Dr. M.C. Seal, Kolkata V. DCIT, CC-VII, KOLKATA, Kolkata

ITA 1914/KOL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9291 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 14-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: S M SURANA
• Keywords: Gift; Search and seizure; Valuation report
• Section: 250; 27; 132

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA ( ) . . , . . ! , ' #$ ) [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT & SHRI A. T. VARKEY, JM] I.T.A. NO. 1914/KOL/2014 ASSESSMENT YEARS: 2010-11 DR. M.C. SEAL PAN: ALIPS 9335 B VS. DCIT, CENTRAL CIRCLE VII, KOLKATA APPELLANT RESPONDENT DATE OF HEARING 09.01.2019 DATE OF PRONOUNCEMENT 03.04.2019 FOR THE APPELLANT SHRI S.M. SURANA, ADVOCATE FOR THE RESPONDENT SHRI RADHEY SHYAM, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), CENTRAL I DATED 19.08.2014 FOR A.Y. 2010-11. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST TH E ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 14,05,979/- AS MADE BY THE AO AS A VALUE OF PART OF JEWELRY FOUND IN COURSE OF SEARCH. 3. THE BRIEF FACT OF THE CASE IS THAT THE ASSESSEE IS A SPECIALIST DOCTOR BY PROFESSION (UROLOGIST). A SEARCH WAS CONDUCTED AT ASSESSEES P REMISES ON 02.12.2009 WHERE JEWELRY EMBEDDED WITH DIAMONDS WAS FOUND. THE AO DURING ASS ESSMENT PROCEEDINGS SEGREGATED THE JEWELRYS GOLD CONTENT AND DIAMOND CONTENT IN SOME PIECES OF JEWELRY AND CONSIDERED THEIR VALUES SEPARATELY. THE AO FOUND THAT THE GOLD CONTE NT IN THE JEWELRY WAS 2276.150 GMS. AND THE ASSESSEE HAD DISCLOSED JEWELRY WHICH INCLUD ED GOLD AS PER WEIGHT WAS 2356.274 GMS. THE AO ACCEPTED THE EXPLANATION WITH REGARD TO THE JEWELRY EXCEPT THE JEWELRY CONTAINING DIAMONDS AND PRECIOUS STONES. SO HE WAS PLEASED TO MAKE NO ADDITION IN RESPECT TO THE VALUE OF GOLD JEWELRY. HOWEVER, THE AO FOUND THAT DIAMONDS EMBEDDED IN SOME OF THE JEWELRY AS PER THE VALUATION REPORT WEIGHING 59 .32 CTS OF RS. 11,21,970/-. AS PER THE AO, THE SAID DIAMONDS WERE EMBEDDED IN THE GOLD ORNAMEN TS WEIGHING 238 GMS (GOLD) VALUED AT RS. 2,84,009/- AND HELD THAT THE VALUE OF THE DIAMO NDS OF RS. 59.32 CTS VALUING RS. 2 ITA NO.1914/KOL/2014 DR. M.C. SEAL AY 2010-11 11,21,970/- WAS SEPARATELY CONSIDERED AND THE AO AD DED BACK THE VALUE OF THE SAID JEWELRY AT RS. 14,05,979/- (RS. 11,21,970/- + RS. 2,84,009/ - AND TREATED THE SAME AS UNDISCLOSED INVESTMENT OF THE ASSESSEE. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND CONFIRMED THE SAME. AGGRIEVED THE ASSESS EE IS BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE IS A UROLOGIST AND IS THE DIRECTO R OF M/S. CALCUTTA UROLOGY RESEARCH CENTRE PVT. LTD. AND RUNS A NURSING HOME IN THE NAME AND S TYLE OF REMEDY. A SEARCH AND SEIZURE U/S 132 OF THE ACT WAS CARRIED OUT ON 02.12.2009 AN D CERTAIN JEWELLERYS WERE FOUND DURING THE SEARCH. FROM THE ASSESSEES PREMISES JEWELRY IT EMS BEARING IDENTIFICATION MARK MCS 1 TO MCS/60 VALUED AT RS. 49,98,857/- (2276.150 GMS. JEWELRY) WERE FOUND AS PER ANNEXURE J OF THE PANCHANAMA DATED 03.12.2009. IN THE EXPL ANATION GIVEN TO RECONCILE THE JEWELRY FOUND IN HIS RESIDENCE THE ASSESSEE STATED THAT HE BELONGS TO A FAMILY OF GOLD TRADERS COMMUNITY OF BENGAL. AND IT WAS BROUGHT TO THE NOTI CE OF THE AO THAT HE HAD SHOWN 1695.874 GMS. OF JEWELRY IN HIS BALANCE SHEET AND H IS WIFE HAS DECLARED 660.400 GMS. UNDER THE VDIS OF 1997 I.E. TOTAL 2356.274 GMS. OF JEWELR Y. THE AO TAKING NOTE OF THE NUMBER OF FAMILY MEMBERS: DR. MOHAN CHAND SEAL (MALE), SELF 100 GMS. SREEMATI SEAL (FEMALE MARRIED), WIFE 500 GMS. ANINDITA SEAL (FEMALE MARRIED), DAUGHTER 500 GMS. JINI SEAL (FEMALE MARRIED), DAUGHTER 500 GMS. JAMIE SHRILAW (MALE), HUSBAND OF JINI 100 GMS. RINI SEAL (FEMALE), DAUGHTER 250GMS. ANUSHKA SEAL (FEMALE), GRAND DAUGHTER 250 GMS. TOTAL 2200 GMS 5. THE AO AFTER TAKING NOTE OF THE STRENGTH OF THE FAMILY MEMBERS AND TAKING NOTE THAT THE ASSESSEES DAUGHTER JINI SEAL GOT MARRIED IN DE CEMBER, 2009 WHEREIN ORNAMENTS WERE PURCHASED AND BILLS TO SUBSTANTIATE THE NEW JEWELRY WERE AVAILABLE, WAS OF THE OPINION THAT ASSESSEE HAD RECONCILED 2276.150 GMS., GOLD JEWELRY . HOWEVER, ACCORDING TO THE AO, 16 3 ITA NO.1914/KOL/2014 DR. M.C. SEAL AY 2010-11 ITEMS OF JEWELLERY CONTAINING PRECIOUS STONES (DIAM OND/PEARL), THE ASSESSEE FAILED TO EXPLAIN ABOUT THE SOURCE OF PURCHASE AND MADE AN ADDITION O F IT IS BOTH GOLD JEWELLERY AND THE DIAMOND EMBEDDED IN IT TO THE TUNE OF RS. 14,05,979 /- ON ACCOUNT OF UNDISCLOSED INVESTMENT AND JEWELLERY. 6. WE NOTE THAT THE ASSESSEE HAS SHOWN DURING THE V DIS IN THE YEAR 1997, 1103.45 GMS JEWELLERY AND HIS WIFE HAS DECLARED 660.400 GMS JEW ELLERY WHICH HAS NOT BEEN DISPUTED BY THE AO I.E. JEWELLERY TO THE TUNE OF 1763.85 GMS OF JEWELLERY HAS BEEN DECLARED BY THE ASSESSEE WAY BACK IN THE YEAR 1997 WHICH HAS BEEN A CCEPTED BY THE DEPARTMENT. WE ALSO NOTE THAT THE ASSESSEE HAS DECLARED 37.30 CTS OF DI AMONDS WHICH WE FIND WAS PART OF THE JEWELLERY DECLARED DURING VDIS IN 1997, WHICH FACT WE FIND FROM THE CERTIFICATE UNDER THE VDIS OF 1997 WHICH IS PLACED AT PAGE NO 9 & 10 OF T HE PAPER BOOK. THUS WE NOTE THE ASSESSEE HAD DECLARED DURING VDIS OF 1997, GOLD JEW ELLERY OF 1763.85 GMS OF JEWELLERY AND 37.30 CTS OF DIAMONDS. WE NOTE THAT THE AO HAS ACCE PTED THE TOTAL JEWELLERY WHICH WAS FOUND DURING THE SEARCH IN 02.12.2009 OF 2276.50 GM S [WHICH INCLUDES GOLD NET WEIGHT IE, OTHER THAN DIAMONDS AS FOUND FROM PERUSAL OF PAGE 2 8 PB]. HOWEVER AO HAS NOT ACCEPTED THE GOLD JEWELLERY EMBEDDED WITH THE DIAMONDS/PRECI OUS STONES AND ADDED GOLD OF 238 GMS. VALUED AT RS. 2,84,009/- AND DIAMONDS OF 59.32 CTS VALUED AT RS. 11,21,970/- TOTALING RS. 14,05,979/-. WE NOTE THAT DURING SEARCH ON 02.12.20 09 TOTAL GOLD JEWELLERY OF 2276.50 GMS WAS ONLY FOUND WHICH MEANS IT INCLUDES THE GOLD JEW ELLERY EMBEDDED WITH THE DIAMONDS. AS STATED EARLIER, THE ASSESSEE HAD DECLARED IN VDI S 1997 ITSELF 1763.85 GMS. AND THAT THE ASSESSEE HAD DECLARED AND PAID TAXES FOR IT. FURTHE R WE NOTE THAT THE LD. CIT(A) AT PARA 3, HAS NOTED THAT ASSESSEE HAD SHOWN 1695.874 GMS, IN THE BALANCE-SHEET, WHICH MEANS THE ASSESSEE HAD SHOWN AN INCREASE OF 592.424 GMS. OF J EWLLERY FROM WHAT HE HAD DECLARED IN THE VDIS 1997 (1695.874 1103.45). THUS THE ASSESS EE HAD WITH HIM AS DECLARED JEWELLERY 2356.274 GMS (1695.874 + 660.400) BEFORE SEARCH WA S CONDUCTED ON 02.12.2009. SO WHEN THE TOTAL GOLD JEWELLERY FOUND DURING SEARCH WAS ON LY 2276.150 GMS., THE ASSESSEE HAD 592.424 GMS. EXCESS GOLD DECLARED EARLIER ITSELF (V DIS OF 1997 + REMAINING SHOWN IN THE BALANCE SHEET) OF 2356.274 GMS, THEN THE ENTIRE GOL D JEWELLERY WHICH INCLUDED GOLD JEWELERY PART WHERE DIAMONDS EMBEDDED IN IT STANDS EXPLAINED AND NO SEPARATE ADDITION OF THE GOLD JEWELLERY EMBEDDED WITH THE DIAMONDS/PRECI OUS STONES OF GOLD OF 238 GMS VALUED AT RS. 2,84,009/- WAS WARRANTED AND THEREFORE IS DI RECTED TO BE DELETED. 4 ITA NO.1914/KOL/2014 DR. M.C. SEAL AY 2010-11 7. COMING TO DIAMONDS, THE AO CALCULATED THE VALUE OF 59.32 CTS OF DIAMONDS VALUED AT RS. 11,21,970/- AND ADDED TO THE INCOME OF ASSESSE E. HOWEVER, WE NOTE THAT 37.30 CTS OF DIAMOND WAS DECLARED IN VDIS 1997 WHICH OUGHT TO HA VE BEEN ALLOWED TO THE ASSESSEE AT THE FIRST PLACE ITSELF. FURTHER WE NOTE THAT THERE WAS GIFT OF DIAMOND BANGLES VIDE PAPER BOOK PAGE 10 BY THE FATHER OF WIFE OF M.C. SEAL AT THE T IME OF HIS MARRIAGE. AND WE ALSO NOTE THAT THE DIAMOND BANGLES ARE NOT THE PART OF THE M.C. SE ALS VALUATION REPORT OF VDIS OF 1997 WHICH IS SEEN FROM PERUSAL OF PAPER BOOK PAGE 9, ME ANING THIS DIAMOND BANGLES GIFTED BY ASSESSEES FATHER-IN-LAW VIDE PAPER BOOK PAGE 10 WA S NOT DECLARED AS AN ITEM DURING VDIS 0F 1997 BUT WAS WITH THE ASSESSEE FROM THE TIME OF HIS MARRIAGE, AND THEREFORE NEEDS TO BE ALLOWED. WE NOTE THE DIAMOND BANGLES IN THE VALUATI ON REPORT AT THE TIME OF SEARCH IS GIVEN AS 12 CTS. (REFER PAGE 10& 27 OF PB), SO 12CTS OF D IAMOND NEEDS TO BE ALLOWED. FURTHER WE NOTE THAT THERE WAS GIFT OF TWO EAR TOPS GIFTED BY THE FATHER-IN-LAW VIDE PAPER BOOK PAGE 10 AND THE WEIGHT OF DIAMOND IN EAR TOPS IS INFERRED/S HOWN AS 2 CTS (4 CTS TOTAL FOR 2 EAR TOPS AND TWO RINGS REFER PAGE 10 & 27) WHICH ALSO NEEDS TO BE ALLOWED. 8. THUS WE NOTE THAT 37.30 CTS DIAMONDS [VDIS OF 19 97] AND DIAMOND BANGLES OF 12 CTS AND DIAMOND EAR TOPS OF 2CTS [ PAGE 10 FATHER-IN-LA W GIFT DURING MARRIAGE] HAVE BEEN DULY EXPLAINED BY ASSESSEE WHICH WAS DECLARED AND IN HIS POSSESSION BEFORE SEARCH AS DISCUSSED SUPRA. THUS TOTAL DIAMOND OF 51.30 CTS STANDS EXPLA INED IN THE HANDS OF ASSESSEE BEFORE SEARCH ITSELF. SO THE REMAINING DIAMOND OF 8.2 CTS OF DIAMOND [59.32- 51.30] CAN BE ONLY TAXED IN THE HANDS OF THE ASSESSEE. ACCORDINGLY THE AO IS DIRECTED TO RE-COMPUTE THE VALUE OF DIAMOND OF 8.2CTS AND ADD TO THE INCOME OF ASSES SEE AND GIVE RELIEF TO THE ASSESSEE AS DISCUSSED ABOVE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 03.04.20 19 SD/- SD/- (P.M. JAGTAP) (ABY. T. VARKEY) VICE-PRESIDENT JUDICIAL MEMBER DATED : 3RD APRIL, 2019 BISWAJIT (SR. P.S.) 5 ITA NO.1914/KOL/2014 DR. M.C. SEAL AY 2010-11 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DR. M.C. SEAL, C/O. V.N. PUROHIT & C O, CHARTERED ACCOUNTANTS, DIAMOND CHAMBERS, UNIT III, 4 TH FLOOR, SUIT NO. 4G, 4, CHOWRINGHEE LANE, KOLKATA 700 016. 2 RESPONDENT DCIT, CENTRAL CIRCLE VII, AAYAKAR BHAWAN POORVA, 4 TH FLOOR, 110, SHANTI PALLI, KOLKATA 700 107. 3. THE CIT(A) -, KOLKATA. (THROUGH E-MAIL) 4. 5. CIT KOLKATA DR, ITAT, KOLKATA. (THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O. ITAT, KOLKATA