CHAMELI A KOTADIA, MUMBAI V. DCIT CEN CIR 35, MUMBAI

ITA 168/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3281 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 26-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 06-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: BEHARILAL
• Keywords: Unexplained investment; Salary income; Valuation report
• Section: 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL C CC C BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , ! ! ! ! ' ' ' ' , . BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI SANJAY ARORA SANJAY ARORA SANJAY ARORA SANJAY ARORA, AM , AM , AM , AM & && & SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM ./ I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.168/MUM/2012 168/MUM/2012 168/MUM/2012 168/MUM/2012 ( #$ #$ #$ #$ % % % % / ASSESSMENT YEAR: 2008-09) CHAMELI A KOTADIA, 7, KARIM MANOR, 8 KRISHANA SANGHI MARG, GAMDEVI, MUMBAI-400007 $ $ $ $ / VS. DY. COMISSIONER OF INCOME TAX, CENTRAL CIRCLE -35, AAYKAR BHAVAN, M.K, MARG, MUMBAI-400020 & ./ ' ./ PAN/GIR NO. :AAGPK6596D ( &( / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( )*&( / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) &( &( &( &( + + + + / APPELLANT BY : SHRI BEHARILAL )*&( )*&( )*&( )*&( , ,, , + + + + /RESPONDENT BY : SHRI A. C. TEJPAL $ $ $ $ , ,, , - - - - / DT. OF HEARING : 26 TH JUNE 2013 .% .% .% .% , ,, ,- - - - / DT.OFPRONOUNCEMENT: 3 RD JULY 2013 / / O R D E R PER : ' , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 31.11.2011 OF THE COMMISSIONER OF INCOME TAX(APPEAL S) FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-37, MUMBAI ERR ED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ADDITION OF ` 4, 21,915/- MADE BY THE ASSESSING OFFICER IN RESPECT OF ALLEGED UNEXPLA INED DIAMOND JEWELLERY AND UNQUANTIFIED VALUE OF GOLD JEWELLERY. 1.2 THE COMMISSIONER OF INCOME TAX(APPEALS)-37 FAIL D TO APPRECIATE THAT THE DIAMOND JEWELLERY HELD TO BE UN EXPLAINED BY THE ASSESSING OFFICER , WAS PART OF THE JEWELLERY W HICH WAS ITA NO. 168/M/2012 CHAMELI A KOTADIA . 2 RELEASED BY THE SEARCH PARTY, AFTER VERIFICATION OF VALUATION REPORTS, IN CONSULTATION WITH GOVERNMENT VALUER. 1.3 THE COMMISSIONER OF INCOME TAX(APPEALS) ERRED I S NOT ACCEPTING THE ACQUISITION OF GOLD JEWELLERY PURCHAS ED FROM REGULAR BOOKS OF ACCOUNTS ACCEPTED BY THE DEPARTMENT. 1.4 THE COMMISSIONER OF INCOME TAX(APPEALS) FACTUAL LY ERRED IN HOLDING THAT GOLD JEWELLERY PURCHASED OF ` 71,400/- WAS OUT OF CASH ON HAND CASH ON HAND CASH ON HAND CASH ON HAND IN THE BOOKS, WHICH WAS ACTUALLY PUR CHASED BY CHEQUE CHEQUE CHEQUE CHEQUE. THE FACTUAL ERROR WAS AS RESULT OF TWO ID ENTICAL AMOUNT OF ` 71,400/-. 3. AT THE TIME OF HEARING THE LD. AR OF THE ASSESSE E HAS STATED THAT THE ASSESSEE HAS NOT PRESSED GROUND NO. 1.3 & 1.4, THER EFORE, THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD. DR HAS NO OBJE CTION, IF THE GROUND NO. 1.3 & 1.4 ARE DISMISSED AS NOT PRESSED. ACCORDI NGLY GROUND NO. 1.3 & 1.4 ARE DISMISSED BEING NOT PRESSED. 4. GROUND NO. 1 & 1.2 REGARDING TO ADDITION ON ACCO UNT OF UNEXPLAINED DIAMOND JEWELLERY. THE ASSESSEE IS AN INDIVIDUAL AN D DERIVING INCOME FROM SALARY, PENSION AND OTHER SOURCES. A SEARCH & SEIZURE OPERATION U/S 132A OF THE INCOME TAX ACT WAS CARRIED OUT ON 15.5. 2008 AT THE RESIDENTIAL AND BUSINESS PREMISES OF M/S DIMPLE DRU MS & BARREL PVT. LTD. AND ITS GROUP ASSOCIATES INCLUDING ITS DIRECTORS/PA RTNERS. DURING THE COURSE OF SEARCH & SEIZURE OPERATION INTER ALIA UNACCOUNTE D JEWELLERY WAS FOUND FROM THE RESIDENTIAL PREMISES OF THE DIRECTORS OF M /S DIMPLE DRUMS & BARREL PVT. LTD. PART OF THE JEWELLERY FOUND DURING THE SEARCH & SEIZURE PROCEEDING BELONGS TO THE ASSESSEE. THE ASSESSEE SU RRENDERS INCOME OF ` 2 LACS ON ACCOUNT OF UNDISCLOSED INVESTMENT. HOWEVE R, THE VALUATION OF THE UNDISCLOSED DIAMOND JEWELLERY WAS TAKEN AT ` 1, 76,680/- BY THE VALUER ITA NO. 168/M/2012 CHAMELI A KOTADIA . 3 AT THE TIME OF PREPARATION OF INVENTORY BY THE SEAR CH PARTY. THE ASSESSEE FILED RECONCILIATION OF THE DIAMOND JEWELLERY. THE AO REJECTED THE RECONCILIATION FILED BY THE ASSESSEE ON THE GROUND THAT CERTAIN ITEMS IN THE RECONCILIATION STATEMENT DO NOT MATCHING WITH THE I TEMS APPEARING IN THE VALUATION REPORT. ACCORDINGLY, THE AO HAS MADE AN A DDITION OF ` 4,21,915/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN DIAMOND JE WELLERY. ON APPEAL THE COMMISSIONER OF INCOME TAX(APPEALS) HAS CONFIRM ED AN ACTION OF THE AO. 5. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ISSUE HAS BEEN DEA LT WITH BY THE AO IN PARA 5.2 OF THE ASSESSMENT ORDER AS UNDER: 5.2 DURING THE COURSE OF SEARCH & SEIZURE PROCEEDI NGS, APART FROM GOLD JEWELLERY, DIAMONDS JEWELLERY WAS ALSO FO UND AMOUNTING TO RS. 8,29,315/-. ASSESSEE HAS ALREADY SURRENDERED DIAMOND JEWELLERY VALUING RS. 2,00,000/- ON ACCOUNT OF UNDI SCLOSED INVESTMENT. (IT IS CLAIMED THAT VALUE OF DIAMOND JE WELLERY WAS RS. 1,76,680/- WHICH WAS TAKEN AT RS. 2,00,000/). BALAN CE DIAMOND JEWELLERY REMAINS OF RS. 6,52,635/- (8,29,315-1,76, 680). DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153A OF TH E L.T. ACT, 1961 ASSESSEE FILED RECONCILIATION OF REMAINING DIA MOND JEWELLERY VIZ-A-VIZ DIAMOND JEWELLERY AS PER VALUATION REPORT DATED 30.08.1989. A PERUSAL OF RECONCILIATION STATEMENT R EVEALS THAT ITEMS APPEARING AT S.NO.23 FOR RS. 62,100/-, S.NO. 24 FOR RS. 1,62,450/-, S.NO.26 FOR RS. 85,230/-, S.NO. 29 FOR 19,180/-, S.NO. 38 FOR RS. 10,0,75/-, S.NO. 39 FOR RS. 26,370/- AND S.NO.1 FOR RS. 56,510/- TOTALLING TO RS. 4,21,915/- ARE NOT MATCHI NG WITH THE ITEMS APPEARING IN THE VALUATION REPORT. IN THESE ITEMS N ET WEIGHT, NUMBER OF PIECES AND CTS ARE NOT MATCHING WITH VALU ATION REPORT FILED EARLIER. LOOKING TO THE ABOVE, I HEREBY ADD A N AMOUNT OF RS. 12,21,615/- AS UNDISCLOSED INVESTMENT IN JEWELLERY (RS. 4,21,915/- DIAMOND JEWELLERY AND RS. 7,99,700/- GOLD JEWELLERY ). SINCE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IT S INCOME, PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED SEP ARATELY. ITA NO. 168/M/2012 CHAMELI A KOTADIA . 4 6. IT IS CLEAR FROM FINDING OF THE AO THAT THE ADDI TION HAS BEEN MADE BECAUSE THE ITEMS APPEARING AT SERIAL NO. 23, 24, 2 6, 29, 38, 39 AND SERIAL NO. 1 DO NOT MATCH WITH THE ITEMS APPEARING IN THE VALUATION REPORT. IT IS NOT CLEAR FROM THE ORDER OF THE ASSESSING OFFICER W HICH VALUATION REPORT HE HAS REFERRED. WE FIND THAT DURING THE SEARCH & SEIZ URE OPERATION THE VALUATION OF THE JEWELLERY ITEM WISE WAS GOT DONE T HROUGH A GOVERNMENT APPROVED VALUER GANPATLAL M. JAIN VIDE VALUATION RE PORT DATED 15.5.2008, WHICH HAS BEEN DULY ACKNOWLEDGED BY THE SEARCH PART Y THROUGH SHRI R. C. NARULA, DDI, UNIT 1. THERE IS NO DISPUTE ON THE POI NT OF VALUATION AS MADE BY THE GOVERNMENT APPROVED VALUER. THE ASSESSEE CL AIMED THAT OUT OF THE TOTAL JEWELLERY FOUND AT THE TIME OF SEARCH, SO ME OF THE JEWELLERY WAS ALREADY DISCLOSED BY THE ASSESSEE IN THE WEALTH TAX RETURN AND THE VALUE OF THE SAME IS SHOWN IN THE VALUATION REPORT DATED 30.8.1989. THIS FACT OF EARLIER VALUATION REPORT AND DISCLOSER OF THE SAID JEWELLERY HAS NOT BEEN DISPUTED BY THE AO. FURTHER, THE ASSESSEE HAS ALSO FURNISHED THE RELEVANT RECORD OF THE DIAMOND JEWELLERY PURCHASED BY THE AS SESSEE AFTER 30.8.1989, WHICH HAS BEEN DULY DISCLOSED AND RECORD ED IN THE BOOKS OF ACCOUNT. THE DETAILS OF THE JEWELLERY PURCHASED BY THE ASSESSEE AFTER THE VALUATION REPORT DATED 30.8.1989 ARE GIVEN AS PAGE NO. 15 OF THE PAPER BOOK. THE ASSESSING OFFICER HAS MADE THE ADDITION O N ACCOUNT OF UNEXPLAINED DIAMOND JEWELLERY DUE TO THE REASON THA T THE ITEM APPEARING AT SERIAL NO. 23, 24, 26, 29, 38, 39 AND SERIAL NO. 1 DO NOT MATCH WITH THE ITEMS APPEARING IN THE VALUATION REPORT. IT IS PERT INENT TO NOTE THAT THE LIST OF INVENTORY PREPARED ON 19.6.2008 BY THE SEARCH PA RTY HAS CLEARLY ITA NO. 168/M/2012 CHAMELI A KOTADIA . 5 MENTIONED THAT ITEM NO. 21, 27, 28, 31, 33, 34, 40 & 41 BELONGS TO THE ASSESSEE AND THE VALUE OF THESE ITEMS HAS BEEN DETE RMINED AT ` 1,76,680/-. 7. THUS, IT APPEARS THAT AFTER TAKING INTO ACCOUNT THE JEWELLERY AS PER THE VALUATION DATED 30.8.1989 AND SUBSEQUENT PURCHA SE AS PER BOOKS OF ACCOUNT, THE SEARCH PARTY HAS FINALLY PREPARED THE INVENTORY WITH RESPECT TO THE ITEMS BEING UNEXPLAINED INVESTMENT IN JEWELL ERY, AND THE ASSESSEE SURRENDER THE SAME. EVEN OTHERWISE AS PER THE VALUA TION MADE ON 15.5.2008 AT THE TIME OF SEARCH THE DIAMOND JEWELLE RY FOUND AND BELONGS TO THE ASSESSEE APPEARING AT SERIAL NO. 21-41 AND T HE TOTAL WEIGHT OF THE DIAMOND IS 29.28 CARAT VALUE AT ` 7,72,805/- OUT O F WHICH THE DIAMOND TO THE EXTENT OF 1.68 CARAT VALUE OF ` 56,510/- WAS TR EATED AS PERSONAL JEWELLERY. THE ASSESSEE SURRENDERED THE DIAMOND JEW ELLERY WEIGHING 6.43 CARAT VALUE AT ` 1,76,680/- AND FURTHER THE ASSESSE E HAS PURCHASED THE DIAMOND OF 18.06 CARAT AFTER THE VALUATION DATED 30 .8.1989 WHICH HAS BEEN RECORDED IN THE BOOKS OF ACCOUNT AND BILLS /IN VOICES WERE ALSO PRODUCED. THUS THE ADDITION, IF ANY ON ACCOUNT OF U NEXPLAINED INVESTMENT IN DIAMOND CAN BE MADE ONLY TO THE EXTENT OF THE DI FFERENCE BETWEEN THE TOTAL QUANTITY OF DIAMOND FOUND AT THE TIME OF SEAR CH AND THE DIAMOND ALREADY DECLARED BY THE ASSESSEE IN WEALTH TAX AS P ER THE VALUATION REPORT DATED 30.8.1989 ALONG WITH THE DIAMOND PURCHASED BY THE ASSESSEE TO THE EXTENT OF 18.06 CARAT AND SURRENDER MADE BY THE ASSESSEE TO THE EXTENT OF 6.43 CARAT. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW QUA THIS ISSUE. SINCE, IT IS NOT CLEAR FROM T HE VALUATION REPORT DATED ITA NO. 168/M/2012 CHAMELI A KOTADIA . 6 30.8.1989 AS HOW MUCH QUANTITY OF DIAMOND WAS DECLA RED BY THE ASSESSEE, THEREFORE, WE DIRECT THE AO TO WORK OUT T HE DIAMOND ALREADY DECLARED BY THE ASSESSEE INCLUDING PURCHASED AFTER 30.8.1989 AND SHOWN IN THE BOOKS OF ACCOUNT AS WELL AS THE SURRENDER MA DE BY THE ASSESSEE TO THE EXTENT OF 6.43 CARAT. IF ANY DIFFERENCE IS FOUN D IN THE QUANTITY OF DIAMOND FOUND DURING THE SEARCH AND THE QUANTITY AL READY DECLARED BY THE ASSESSEE, PURCHASED AND SURRENDERED, THE SAME C AN BE CONSIDERED FOR ADDITION. THE VALUATION OF SUCH DIFFERENCE IN QUANT ITY OF DIAMOND IF ANY CAN BE MADE BY TAKING THE AVERAGE VALUE OF DIAMOND PER CARAT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 RD JULY 2013 / , .% 0 1$2 3 RD , 3 SD/- SD/- ( ) (SANJAY ARORA) ACCOUNTANT MEMBER ( ' ) # (VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 3 RD JULY 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER