Deepak Radhyesham Jhunjhunwala, Pune V. ACIT Cen Cir Aurangabad., Aurangabad

ITA 1750/PUN/2012

• Counselvise Citation: 175024514 RSA 2012
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-12-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 28-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VERMA
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Unexplained investment; Capital asset; Source of fund; Cost of acquisition
• Section: 153A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1750/PN/2012 (ASSESSMENT YEAR: 2001-02) DEEPAK RADHYESHAM JHUNJHUNWALA MZSK & ASSOCIATES, LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESELY ROAD, PUNE 411001 PAN: ACQPJ0657A . APPELLANT VS. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, AURANGABAD . RESPONDENT APPELLANT BY : SHRI NILESH KHANDELWAL RESPONDENT BY : SMT. M.S. VERMA, CIT DATE OF HEARING : 04-12-2014 DATE OF PRONOUNCEMENT : 16-12-2014 ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT (A), AURANGABAD DATED 18.07.2012 RELATING TO ASSESSMENT YEAR 2001-02 IS AGAINST ORDER PASSED UNDER SECTION 153A R.W.S. 143(3)(II) O F THE INCOME-TAX ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED TAXING AUTHORITIES BELLOW HAD ERRED IN NOT ALLOWING THE CLAIM OF RS.68,500/- TOWARDS LONG TERM CAPITAL LOSS DU E TO INDEXATION OF VALUE OF CAPITAL ASSET. CONSIDERING THE F ACTS OF THE CASE AND PROVISIONS OF LAW, THE CAPITAL LOSS MAY BE ALLO WED. JUST AND PROPER RELIEF MAY BE GRANTED TO THE APPELLANT AS PER THE PROVISIONS OF LAW. 2. THE LEARNED TAXING AUTHORITIES BELLOW HAD ERRED IN MAK ING AN ADDITION OF RS.1,45,534/- AS UNDISCLOSED INCOME U/S 69 OF THE IT ACT, 1961. CONSIDERING THE FACTS OF THE CASE AND PROVI SIONS OF LAW, ITA NO.1750/PN/2012 DEEPAK RADHYESHAM JHUNJHUNWALA 2 THE ADDITION MAY BE DELETED. JUST AND PROPER RELIEF M AY BE GRANTED TO THE APPELLANT AS PER THE PROVISIONS OF LAW. 3. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, TO DELETE, TO E NLARGE THE GROUNDS OF APPEAL AT THE TIME OF HEARING 4. THE BRIEF FACTS OF THE CASE ARE THAT, SEARCH ACTION UND ER SECTION 132 OF THE ACT WAS CONDUCTED ON SHAH AND JHUNJHUNWALA GROUP OF JALNA AND AURANGABAD RESPECTIVELY. THE SHAH GROUP WAS MAINLY ENGAGED IN THE MANUFACTURE OF BIDIS AND GUTKA (PAN MASALA) WHILE THE JHUNJHUNWALA GROUP WAS THE PRINCIPAL SUPPLIER OF PACKING MA TERIAL FOR GUTKA UNIT OF SHAH GROUP. THE ASSESSEE BELONGS TO THE JHUNJHUNWALA GROUP AND WAS DIRECTOR OF M/S ORION LAMINATES LTD. THE RESIDENCE AND BUSINESS PREMISES WERE ALSO COVERED BY SEARCH ACTI ON UNDER SECTION 132 OF THE ACT. THE ASSESSEE HAD FILED ORIGINAL RE TURN OF INCOME DECLARING TOTAL INCOME OF RS.1,14,914/- ON 31.07.2001 AND HAD FURTHER REVISED THE RETURN OF INCOME ON 14.08.2003 DE CLARING TOTAL INCOME OF RS.1,12,209/-. IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THERE WAS NO CHANGE IN THE RET URNED INCOME. THE ASSESSEE BEFORE THE ASSESSING OFFICER CHALLENGED THE J URISDICTION CONFERRED UNDER SECTION 153A OF THE ACT. HOWEVER, THE S AID OBJECTION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER AS THE SEARCH WARRANT CONTAINED THE NAME OF THE ASSESSEE AT ANAND N IWAS, NEAR SANT EKNATH RANG MANDIR, OSMANAPURA, AURANGABAD, WHICH WAS DU LY EXECUTED. 5. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HA D SHOWN A LOSS OF RS.68,500/- ON SALE OF PRECIOUS STONES. THE ASSES SEE WAS ASKED TO FURNISH THE BILLS OF THE PURCHASE OF THE SAID PREC IOUS STONES, SOURCE OF FUNDS FOR ACQUISITION AND PROOF OF HOLDING THE STON ES FOR MORE THAN 3 YEARS AND ALSO PROOF OF SALE OF THE STONES A LONG WITH MODE ITA NO.1750/PN/2012 DEEPAK RADHYESHAM JHUNJHUNWALA 3 OF RECEIPT OF SALE PROCEEDS. IN REPLY, THE ASSESSEE CLAIME D THAT THE VALUE OF THE SAID STONES WAS DECLARED IN VDIS, 1997 AND T HE PURCHASE BILL AND SALE BILLS OF THE PRECIOUS STONES WERE NOT AVAILABLE WITH THE ASSESSEE. THE ASSESSEE FILED THE COPY OF VDIS DECLARATIO N MADE IN THE YEAR 1997. THE ASSESSEE FAILED TO FURNISH ANY PROOF OF TH E SALE OF PRECIOUS STONES I.E. TYPE OF STONES SOLD, QUANTITY, THE RATE OF SALE AND THE PERSON TO WHOM THE SAID STONES WERE SOLD AND THE MODE OF RECEIPT OF SALE PROCEEDS. THE ASSESSEE VIDE LETTER DATED 30.10.20 08 FILED THE COPIES OF THE BALANCE SHEET RELATING TO FINANCIAL YEARS 200 0-01, 2001- 02 AND 2002-03 WHEREIN, THE VALUE OF THE PRECIOUS STONES DECLARED IN THE VDIS WERE REDUCED, EACH YEAR IN PROPORTION TO THE COST OF ACQUISITION OF STONES SOLD. THE PLEA OF THE ASSESSEE WAS T HAT IT WAS LEFT WITH 4 PIECES VALUED AT RS.2,200/- FROM THE PACKET OF 195 PIECES AND ALSO 101 PIECES VALUED AT RS.36,280/- AND HENCE THE TOTA L STOCK WAS OF RS.38,480/-. THE ASSESSING OFFICER FROM THE PERUSAL OF THE DOCUMENTS FILED BY THE ASSESSEE AND THE VDIS DECLARATION NOTED THA T DIAMOND CUTS OF 82.4 CARATS, TOTAL 347 PIECES WERE DECLARED BY T HE ASSESSEE WHICH WERE VALUED AT RS.3,05,980/- FOR THE YEAR 1987. THIS VALUE APPEARED IN THE OPENING BALANCE SHEET OF THE ASSESSEE FO R FINANCIAL YEAR 1999-2000. IN FINANCIAL YEAR 2000-01, THE ASSESSEE SOLD DIAMONDS VALUING RS.65,000/- OUT OF RS.3,05,980/- AT A PRIC E OF RS.1,20,000/-. THE ASSESSEE CLAIMED TO HAVE SOLD THE SAID DIAMONDS AT A PRICE OF RS.1,20,000/- WHILE THE COST OF ACQUISITION A FTER INDEXATION WAS CALCULATED AT RS.1,88,500/- AND HENCE LONG TERM CAPITAL LOSS OF RS.68,500/- WAS CLAIMED. THE ASSESSEE FAILED TO FURNISH ANY PROOF OF SALE OF THE STONES AND THE ONLY PROOF RELATI NG SALE OF DIAMONDS WAS THAT VALUE OF PRECIOUS STONES HAD REDUCED IN THE BALANCE SHEET IN THE YEAR OF SALE. THE ASSESSING OFFICER THUS, OBSERVED ITA NO.1750/PN/2012 DEEPAK RADHYESHAM JHUNJHUNWALA 4 THAT THEREFORE, IN THE ABSENCE OF THE CRUCIAL DETAILS, THE S ALE CONSIDERATION CAN AT MAXIMUM BE REGARDED AS WORKED O UT BY ADJUSTING THE COST OF ACQUISITION WITH THE INFLATION COST OF IND EX. HENCE, THE LOSS OF RS.68,500/- WAS DISALLOWED AND THE INCOME OF THE ASSESSEE WAS INCREASED BY RS.68,500/-. 6. ANOTHER ADDITION MADE IN THE HANDS OF THE ASSESSEE W AS ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SHARES. THE ASSESS EE IN THE RETURN OF INCOME FILED UNDER SECTION 153A OF THE ACT FOR A SSESSMENT YEAR 2006-07 HAD CLAIMED LONG TERM CAPITAL GAIN OF RS.9,93,2 38/-. THE ASSESSEE STATED THAT SINCE THE INVESTMENTS WERE O LD, THEREFORE, THE EXACT COST OF ACQUISITION OF THE SHARES WAS NOT AVAILABLE AND ESTIMATED COST OF RS.75,000/- WAS ADOPTED. THE ASSESSEE WAS ASK ED TO FURNISH THE DETAILS OF PURCHASE AND SALE OF SHARES IN SUPPORT OF HIS CLAIM OF LONG TERM CAPITAL LOSS. THE ASSESSEE IN SUPPORT OF HIS CLAIM FURNISHED THE BALANCE SHEET WHEREIN, THE SAID SHARES WERE DECLARED AS INVESTMENTS. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO W HY THE INVESTMENTS IN SHARES RELATING TO THE YEAR UNDER CONSIDE RATION SHOULD NOT BE TREATED AS UNEXPLAINED INVESTMENTS IN THE RESPEC TIVE ASSESSMENT YEARS AND TAXED. A SUM OF RS.1,06,490/- APPE ARED AS INVESTMENTS IN SHARES IN THE BALANCE SHEET FILED AS RAUNAK SHARES AND THE ASSESSEE HAD SET OFF OF THE SAME WHILE ARRIVING AT THE AMOUNT OF UNDISCLOSED INVESTMENTS IN SHARES. THE ASSESSING OFFICER IN VIEW THEREOF, OUT OF TOTAL INVESTMENTS MADE IN SHARES OF RS.2, 52,024/- DURING THE BLOCK PERIOD SINCE ONLY RS.1,45,534/- WAS EXPLA INED, BALANCE OF RS.1,44,534/- WAS ADDED AS INCOME OF THE ASSESSEE. 7. THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER AS THE ASSESSEE FAILED TO FURNISH ANY PROOF IN SUPPORT OF THE SALE OF PRECIOUS ITA NO.1750/PN/2012 DEEPAK RADHYESHAM JHUNJHUNWALA 5 STONES. FURTHER, IN RESPECT OF THE SECOND ADDITION ON A CCOUNT OF INVESTMENT IN SHARES, THE PLEA OF THE ASSESSEE WAS THAT THE SHARES WERE PURCHASED BEYOND THE BLOCK PERIOD AND THESE SHAR ES COULD NOT CONSIDERED FOR THE PURPOSE OF ADDITION AS UNDISCLOSED INCOM E UNDER SECTION 69 OF THE ACT. HOWEVER, THE ASSESSEE FAILED TO FUR NISH ANY EVIDENCE IN SUPPORT THEREOF AND IN VIEW THEREOF, THE ADDITIO N OF RS.1,44,534/- WAS UPHELD BY THE CIT(A). 8. THE ASSESSEE IS IN APPEAL AGAINST BOTH THE AFORESAID AD DITIONS MADE IN HIS HANDS. 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSE E WITH REGARD TO GROUND NO.1 RAISED AGAINST NON-ACCEPTANCE OF LONG TERM LOSS OF RS.68,500/- POINTED OUT THAT THE DETAILS OF PRECIOUS ST ONES FROM YEAR TO YEAR WERE FILED AS AGAINST THE LOSS IN THE YEAR UNDER CONSIDERATION, THERE WAS CAPITAL GAIN IN ASSESSMENT YEARS 200 2-03 AND 2003-04 WHICH WAS ACCEPTED IN THE SUCCEEDING YEAR. HENCE, T HERE WAS NO MERIT IN THE DISALLOWANCE OF LOSS IN THE HANDS OF THE AS SESSEE. FURTHER, OUR ATTENTION WAS DRAWN TO THE LIST OF PURCHASE OF EQUITY SHARES WHICH IS PLACED AT PAGE 72 OF THE PAPER BOOK WHIC H REFLECTS THAT SOME OF SHARES PURCHASED PRIOR TO THE BLOCK OF SIX YEARS. THE SAID LIST WAS GIVEN TO THE ASSESSING OFFICER AND THE SHARES TOT ALING VALUE OF RS.94,125/- PERTAIN TO THE PERIOD PRIOR TO THE BLOCK PER IOD. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ISSUE RAISED IN THE PRESENT APPEAL IS IN RELATION T O THE LONG TERM CAPITAL LOSS BOOKED ON SALE OF PRECIOUS STONES. THE ASSESSEE ITA NO.1750/PN/2012 DEEPAK RADHYESHAM JHUNJHUNWALA 6 CLAIMS THAT IT HAD SOLD CERTAIN PRECIOUS STONES DURING THE YEAR UNDER CONSIDERATION WHICH IN TURN, WERE DECLARED UNDER THE VDIS SCHEME, 1997. THE ASSESSEE WAS REQUISITIONED TO FURNISH THE DETA ILS OF SALE OF THE PRECIOUS STONES I.E. SALE RECEIPTS, QUANTITY SOLD AND T HE RATE AT WHICH IT WAS SOLD. FURTHER, THE ASSESSEE WAS ALSO ASKED TO FURNISH THE EVIDENCE OF SALE AND THE MODE BY WHICH THE SALE PROCEEDS WERE RECEIVED. HOWEVER, THE ASSESSEE FAILED TO FURNISH ANY EVIDE NCE IN REGARD THERETO NEITHER BEFORE THE ASSESSING OFFICER NOR B EFORE THE CIT(A). EVEN BEFORE US, THE ASSESSEE HAD NOT FURNISHED AN Y EVIDENCE OF SALE OF THE SAID PRECIOUS STONES DURING THE YEAR UNDER CONSIDERATION. THE PLEA OF THE ASSESSEE IS THAT IT HAD SO LD THE SAID PRECIOUS STONES AT A PRICE OF RS.1,20,000/-, BUT NO SUPPOR TING EVIDENCE IN THIS REGARD WAS FURNISHED BY THE ASSESSEE. T HE COST OF THE SAID DIAMONDS WERE CLAIMED TO BE RS.65,000/- AND AFTER IND EXATION, THE VALUE WAS CALCULATED AT RS.1,88,500/- AND THE LONG TER M CAPITAL LOSS OF RS.68,500/- WAS DECLARED BY THE ASSESSEE. IN THE ABSENCE OF THE RELEVANT DETAILS JUSTIFYING THE PRICE AT WHICH THE SAI D PRECIOUS STONES WERE SOLD BY THE ASSESSEE, THE CAPITAL GAIN CLAIME D BY THE ASSESSEE WAS DISALLOWED, AGAINST WHICH THE ASSESSEE IS IN A PPEAL BEFORE US. HOWEVER, IN THE ABSENCE OF THE EVIDENCE OF SALE OF PRECIOUS STONES AT A PARTICULAR PRICE, WE FIND NO MERIT IN THE GROUN DS OF APPEAL RAISED BY THE ASSESSEE AS THE ASSESSEE HAS FAILED TO JU STIFY THE QUANTUM OF LONG TERM CAPITAL LOSS DECLARED BY IT. UPHOLDING THE ORDER OF CIT(A) IN DISALLOWING RS.68,500/- I.E. THE LOSS CLAIMED BY TH E ASSESSEE UNDER THE HEAD LONG TERM CAPITAL LOSS, WE DISMISS THE GROUND NO.1 RAISED BY THE ASSESSEE. ITA NO.1750/PN/2012 DEEPAK RADHYESHAM JHUNJHUNWALA 7 11. NOW, COMING TO THE SECOND ISSUE RAISED BY THE ASSESS EE WHICH RELATES TO THE UNEXPLAINED INVESTMENT IN SHARES. THE CAS E OF THE ASSESSEE WAS THAT CERTAIN SHARES WERE INVESTED BY THE ASSESSEE DURING THE BLOCK PERIOD AND CERTAIN SHARES WERE INVESTED IN THE PERIOD PRIOR TO THE BLOCK PERIOD. THE ASSESSEE WAS ASKED TO EXPLAIN THE TOTAL INVESTMENT IN SHARES OF RS.2,52,024/-. IN THE REPLY FURNIS HED BEFORE THE ASSESSING OFFICER, THE ASSESSEE CLAIMED THAT A SUM OF RS.1,06,490/- APPEARS AS INVESTMENT IN SHARES IN HIS BALANC E SHEET AS RAUNAK SHARES AND HENCE SET OFF OF THE SAME SHOULD BE G IVEN WHILE ARRIVING AT THE AMOUNT OF UNDISCLOSED INVESTMENT IN SHARES . AFTER VERIFYING THE CONTENTION OF THE ASSESSEE, THE ASSESSING OFFICER GAVE THE BENEFIT OF RS.1,06,490/- AS AGAINST THE TOTAL INVESTMENT OF RS.2,52,024/- IN SHARES, THE REMAINING AMOUNT OF RS.1,45,534/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. THE LEARNED AUTHO RIZED REPRESENTATIVE FOR THE ASSESSEE DREW OUR ATTENTION TO THE DETAILS FURNISHED BEFORE THE ASSESSING OFFICER AND THE SCRIPT-WISE D ETAILS OF SHARES PURCHASED FROM YEAR TO YEAR. IT WAS POINTED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE INV ESTMENT IN CERTAIN SHARES WAS MADE IN THE PERIOD PRIOR TO BLOCK PER IOD AND THE SAID INVESTMENT CANNOT BE HELD TO BE MADE IN THE CAPTION ED ASSESSMENT YEAR. AFTER PERUSING THE DETAILS, WE FIND MERIT IN THE PLEA OF THE ASSESSEE. THE EVIDENCES OF SCRIPT-WISE SHARE CERT IFICATES ISSUED TO THE ASSESSEE HAVE BEEN PLACED ON RECORD AT PAGES 6 TO 69 OF THE PAPER BOOK. IN THE ENTIRETY OF THE SAID EVIDENCE, THERE IS NO MERIT IN THE ADDITION MADE BY THE ASSESSING OFFICER AND THE SAME IS DELETED. THE GROUND NO.2 RAISED BY THE ASSESSEE IS THUS, ALLOWED. ITA NO.1750/PN/2012 DEEPAK RADHYESHAM JHUNJHUNWALA 8 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF DECEMBER, 2014. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 16 TH DECEMBER, 2014. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE