Manoj Sahni, V. ACIT CENTRAL CIRCLE =II,

ITA 178/CHANDI/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9915 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 20-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: RAJ KUMAR SH SUMIT GOYAL
• Keywords: Unexplained expenditure
• Section: 69C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.182/CHD/2014 ASSESSMENT YEAR: 2010-11 GIRISH SAHNI VS. ACIT CENTRAL CIRCLE-II SAHNIS AASHIANA CHANDIGARH CIRCULAR ROAD, SOLAN H.P.- 173212 PAN NO. AFNPS5720P ITA NO.177/CHD/2014 ASSESSMENT YEAR: 2010-11 PAWAN SAHNI VS. ACIT CENTRAL CIRCLE-II SAHNIS AASHIANA CHANDIGARH CIRCULAR ROAD, SOLAN H.P.- 173212 PAN NO. AFNPA5722B & ITA NO.178/CHD/2014 ASSESSMENT YEAR: 2010-11 MANOJ SAHNI VS. ACIT CENTRAL CIRCLE-II SAHNIS AASHIANA CHANDIGARH CIRCULAR ROAD, SOLAN H.P.- 173212 PAN NO. AFRPS9620P (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJ KUMAR SH. SUMIT GOYAL RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 27/04/2016 DATE OF PRONOUNCEMENT : 14/06/2016 ORDER PER ANNAPURNA GUPTA A.M. THE ABOVE THREE APPEALS HAVE BEEN PREFERRED AGAINST SEPARATE ORDERS OF LD. CIT(A), (CENTRAL), GURGAON, DATED 26.12.2013. S INCE COMMON ISSUE IS INVOLVED IN ALL THE APPEALS THEY ARE BEING ADJUDICATED THROU GH A COMMON ORDER. 2 2. WE SHALL FIRST TAKE UP THE APPEAL FILED IN ITA N O. 182/CHD/2014. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE ADDITIO N OF RS. 4,45,573/- U/S 69B AS UN-EXPLAINED JEWELLERY OF 347.970 GMS. (GROS S WEIGHT) IS UN-SUSTAINABLE IN LAW AS WELL AS ON MERITS. 2. THAT NO SURCHARGE ON TAX SHOULD HAVE BEEN LEVIED AS IT WAS NOT APPLICABLE ON INDIVIDUALS IN A.Y. 2010 - 2011. THE LD. C1T (A) ERRED ON FACTS IN STATING THAT THIS GROUND WAS NOT PRESSED. 4. REGARDING THE FIRST GROUND, THE FACTS NOTED BY A .O. ARE THAT DURING THE COURSE OF SEARCH TOTAL JEWELLERY OF 1297.970 GRAMS WAS FOUND FROM BEDROOM AND LOCKER OF THE ASSESSEE AND HIS WIFE. ACCORDING TO T HE A.O., THE JEWELLERY WHICH COULD BE TREATED AS EXPLAINED IN TERMS OF CBDT INST TUCTION. NO. 1916 COMES TO 950 GRAMS AS PER THE CHART PREPARED BY HIM IN THE A SSESSMENT ORDER. ACCORDINGLY, A.O. FOUND THE DIFFERENCE VIZ. 347.970 GRAMS JEWELLERY VALUED AT RS. 4,45,573/- AS UNEXPLAINED AND MADE ADDITION OF THE SAME. 5. BEING AGGRIEVED ASSESSEE FILED APPEAL BEFORE CIT (A), WHEREIN THE ASSESSEE SUBMITTED THAT THE JEWELLERY FOUND 1297.97 0 GRAMS WAS ON GROSS BASIS WHERE AS THE NET WEIGHT OF THE JEWELLERY WAS 1209.0 80 GRAMS AND THE DIFFERENCE WAS ON ACCOUNT OF WEIGHT OF STONE, THREAD AND BALTI ETC. IT WAS FURTHER CLAIMED BY THE ASSESSEE THAT AFTER TAKING INTO ACCOUNT THE NET WEIGHT, THE DIFFERENCE REMAINS ONLY 259.080 GRAMS, WHICH WAS QUITE NOMINAL / REASONABLE HAVING REGARD TO THE STATUS OF THE FAMILY OF THE ASSESSEE AND THEREFORE, NO ADDITION WAS CALLED FOR. ARGUMENTS OF THE ASSESEE HOWEVER DID NO T FIND FAVOUR WITH LD. CIT(A) AND THAT IS HOW THE ASSESSEE HAS COME UP IN APPEAL BEFORE US BY WAY OF GROUND OF APPEAL NO.1. 6. ARGUMENTS WERE REITERATED BEFORE US FROM BOTH TH E SIDES. WE HAVING CONSIDERED THE ENTIRE MATERIAL BEFORE US AND HAVING HEARD THE PARTIES, ARE OF THE CONSIDERED VIEW THAT ASSESSEE HAS TO SUCCEED. J EWELLERY SHOULD BE TAKEN ON NET BASIS, BY EXCLUDING THE WEIGHT OF STONE, THR EAD AND BALTI. IF THIS IS NOT 3 DONE, IT WILL BRING ABSURDITY IN AS MUCH AS IN CASE OF A PERSON WHERE SUCH EXTRA ITEMS ARE OF SUBSTANTIAL WEIGHT, SUCH PERSON WOULD BE AT DISADVANTAGE AS COMPARED TO A PERSON WHERE JEWELLERY FOUND DOES HAV E STONE, THREAD ETC. OF LESSER WEIGHT. WEIGHT OF STONE, THREAD AND BALTI AR E NOT TO BE ADDED TO THE WEIGHT OF JEWELLERY FOR THE PURPOSE OF EXAMINING TH E LIMITS MENTIONED IN THE ABOVE REFERRED CBDT INSTRUCTION. THEREFORE, CONTENT ION OF THE ASSESEEE THAT NET WEIGHT OF JEWELLERY SHOULD BE TAKEN INTO ACCOUNT, F INDS OUR APPROVAL. MOREOVER, WE FIND THAT THE DIFFERENCE AFTER TAKING INTO ACCOU NT THE NET WEIGHT IS ONLY 259.080 GRAMS. CBDT INSTRUCTION, SUPRA, HAS ALSO ME NTIONED THAT EVEN HIGHER AMOUNT OF JEWELLERY CAN TREATED AS EXPLAINED HAVING REGARD TO THE STATUS AND A FAMILY BACKGROUND OF A PERSON. WE FIND THAT ASSESSE E HAS FILED THE RETURN OF INCOME AT RS. 14,07,223/- AND HAD MADE SURRENDER OF RS. 8.50 LAKHS DURING THE COURSE OF SEARCH. HAVING REGARD TO SUCH FACTS INDIC ATING THE STATUS WE ARE OF THE CONSIDERED VIEW THAT SUCH EXCESS JEWELLERY BE ALSO TREATED AS EXPLAINED. HENCE THIS GROUND OF APPEAL IS ALLOWED. 7. GROUND NO. 2 HAVING NOT BEEN PRESSED IS DISMISSE D. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED ITA NO. 178/CHD/2014 9. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE ADDITIO N OF RS. 2,88,891/- U/S. 69B AS UN-EXPLAINED JEWELLERY OF 21 4.800 GMS. (GROSS WEIGHT) IS UN-SUSTAINABLE IN LAW AS WELL AS ON MERI TS. 10. THE FACTS IN THIS CASE ARE IDENTICAL TO THAT IN ITA NO. 182/CHD/2014 WITH THE ONLY DIFFERENCE THAT JEWELLER Y FOUND DURING THE COURSE OF SEARCH WAS 1164.800 GMS OUT OF WHICH 950 GMS WAS 4 TREATED AS EXPLAINED IN TERMS OF CBDT INSTRUCTION N O. 1916 DT. 11/05/94 WHILE BALANCE JEWELLERY BEING 214.800 GMS VALUED AT RS. 2,88,891/- WAS TREATED AS UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE U/S 69B OF THE ACT. 11. LD. CIT(A) UPHELD THE ACTION OF THE AO AND AGGR IEVED BY THE SAME ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 12. THE LD. AR REITERATED THE PLEADINGS TAKEN BEFOR E US IN ITA NO. 182/CHD/2014 STATING THAT DIFFERENCE IN WEIGHT OF J EWELLERY SHOULD HAVE BEEN CALCULATED TAKING THE NET WEIGHT OF JEWEL LERY FOUND DURING SEARCH WHICH COMES TO 153.500 GMS ONLY, THE NET WEIGHT BEING 1103.500 GMS AND FURTHER THE DIFFERENCE BEING NOMINAL FOR SUCH A STATUS FAMILY AS THE ASSESSEE NO ADDITION NE EDS TO BE MADE. SINCE IDENTICAL ISSUE HAS BEEN DEALT BY US IN ITA N O. 182/CHD/2014, THE DECISION RENDERED AT PARA 6 OF THE ORDER APPLIE S TO THE PRESENT CASE ALSO. WE THEREFORE HOLD THAT NET WEIGHT OF TH E JEWELLERY SHOULD BE TAKE INTO ACCOUNT FOR CALCULATING THE EXCESS JEW ELLERY FOUND DURING SEARCH WHICH CAME TO 153.500 GMS AND AS HELD ABOVE SINCE AS PER THE CBDT INSTRUCTION EVEN HIGHER AMOUNT OF J EWELLERY CAN BE TREATED AS EXPLAINED CONSIDERING THE STATUS OF THE PERSON, WE FIND THAT THE ASSESSEE HAVING SURRENDERED A SUM OF RS. 1 1.50 LACS AND FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS . 17,98,223/- WE ARE OF THE CONSIDERED VIEW THAT SUCH EXCESS JEWELLE RY BE ALSO TREATED AS EXPLAINED. HENCE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 13. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ITA NO. 177/CHD/2014 14. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWIN G GROUNDS: 5 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE ADDITIO N OF RS. 1,94,601/- U/S 69B AS UN-EXPLAINED JEWELLERY OF 143 .950 GMS. (GROSS WEIGHT) IS UN-SUSTAINABLE IN LAW AS WELL AS ON MERI TS. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, ADDITION OF RS. 1,24,040/- U/S. 69C AS UN-EXPLAINED EXPENDITURE ON THE BASIS O F SEIZED PG.-17 IS UN-SUSTAINABLE IN LAW AS WELL AS ON MERITS. 15. THE FACTS IN THIS CASE ARE IDENTICAL TO THAT IN ITA NO. 182/CHD/2014 WITH THE ONLY DIFFERENCE THAT JEWELLER Y FOUND DURING THE COURSE OF SEARCH WAS 1593.950 GMS OUT OF WHICH 1450 GMS WAS TREATED AS EXPLAINED IN TERMS OF CBDT INSTRUCTION N O. 1916 DT. 11/05/94 WHILE BALANCE JEWELLERY BEING 143.950 GMS VALUED AT RS. 1,94,601/- WAS TREATED AS UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE U/S 69B OF THE ACT. 16. LD. CIT(A) UPHELD THE ACTION OF THE AO AND AGGR IEVED BY THE SAME ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 17. THE LD. AR REITERATED THE PLEADINGS LATER IN IT A NO. 182/CHD/2014 STATING THAT DIFFERENCE IN WEIGHT OF J EWELLERY SHOULD HAVE BEEN CALCULATED TAKING THE NET WEIGHT OF JEWEL LERY FOUND DURING SEARCH WHICH COMES TO 45.700 GMS ONLY, THE N ET WEIGHT BEING 1495.700 GMS AND FURTHER THE DIFFERENCE BEING NOMIN AL FOR SUCH A STATUS FAMILY AS THE ASSESSEE NO ADDITION NEEDS TO BE MADE. SINCE IDENTICAL ISSUE HAS BEEN DEALT BY US IN ITA N O. 182/CHD/2014, THE DECISION RENDERED AT PARA 6 OF THE ORDER APPLIE S TO THE PRESENT CASE ALSO. WE THEREFORE HOLD THAT NET WEIGHT OF TH E JEWELLERY SHOULD BE TAKE INTO ACCOUNT FOR CALCULATING THE EXCESS JEW ELLERY FOUND DURING SEARCH WHICH CAME TO 45.700 GMS AND AS HELD ABOVE SINCE AS PER THE CBDT INSTRUCTION EVER HIGH AMOUNT OF JEWELL ERY CAN BE TREATED AS EXPLAINED CONSIDERING THE STATUS OF THE PERSON. WE FIND THAT THE ASSESSEE HAVING SURRENDERED A SUM OF RS. 2 5 LACS AND FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 40,4 1,870/- WE ARE OF 6 THE CONSIDERED VIEW THAT SUCH EXCESS JEWELLERY BE A LSO TREATED AS EXPLAINED. HENCE GROUND OF APPEAL RAISED BY THE ASS ESSEE IS ALLOWED. 18. IN GROUND NO. 2 THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 1,24,040/- U/S 69C AS UNEXPLAINED EXPENDITURE ON TH E BASIS OF SIZED DOCUMENT PAGE NO. 17 19. BRIEFLY STATED DURING SEARCH CERTAIN LOOSE PAPE RS WERE FOUND BEING PAGE NO. 17 & 19 CONTAINING DETAILS OF PURCHA SE OF SANITARY ITEMS. LD. AO ADDED AN AMOUNT OF RS. 1,24,040/- AND RS. 75,281/- ON ACCOUNT OF THOSE DETAILS TREATING THEM AS UNEXPLAIN ED EXPENDITURE U/S 69C OF THE ACT. LD. CIT(A) DELETED THE ADDITION OF RS. 75,281/- ON THE GROUND THAT THE SAME WAS INCLUDED IN RS. 1,24,0 40/-AND UPHELD THE ADDITION OF RS. 1,24,040/-. 20. AGGRIEVED BY THE SAME THE ASSSSEE HAS NOW COME UP IN APPEAL BEFORE US. 21. BEFORE US LD. AR CONTENDED THAT THE IMPUGNED AM OUNTS WERE NOT UNEXPLAINED BUT IN FACT WERE ENTERED IN THE BOO KS OF THE PROPRIETORSHIP CONCERN OF THE ASSESSEE M/S DEV BHOO MI APARTMENTS PERTAINING TO THE FY 2005-06 WHEN THE IMPUGNED PURC HASES OF SANITARY ITEMS WAS MADE. LD. AR DREW OUR ATTENTION TO PAPER BOOK PAGE NO. 51 BEING COPY OF THE CASH BOOK OF M/S DEV BHOOMI APARTMENTS WHEREIN CASH PURCHASE OF MATERIALS OF RS . 1,31,835/- WAS SHOWN TO BE MADE ON 25/08/2005. FURTHER ATTENTION W AS DRAWN TO PAPER BOOK PAGE NO. 33 BEING MATERIAL LEDGER ACCOUN T IN THE BOOKS OF M/S DEV BHOOMI APARTMENTS SHOWING PURCHASE OF MA TERIAL OF RS. 1,31,835/- ON 25/08/2005. 22. LD. DR ON THE OTHER HAND STATED THAT THE EXPENS ES RECORDED ON THE SEIZED PAGES DO NOT RECONCILE WITH THE BOOKS OF M/S DEV BHOOMI 7 APARTMENTS, NOR IS ANY DATE MENTIONED ON THE DOCUME NT. LD. DR FURTHER RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT SINCE THE ASSESSEE HAD NOT SHOWN THE ENTRIES TO THE AO, E XPLANATION GIVEN BY THE ASSESSEE IS NOT ACCEPTABLE. 23. WE HAVE HEARD THE RIVAL ARGUMENTS AND FIND MERI T IN THE CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESS EE THAT THE PURCHASES MENTIONED IN THE SEIZED PAPERS WERE ENTER ED IN THE BOOKS OF THE PROPRIETORSHIP CONCERN OF THE ASSESSEE I.E; M/S DEV BHOOMI APARTMENT. UNDISPUTEDLY, THE AMOUNT APPEARING ON TH E SEIZED PAGES WAS RS. 1,31,835/- AS REPRODUCED AT PAGE NO. 9 OF CIT(A) ORDER AS FOLLOWS: PG. 1 (NO. AS PG. 19) RS. 75,281/-} RS. 1,24,04 0/- PG. 2 (NO. AS PG. 17) RS. 48,759/- PG. 3 (NO. AS PG. 19 (BACKSIDE) RS. 6,807/- TOTAL RS. 1,30,847/- PG. 3 (NO. AS PG. 19 (BACKSIDE) ONE MORE ENTRY RS 988/- GRAND TOTAL RS. 1,31,835/- IT IS ALSO NOT DISPUTED THAT THE AMOUNT REPRESENTS PURCHASE OF SANITARY ITEMS WHICH IS EVIDENT FROM A BARE PERUSAL OF THE SEIZED PAGES REPRODUCED AT PAGE NO. 21-23 OF THE PAPER BOO K AND IN THE ASSESSMENT ORDER ALSO. THE ASSESSEE HAD CLAIMED THA T THE SAME WAS ACCOUNTED FOR IN THE BOOKS OF M/S DEV BHOOMI APARTM ENTS AND PRODUCED COPY OF LEDGER ACCOUNT OF MATERIAL REFLECT ING PURCHASE OF EXACTLY THE SAME AMOUNT OF RS. 1,31,835/- ON 25/08/ 2005 VIDE ITS LETTER BEFORE THE AO WHICH FINDS MENTION IN PARA 9 OF THE ASSESSMENT ORDER. THIS FACT IS NOT CONTROVERTED BY THE LOWER A UTHORITIES. IN FACT THEIR ONLY ARGUMENT IS THAT NO DATE IS MENTIONED IN THE SEIZED DOCUMENT THEREFORE IT CANNOT BE SAID TO BE RELATED TO AN EARLIER I.E; FY 2005-06 AND THE ENTRIES ARE NOT IN CONFORMITY WI TH THAT IN THE SEIZED PAPERS. 8 24. WE FIND NO MERIT IN THIS ARGUMENT OF THE REVENU E SINCE IT IS BUT NATURAL THAT THE ASSESSEE HAS RECORDED A SINGLE ENT RY OF RS. 1,31,835/- ON 25/08/2005 INSTEAD OF SEVERAL ENTRIES PERTAINING OF DIFFERENT ITEMS PURCHASED. THE FIGURE WE FIND TALLI ES EXACTLY, AND ADMITTEDLY RELATE TO PURCHASE OF SANITARY ITEM REFL ECTED AS SUCH BY THE ASSESSEE. THAT NO DATE IS MENTIONED ON THE SEIZ ED PAPER WE FIND, DOES NOT DILUTE THE CONTENTION OF THE ASSESSE E AND IN OUR CONSIDERED OPINION ALL CIRCUMSTANTIAL EVIDENCES LEN D CREDENCE TO THE ASSESSEE CONTENTION THAT THE IMPUGNED SUMS WERE NOT UNACCOUNTED OR UNEXPLAINED BUT WERE DULY ACCOUNTED FOR IN THE BOOKS OF THE PROPRIETORSHIP CONCERN I.E; M/S DEV B HOOMI APARTMENTS OF THE ASSESSEE. FURTHER COPY OF THE LEDGER ACCOUNT WAS DULY PRODUCED BEFORE THE AO AS STATED ABOVE AND MENTIONE D IN THE ASSESSMENT ORDER ALSO, AND THEREFORE LD. CIT(A) HAD INCORRECTLY HELD THAT THE ASSESSEE HAD NOT SHOWN THE ENTRIES TO THE AO. 25. IN VIEW OF THE ABOVE WE HOLD THAT THE AMOUNT OF RS. 1,24,040/- STANDS EXPLAINED AND ADDITION MADE ON THIS ACCOUNT BE DELETED. 26. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWE D. 27. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPT A) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED : 14/06/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR