF THE JEWEL LERY DECLARED IN THE WEALTH TAX RETURNS OF SRI. LAXMINANDAN (HUF) , SMT. TARADEVI AND MS. NAMRATA TO THE EXTENT OF RS.90,OL,432/-,. RS.61 ,75,700/- AND RS.,4,67,753/- RESPECTIVELY, AND IF THE SAME ARE IN CLUDED, THE TOTAL OF THE VALUE OF JEWELLERY WOULD BE RS.2,76,47,656/-. THE A RGUMENT OF THE APPELLANT ON THE ISSUE OF GIVING CREDIT FOR THE DIF FERENCE IN VALUATION ON ACCOUNT OF DIFFERENCE IN RATES OF GOLD AS ON 31.030 8 AND 29.01.09, THE DATE OF VALUATION, WHICH WAS RELIED UPON BY THE A.O . FOR CALCULATING EXCESS JEWELLERY, FOR THE PURPOSE OF TREATING IT AS UNEXPL AINED INVESTMENT IS A REASONABLE ONE AND DESERVED TO BE CONSIDERED. FURTH ER, THE A.O. SHOULD ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 9 CONSIDER THE JEWELLERY STANDING IN THE NAMES OF ALL FAMILY MEMBERS AS REFLECTED IN W.T. RETURNS, SINCE THE VALUATION REPO RT HAS TAKEN THE ENTIRE JEWELLERY OF THE FAMILY INTO CONSIDERATION. BASED O N THE SAID FINDINGS AND ON THE INFORMATION FURNISHED/GATHERED, VIS-A-VIS TH E VALUE OF THE JEWELLERY AS PER THE VALUATION REPORT AND EXCESS JEWELLERY IS WORKED OUT, AS UNDER; JEWELLERY AS PER VALUATION REPORT DATED 29.1.2009 RS.4,17,30,073 LESS: (A) GOLD JEWELLERY CONSIDERED BY A.D. RS.1,14,32,771 (B) JEWELLERY STANDING IN THE NAMES OF (I) SRI.LAXMINANDAN(HUF) RS.90,01,432 (II) TARADEVI RS.61,75,700 (III) NAMRATA RS. 4,67,753 (C) VALUE OF SILVERWARE SHOWN IN W.T. RETURNS OF TARADEVI & RICHA RS. 5,70,000 R S.2,76,47,656 RS.1,4 0,82,417 LESS: RELIEF ON ACCOUNT OF DIFFERENCE BETWEEN VALUE OF JEWELLERY ON ALC OF RATE DIFFERENCE AS ON 31.03.2008 AND 16.03.2009, ON THE VALUE OF RS.2,70,77,656/- SHOWN IN THE VALUATION REPORT RS. 39,63,945 RS.1,0 1,18,472 ------------- 10. THE CIT (A) OBSERVED THAT THERE IS NO STRENGTH IN THE ARGUMENT OF THE APPELLANT FOR THE REASON THAT THE JEWELLERY WERE FOUND IN THE RESPECTIVE RESIDENTIAL PREMISE OF THE FAMILIES OF SR I LAXMINANDAN, SRI KRISHNA KUMAR AND SRI RAM PRASAD ALIAS MAHAVIR PRAS AD, DURING THE COURSE OF THE SEARCH PROCEEDINGS AND SOME OF THE JEW ELLERY FOUND IN THE BANK LOCKERS. IN THE VALUATION REPORT, THE JEWEL LERY SHOWN TO HAVE BELONGED TO RESPECTIVE FAMILIES ALONE AND NOWHERE TH E INDICATION ABOUT THE MIXING OF THE JEWELLERY AND BELONGING TO OTHER GROUPS WERE MADE. HENCE, THE ARGUMENTS THAT EXCESS JEWELLERY AS PER W.T. RECORDS IN THE HANDS OF SRI RAM PRASAD THAT HAS BEEN REQUESTED TO ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 10 BE SET OFF AGAINST THE EXCESS JEWELLERY PHYSICALLY FO UND IN THE HANDS OF SRI. LAXMINANDAN ON BEHALF OF HIMSELF AND HIS FAM ILY MEMBERS IS NOT TENABLE AND HENCE THE CIT (A) REJECTED THE PLEA OF THE ASSESSEE. 11 . ON THE ISSUE OF VALUATION OF PRECIOUS STONES WHICH IS M OSTLY BY ESTIMATION UNLIKE THE STANDARDIZED PROCEDURE IN TH E CASE OF GOLD JEWELLERY, THE APPELLATE DESERVE THE REBATE, KEEPING THE VERY HIGHER PERCENTAGE OF THE PRECIOUS STONES (79.69%), EMBEDDED INTO JEWELLERY AND AS SUCH THE EXCESS VALUE AS ARRIVED ABOVE DESERVED TO BE REDUCED AND RESTRICTED TO A PART OF THE EXCESS VALU E, THE CIT (A) PLACED RELIANCE ON THE DISCUSSION IN THE CASE O F SRI. KRISHNA KUMAR, IN ITA NO.1571/DC-CC4/CIT(A)-VII/2010-11, DA TED 9.03.2012. HE HAS GIVEN DIRECTION THAT THE EXCESS VAL UE AS DETERMINED ALSO DESERVES TO BE SET OFF WITH THE CLAIM OF THE APPELLANT, AS MADE OUT IN THE GROUNDS OF APPEAL THAT ENTIRE JEWELLERY OF THE FAMILY IS CONSIDERED FOR ADDITION IN THE HANDS OF ONE PERSON. ACCORDINGLY, THE EXCESS JEWELLERY AS DETERMINED/QUANTIF IED AT RS.1,01,18,472/- DESERVE TO BE REDUCED TO 50% I.E. R S.50,59,236/- ON THE LINES OF THE DISCUSSION IN THE ORDER, AND THE DISALLOWANCE IS ORDERED TO BE RESTRICTED TO RS.50,59,236/- (RS.1,OL,18,472 - 50,59,236), WHILE GIVING EFFECT TO THIS APPELLATE O RDER. THUS, THE EXCESS JEWELLERY IN THE HANDS OF SRI LAXMMANDAN STA NDS QUANTIFIED AND CONFIRMED AT RS.50,59,236/-AS AGAINS T RS.3,02,97,302/-, AS QUANTIFIED BY THE ASSESSING OF FICER IN THE ASSESSMENT ORDER. ACCORDINGLY, THE APPELLANT GOT PA RT RELIEF ON THIS ISSUE AS PER THE ORDER OF THE CIT (A). A GAINST THE DECISION OF CIT (A), BOTH THE ASSESSEE AS WELL AS DEPARTMEN T ARE IN APPEAL BEFORE US. 12. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE A SSESSEE SUBMITTED THAT SEARCH OPERATIONS WERE CONDUCTED SIMULTANEOUSLY AT THE RESIDENCES OF THE THREE BROTH ERS FAMILIES, NAMELY (A) SRI RAMPRASAD ALIAS MAHAVIR PR ASAD (B) SRI KRISHNAMUMAR AND (C) SRI LAKSHMINANDAN, THE ASS ESSEE ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 11 WHO LIVE IN ADJOINING HOUSES. THE VALUE OF GOLD JE WELLERY AS ON THE DATE OF SEARCH ON 29-1-2008 AS PER VALUATIO N REPORTS OF THE APPROVED VALUER, IN THE ASSESSEE & FAMILY ME MBERS IS RS.4,17,30,073/-. THE ASSESSEES SUBMISSION IS ON THREE ISSUES ARE AS FOLLOWS:- (1) ALL THE FAMILY MEMBERS OF THE 3 FAMILIES HAVE REGUL ARLY BEEN FILING WEALTH TAXRETURNS ADMITTING VALUES OF JEWELL ERY RIGHT FROM THE ASSESSMENT YEAR 2002-03,THELATESTBEFORETHE DATE OF SEARCH WAS BEING FOR THE AY 2008-09 .. (2) THAT THERE IS INTERMIXING OF JEWELLERY BELONGI NG TO THE 3 FAMILIES OF (A) SHRI RAMPRASAD ALIAS MAHAVIR PRASAD ; (B) SHRI KRISHNAMUAR; AND THE ASSESSEE AT THE TIME OF TAKING INVENTORY. THIS IS EVIDENT FROM THE FACT EXCESS JEW ELLERY OF THEORDEROFRS.37,36,132/-WAS WORKED OUT IN THE HANDS OF SRI RAMPRASAD ALIAS MAHAVIRPRASAD. THIS EXCESS WAS ARRI VED AT WITHOUT GIVING EFFECT TO THE DIFFERENCE IN VALUE OF GOLD AS ON 31-3-2008 & 29-1-2009. IF THE SAME IS CONSIDERED THE VALUE OF EXCESS JEWELLERY FOUND IN THE CASE OF SRI RAMPRA SAD WORKS OUT TO RS. 76,73,441/-. (3) THE SECOND POINT IS THAT OUT OF THE TOTAL VALUE OF JEWELLERY OF RS. 4,17,30,073/-THE COMPONENT OF PREC IOUS STONES WAS VALUED AT RS. 3,32,58,600/-.NORMALLY THE RE IS NO SCIENTIFIC METHOD OF VALUING THE PRECIOUS STONES. W HILE THE RATE OF GOLD IS PEGGED TO THE PREVAILING MARKET RAT E AS ON THE DATE OF VALUATION, THERE IS NO SUCH SYSTEM FOR VALUING THE PRECIOUS STONES. THUS THE SAME IS DONE ON PURE ESTI MATE AND GUESSWORK.(PLEASE SEE PARA 4.9 OF THE ORDER OF THE CLT (A) IN THIS REGARD) (4) THE OTHER ISSUE IS THAT THE VALUE OF GOLD JEWEL LERY ADMITTED BY ALL THE MEMBERS OF THE ASSESSEE'S FAMIL Y AS ON 31-3-2002 WAS RS. 1,40,05,713/- (INCLUSIVE OF VALUE OF PREVIOUS STONES) WHICH IF CONVERTED INTO QUANTITY A CCORDING TO THE PREVAILING RATE OF RS.5,010/-PER 10 GRAMS AS ON 31-3- 2002, ACCOUNTS TO 27955.515 GRAMS AND IF THE VALUE AS ON 29-1-2008 OF RS. 4,41,39,653/- IS CONVERTED INTO QU ANTITY IT WORKS OUT TO A LESSER QUANTITY. THUS, THE EXCESS IN ASSESSEES HANDS IS ON ACCOUNT O F THE ABOVE FACTORS, IE., (A) THAT THE JEWELLERY OF ALL THE MEMBERS WAS POOLED TOGETHER AND INVENTORIED ON THE DATE OF SEARCH; AND (B) ALSO ON ACCOUNT OF GUESS WORK INVOLVED IN ESTIMATION OF PRECIOUS STONES. COMING TO THE FIRST GROUND TAKEN BY THE DEPARTMENT TO THE EFFECT THAT, 'CIT (A) RELIED ON ASSESSEE'S INFORMAT ION WHICH IS NOT IN POSSESSION OF THE ASSESSING OFFICER' IS F ACTUALLY INCORRECT. THE INFORMATION RELIED UPON BY THE CLT ( A) IS FROM ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 12 THE WEALTH TAX RETURNS OF THE MEMBERS FILED WITH TH E ASSESSING OFFICER. THE DETAILS OF FILING OF WEALTH TAX RETURNS ARE AS UNDER: FILING OF W.T RETURNS FOR ASST YEAR FILING OF W.T RETURNS FOR ASST NAME OF THE FAMILY 2002-03 YEAR 2008-09 SI NO VALUE OF MEMBER/ASSESSEE DATE VALUE OF JEWELLERY DATE JEWELLERY ADMITTED ADMITTED 1 LAKSHMINANDAN 13-10-2002 13,75,266 30-10-2008 23,20,817 2 LAKSHMINANDAN 25-06-2002 41,26,100 31-07-2008 90,01,432 3 TARA DEVI 30-10-2002 32,89,578 30-09-2008 61,75,700 4 SUNIL KUMAR 31-07-2002 49,72,302 30-09-2008 80,09,554 5 RICHA 29-09-2003 44,500 31-07-2008 11,02,400 6 NAMRATHA 31-07-2002 1,97,967 31-07-2008 4,67,753 TOTAL VALUE: RS.1,40,05,713 RS 2,70,77,656 13. AS A MATTER OF FACT THE ASSESSING OFFICER HAD ALSO RELIED ON THE INFORMATION AVAILABLE IN THE WEALTH TAX RETURNS WHEN HE HAD GIVEN CREDIT FOR VALUE OF RS. 1,14,32,771/- AS PER WEALTH TAX RETURN OF THE FAMILY MEMBERS. THE A.D. FAILED TO GIVE CRED IT VALUE OF JEWELLERY ADMITTED IN THE WEALTH TAX RETURNS OF SRI LAKSHMINANDAN (HUF); SMT. TARADEVI; AND MS. NAMRATA. THUS IT IS R ATHER ODD TO TAKE A GROUND THAT 'CIT (A) RELIED ON ASSESSEE'S IN FORMATION WHICH IS NOT IN POSSESSION OF THE ASSESSING OFFICER'. APA RT FROM THE ABOVE IT IS SUBMITTED THAT DURING THE COURSE OF APPEAL PR OCEEDINGS, THE CIT (A) HAD MADE A CATEGORICAL QUERY REGARDING AVAI LABILITY OF THE INFORMATION BEFORE THE ASSESSING OFFICER; AND THE A NSWER GIVEN TO THE SAID QUERY IS EXTRACTED HEREUNDER: NOTE ON OTHER CLARIFICATIONS SOUGHT BY THE CIT(A): WHETHER THE ABOVE INFORMATION IS IN THE POSSESSION OF THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEED INGS? (A) THE PRECISE ANSWER TO THIS IS A CATEGORICAL YES . ALL THE WEALTH TAX RETURNS OF THE FAMILY MEMBERS WERE FILED BEFORE THE SAME ASSESSING OFFICER AND WERE FILED REGULARLY ON THE DUE DATES DURING THE COURSE OF THE RELEVANT YEARS. THE INFORMATION RELATING TO THE GOLD JEWELLERY ADMITTED IS AVAILABLE IN THE SAID RETURNS WITH HIM. FOR CIT 'S KIND ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 13 PERUSAL ALL THE WEALTH TAX RETURNS ARE ENCLOSED. (B) DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED DETAILED EXPLANATION ON 16-12-2010 I N THE MATTER AND AS A MATTER OF FACT THE SAID EXPLANATION WAS QUOTED IN THE ASSESSMENT ORDER 'PASSED FOR AY 2009- 10.A COPY OF THE SAID LETTER DT. 16-12-2010 IS ENCLOSED. (C) IN VIEW OF THE ABOVE IT CANNOT BE SAID THAT THE INFORMATION FURNISHED BEFORE THE HON'BLE CIT(A) IS EITHER ADDITIONAL EVIDENCE OR FILED FOR THE FIRST TIME. (D) IT IS AN ACCEPTED LEGAL PROPOSITION THAT IF THE ASSESSING OFFICER EITHER IGNORES OR DO NOT ACT ON THE MATERIA L AVAILABLE WITH HIM, THE APPELLATE AUTHORITY HAS TO ADJUDICATE THE MATTER ON THE BASIS OF INFORMATION AVAILABLE. 14. IN SUPPORT HIS CONTENTION, THE LEARNED AR REL IED UPON THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RAGHURAJI AGRO INDUSTRIES PVT. LIMITED (349 ITR 260 ) WHEREIN AT PAGES 263-264 THE HONBLE HIGH COURT AS UNDER:- NEEDLESS TO MENTION THAT THE POWER OF THE FIRST APP ELLATE AUTHORITY IS CO TERMINUS WITH THE POWERS OF THE ASSESSING OFFICER AS FAR AS EXAMINING THE EVIDENCE IS CONCERNED. THE APPELLATE AUTHORITY HAS ALL THE POW ERS WHICH ORIGINAL AUTHORITY HAS, SUBJECT TO CONDITIONS/RESTRICTIONS, IF ANY, PRESCRIBED BY LAWS AS PER THE RATIO LAID DOWN IN THE FOLLOWING CASES: - I) JUTE CORPORATION OF INDIA LTD. VS. CIT (1991) 18 7 ITR 688 (SC) AND II) CIT VS. NIRBHERAM DALURAM (1997) 224 ITR 610 (SC) SO THE PLEA OF THE APPELLANTS COUNSEL THAT EXPLANA TION GIVEN BEFORE THE CIT (A) WAS NOT GIVEN BEFORE THE ASSESSING OFFICER, IS NOT SUSTAINABLE. IN VIEW OF THE ABOVE, WE FIND NO REASON TO INTERFER E WITH THE IMPUGNED ORDER PASSED BY THE TRIBUNAL AND THE S AME IS HEREBY SUSTAINED. THE ANSWER TO THE QUESTION IS IN THE AFFIRMATIVE, I.E., AGAINST THE REVENUE AND IN FAVOU R OF THE ASSESSEE. ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 14 15. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY RELIED UPON THE ORDER OF THE ASSESSI NG OFFICER. 16. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT SIMILA R AND IDENTICAL ISSUE WAS CONSIDERED BY US IN ITA NO.966 TO 968/HYD/2012 AND GROUP IN THE CASES OF SRI KRISHNA KUMAR AND OTHERS VIDE ORDER DATED 29-11-2013 WHEREIN TH E TRIBUNAL HELD AS FOLLOWS: 32. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDERS OF THE REVENUE AUTHORITIES. WE HAVE ALS O EXAMINED THE DECISIONS RELIED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE. THE ISSUE BEFORE US PRECISELY IS WHETHER THERE IS AN EXCESS OF JEWELLERY TO THE EXTENT OF RS.1,27,60,063 /- AS DETERMINED BY THE ASSESSING OFFICER. AS CAN BE SEEN FROM THE ASSESSMENT ORDER, THE ASSESSING OFFICER ON THE BASIS OF THE JEWELLERY DECLARED IN T HE WEALTH-TAX RETURN FILED BY THE ASSESSEE AND HIS FAM ILY MEMBERS FOUND THAT THE TOTAL JEWELLERY DECLARED TO THE TUNE OF RS.2,63,60,261/- WHEREAS AS PER THE REPORT DATED 29-1-2009 OF THE REGISTERED VALUER TH E TOTAL JEWELLERY OF THE ASSESSEE AND HIS FAMILY MEMBERS WAS VALUED AT RS.4,19,67,132/-. WHEREAS BEFORE THE CIT (A) IT WAS CONTENDED BY THE ASSESSEE THAT THE ASSESSING OFFICER HAS NOT TAKEN INTO CONSIDERATION THE JEWELLERY DECLARED BY SRI KRISHNA KUMAR HUF IN THE WEALTH-TAX RETURN AMOUNTING TO RS.60,36,175/- AND THE VALUE OF SILVERWARE OF RS.27,22,890/- DECLARED IN THE WEALTH TAX RETURN WHICH WAS INCLUDED IN THE VALUATION MADE BY THE VALUER AMOUNTING TO RS.4,19,67,132/-. HOWEVER, IT I S SEEN FROM THE ASSESSMENT ORDER THAT SO FAR AS VALU E OF JEWELLERY STATED TO HAVE BEEN DECLARED IN THE WEALTH-TAX RETURN OF SRI KRISHNA KUMAR HUF AMOUNTING TO RS.60,36,175/- DOES NOT APPEAR IN PARA-2 OF THE ASSESSMENT ORDER WHEREIN THE ASSESSING OFFICER HAS CONSIDERED THE JEWELLERY DECLARED IN THE CASE OF THE ASSESSEE AND OTHER FAM ILY MEMBERS. IT IS NOT KNOWN WHETHER THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER BY T HE ASSESSEE. SIMILARLY, THE SILVERWARE VALUED AT RS.27,22,890/- ALSO DOES NOT FIND PLACE ANYWHERE IN THE ASSESSMENT ORDER. IT IS ALSO NOT KNOWN WHETHER THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSIN G OFFICER THAT THE SILVERWARE OF RS.27,22,890/- STATE D TO HAVE BEEN DECLARED IN THE WEALTH-TAX RETURN ALSO ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 15 FORMS PART OF THE VALUATION MADE BY THE REGISTERED VALUER. THEREFORE, IN OUR VIEW, THE CIT (A) BEFORE ACCEPTING THE CONTENTION OF THE ASSESSEE SHOULD HAV E GIVEN AN OPPORTUNITY TO THE ASSESSING OFFICER TO P UT FORTH HIS OPINION ON THE ISSUE. THIS IS BECAUSE OF THE FACT, AS IT APPEARS FROM THE ASSESSMENT ORDER, THE ASSESSEE HAS NOT SUBMITTED THE BASIS FOR VALUATION OF GOLD JEWELLERY, STONES, DIAMONDS ETC. IN AFORESAID VIEW OF THE MATTER, WE ARE INCLINED TO REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFYING THE CLAIM OF THE ASSESSEE. IF THE ASSESS EE IS ABLE TO PROVE THAT JEWELLERY AMOUNTING TO RS.60,36,175/- HAS BEEN DECLARED AT THE HANDS OF TH E HUF IN THE WEALTH-TAX RETURN AND FURTHER IF IT IS F OUND THAT SILVERWARE AMOUNTING TO RS.27,22,890/- HAS BEEN DECLARED IN THE WEALTH-TAX RETURN AND ALSO FORMS PART OF THE VALUATION MADE BY THE REGISTERED VALUER, THEN THEY CANNOT BE TREATED AS UNEXPLAINE D. WHILE DECIDING THE ISSUE, THE ASSESSING OFFICER SHOULD ALSO TAKE INTO ACCOUNT THE ASSESSEES CONTENTION WITH REGARD TO THE DIFFERENCE ARISING ON ACCOUNT OF RATE OF GOLD AS ON 31-3-2008 AND AS ON 1 6- 3-2009. THE ASSESSING OFFICER SHALL DECIDE THE ISS UE AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN VIEW OF THE ABOVE AND THE GROUNDS RAISED IN THES E APPEALS ARE QUITE SIMILAR AND IDENTICAL, AFTER CONSIDERING THE CONSISTENT VIEW TAKEN BY THE TRIBUNAL IN THE CASE OF SRI KRISH NA KUMAR AND OTHERS (SUPRA), WE ARE INCLINED TO REMIT THE IS SUES BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE DE NOVO IN ACCORDANCE WITH LAW AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 17. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE AS WELL AS BY THE DEPARTMENT ARE TREATED AS ALLOWED FO R STATISTICAL PURPOSES. PRONOUNCED IN OPEN COURT ON 13-12-2013. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 13 TH DECEMBER, 2013 JMR* ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 16 COPY FORWARDED TO: 1. SRI LAKSHMINANDAN, 21-2-636, URDUGALLI, PATHERGA TTI, HYDERABAD. 2. THE ACIT, CENTRAL CIRCLE-4, HYDERABAD. 3. THE CIT(A) VII, HYDERABAD. THE CIT, CENTRAL RANGE-2, HYDERABAD. 4. THE DR ITAT, HYDERABAD ITA NO. 1655 AND 1597 OF 2012 SRI LAXMINANDAN, HYD. ====================== 17 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER