Sri. JAYENDRA CHOKSHI, MUMBAI V. CIT (A) -XVI, MUMBAI

ITA 2021/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7269 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 18-03-2010
• Assessment Year: 1992-1993
• Appeal Filed On: 08-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MADHUK
• Keywords: Opportunity of being heard; Valuation report; Set aside
• Section: 143(3); 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI R.V. EASWAR, SR. VICE PRESIDENT & SHRI R.K.PANDA, AM I.T.A. NO. 2021/MUM/2007 (ASSESSMENT YEAR 1992-93) MR. JAYENDRA CHOKSI 76, ZAVERI BAZAR, MUMBAI-400 002 PAN: AABPC3985D VS. ASST. CIT-XIV MUMBAI APPELLANT RESPONDENT APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI S.K. MADHUK ORDER DATE OF HEARING: 18.03.2010 DATE OF ORDER: 24.03.2010 PER R.K.PANDA, AM , THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 11.11.2006 OF THE CIT(A)-XIV, MUMBAI RELATING TO A.Y. 1992-93. 2. THIS IS THE SECOND ROUND OF LITIGATION BEFORE THE T RIBUNAL. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER HAS MADE ADDITION OF SEVERAL ITEMS INCLUDING ADDITION IN RESPECT OF ITEM NO. 5 OF ANNEXURE J TO THE PANCHANAMA DATED 23 RD MARCH, 1992 AMOUNTING TO RS. 3 LAKHS. THIS ITEM W AS A PAIR OF DIAMOND EAR TOPS IN WHITE METAL. IT WAS SUBMITT ED BY THE ASSESSEE THAT THIS ITEM BELONGS TO HIS WIFE MRS. INDIRABEN J . CHOKSI AND STOOD DULY DECLARED IN HER WEALTH-TAX RETURN. THE ASSESSING O FFICER WHILE PASSING THE ORDER U/S. 143(3) OF THE INCOME-TAX ACT, 1961 ( THE ACT) DATED 22 ND MARCH, 1995 DID NOT ACCEPT THE CONTENTION OF THE AS SESSEE ON THE GROUND THAT THE PAIR OF DIAMOND EAR TOPS IN WHITE M ETAL DECLARED IN THE VALUATION REPORT OF THE WIFE OF THE ASSESSEE WA S OF 6 CT. WHEREAS ITA NO. 2021/MUM/2007 MR. JAYENDRA CHOKSI ===================== 2 THE ITEM SEIZED WAS 8.60 CT. AND THUS THESE ITEMS C ANNOT BE SAID TO BE ONE AND THE SAME. THE CIT(A) CONFIRMED THE FINDING OF THE ASSESSING OFFICER. ON FURTHER APPEAL, THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE FOLLOWING DIRECTI ON: REGARDING ITEM NO. 5 WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FI LE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH AFTER ASCERTAINING THE CORRECT DIA. CTS. OF THIS ITEM BY OBTAINING A FRESH VALUATION REPORT ABOUT THIS ITEM FROM AN APPROVED VALUER IN THE PRESENCE OF THE ASSESSEE AND THEN PASS NECESSARY ORDER AS PER LAW AFTER PROVIDIN G THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 3. BASED ON THE DIRECTION OF THE ITAT, THE ASSESSING O FFICER OBTAINED A FRESH VALUATION REPORT OF THE AFORESAID ITEMS IN THE PRESENCE OF THE ASSESSEE FROM THE VALUER. THE VALU ATION OF THE SAID JEWELLERY ITEM WAS MADE AT RS.6,77,300 ON 7 TH MARCH, 2006 AND AT RS.2,64,800 ON 23 RD MARCH, 1992. THE ASSESSING OFFICER ADOPTED THE VALUATION OF THE JEWELLERY ITEM AT RS.2,64,800 AND MADE THE ADDITION AS THE UNDISCLOSED INCOME OF THE ASSESSEE. 4. BEFORE THE CIT(A) IT WAS SUBMITTED THAT AS PER VALU ATION REPORT THE WEIGHT OF THE EAR TOP CONSISTING OF TWO BIG DIA MONDS AND 48 SMALL DIAMONDS WAS FOUND AT 6.10 CT. (3 + 3.10 CT) AND TH US IT IS CLEAR THAT THE WEIGHT OF THE ITEM WAS INDEED 6.10 CT AND NOT 8.60 CT AS ARRIVED AT BY THE PREVIOUS DVO. IT WAS SUBMITTED THAT THE ADDITI ON WAS MADE ON THE GROUND THAT THE WEIGHT IN CTS. WAS NOT MATCHING. T HEREFORE, THE ITEM DECLARED IN THE WEALTH-TAX RETURN OF MRS. INDIRABEN J. CHOKSI WAS NOT THE SAME ITEM FOUND DURING THE COURSE OF SEARCH. N OW THAT THE WEIGHT OF THE DIAMOND EAR TOPS IS MATCHING WITH THE ITEM R EFLECTED IN THE VALUATION REPORT OF MRS. INDIRABEN J. CHOKSI, THERE FORE, THE ASSESSING OFFICER SHOULD HAVE DELETED THE ENTIRE ADDITION. 4.1 HOWEVER, THE CIT(A) DID NOT ACCEPT THE CONTENTI ON OF THE ASSESSEE AND CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY HOLDING AS UNDER: ITA NO. 2021/MUM/2007 MR. JAYENDRA CHOKSI ===================== 3 7. I HAVE CAREFULLY CONSIDERED THE FACTS AND SUBMISSIONS. I AM NOT CONVINCED WITH THE ARGUMENTS OF THE AR. ON PERUSAL OF THE ITATS DIRECTIONS, IT IS APPARENT THAT THE MATTER WAS RESTORED BACK TO THE FILE OF TH E AO ONLY FOR THE LIMITED PURPOSE OF OBTAINING A FRESH V ALUATION REPORT ABOUT THE DIAMOND EAR TOPS FROM THE APPROVED VALUER AND THEN PASS THE ASSESSMENT ORDER WHICH WAS DONE BY THE AO. THEREFORE, THE ISSUE TO WHOM THIS DIAMOND EAR TOPS BELONGED OR IN WHOSE HANDS THE SAM E WAS ASSESSABLE WAS NOT LEFT OPEN TO BE DECIDED BY T HE AO. THUS THE AO HAD FULLY COMPLIED WITH THE ITATS DIRECTION AND THERE WAS NO ROOM FOR ANY FURTHER EXAMINATION WITH REGARD TO OWNERSHIP OF THE ITEMS. HOWEVER, EVEN IF FOR ARGUMENTS SAKE THE ISSUE IS TO BE EXAMINED, THE EAR TOPES IN QUESTION STILL DO NOT MA TCH WITH THE EAR TOPS INCLUDED IN THE VALUATION REPORT OF MRS. INDIRABEN J. CHOKSI. IN THE VALUATION REPORT DATED 27.3.92 FROM SATISH G. JHAVERI IN THE CASE OF MRS. INDIRABE N J. CHOKSI, ONE PAIR OF EAR RING SET WITH 64 DIAMONDS I S MENTIONED WEIGHING 6 CARATS IN WHITE METAL WHEREAS IN THE INSTANT CASE IT IS 50 DIAMONDS EAR TOPS WEIGHIN G 6.1 CARATS. THUS, THE NUMBER OF DIAMONDS AND WEIGHT DI FFERS. THEREFORE, THE CONTENTION OF THE AR IS NOT ACCEPTAB LE THAT THE EAR TOPS UNDER DISPUTE MATCHED WITH THE ON E INCLUDED IN THE VALUATION REPORT OF MRS. INDIRABEN J. CHOKSI. ACCORDINGLY, THE AOS ACTION IN INCLUDING THE VALUE OF THE DIAMOND EAR TOPS AT RS.2,64,800/- IN T HE HANDS OF THE APPELLANT IN PURSUANCE TO ITAT DIRECTI ONS WAS FULLY JUSTIFIED AND THE SAME IS HEREBY CONFIRME D. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TWO PARTS OF THE DIAMOND JEWELLERY WERE FOUND FROM THE PREMISES OF THE ASSESSEE AND ONE PART OF THE JEWELLERY WAS FOUND FROM THE PR EMISES OF THE BROTHER OF THE ASSESSEE. HE SUBMITTED THAT IF BOTH THE ITEMS ARE ADDED TOGETHER THE TOTAL WEIGHT APPROXIMATELY TALLIES WIT H THE ITEM DECLARED IN THE WEALTH-TAX RETURN OF THE WIFE OF THE ASSESSE E PRIOR TO THE DATE OF SEARCH. REFERRING TO PAPER BOOK PAGE 44, HE SUBMITT ED THAT AS PER PANCHANAMA THE PAIR OF DIAMOND EAR TOPS IN WHITE ME TAL, 48 PIECES (2.95 CTS.) WAS VALUED AT RS.3 LAKHS. REFERRING TO PAPER BOOK PAGE 42, HE SUBMITTED THAT THE VALUATION OFFICER HAS VALUED THE PAIR OF DIAMOND ITA NO. 2021/MUM/2007 MR. JAYENDRA CHOKSI ===================== 4 EAR TOPS OF (2 PIECES AND 48 SMALL PIECES) AND THE CTS. MENTIONED WAS 3.65 AND 4.95 CTS, RESPECTIVELY. REFERRING TO PAGE 125 OF THE PAPER BOOK, HE SUBMITTED THAT IN THE VALUATION REPORT OF MRS. INDIRABEN J. CHOKSI IT WAS MENTIONED ONE PAIR EAR RINGS SET 64 DIAMONDS WEIGHING APPROXIMATELY 6.00 CTS. IN WHITE METAL AND VALUED AT RS.33,000 ON 25 TH FEBRUARY, 1981. REFERRING TO PAGE 67 OF THE PAPER BOOK, HE SUBMITTED THAT IN THE VALUATION REPORT OF MRS. INDIRABEN J. C HOKSI DATED 27 TH MARCH, 1992 IT WAS MENTIONED ONE PAIR OF EAR RINGS SET 64 DIAMONDS WT. APPROXIMATELY 6.00 CTS. IN WHITE METAL AND VAL UED AT RS.1,92,000. REFERRING TO THE LETTER ADDRESSED TO THE ADIT ON 1 ST MAY, 1992, A COPY OF WHICH IS AVAILABLE AT PAPER BOOK PAGES 60 TO 68, HE DREW THE ATTENTION OF THE BENCH TO CLAUSE B ON PAGE 3 OF THAT LETTER WHEREIN IT WAS MENTIONED THAT THE DIAMOND EAR TOPS ACTUALLY CONSIS T OF THREE PARTS WHICH CAN BE DETACHABLE AND ANY TWO PARTS OUT OF TH E THREE PARTS CAN BE WORN AT A TIME. THE TOTAL NUMBER OF DIAMOND S IS 64 I.E., 48 + 2 + 14. TWO PARTS CONTAINING 50 DIAMONDS WERE IN FLA T NO. 111 AND THE THIRD PART WAS IN FLAT NO. 131. IT WAS ALSO MENTIO NED IN THE SAID CLAUSE THAT IF THE JEWELLERY SEIZED FROM FLAT NO. 131 VID E ITEM NO. 19/S-18 OF THE VALUATION REPORT AND THE ITEM NO. J-15/5 OF THE VAL UATION REPORT PREPARED IN RESPECT OF JEWELLERY SEIZED FROM FLAT N O. 131 ARE COMBINED IT TALLIES WITH ITEM NO. 1 OF THE ASSESSEES VALUAT ION REPORT. IT WAS ALSO MENTIONED IN THE SAID LETTER THAT THE DESCRIPTION O F THE TYPE OF METAL, ETC., OF BOTH THE ITEMS TALLIED. REFERRING TO THE VALUATION REPORT AFTER THE ORDER OF THE ITAT, A COPY OF WHICH IS PLACED AT PAGE 51, HE SUBMITTED THAT THE VALUER IN THE SAID REPORT HAS ME NTIONED ONE PAIR EAR TOPS EACH HAVING ONE BIG DIAMOND IN CENTRE AND 24 DIAMONDS AROUND, TOTAL BIG DIAMONDS 2 AND SMALL DIAMONDS 48. THE CARATS MENTIONED WAS, BIG DIAMONDS 3 CTS. AND SMALL DIAMON DS 3.10 CTS. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO PRODUCED THE 2 DIAMOND EAR TOPS PHYSICALLY TO DEMONSTRATE THAT THESE ARE DETAC HABLE AND SUBMITTED THAT ONE PAIR WAS IN THE HOUSE OF THE BRO THER OF THE ASSESSEE AND TWO PAIRS IN THE PREMISES OF THE ASSESSEE. HE ACCORDINGLY SUBMITTED THAT SINCE THE DESCRIPTION OF THE ITEM WI TH THE DESCRIPTION IN ITA NO. 2021/MUM/2007 MR. JAYENDRA CHOKSI ===================== 5 THE VALUATION REPORT TALLIES AND IF BOTH PARTS ARE PUT TOGETHER IT WILL TALLY WITH THE ITEM AS PER THE VALUATION REPORT OF THE AS SESSEES WIFE MADE EARLIER I.E., PRIOR TO THE DATE OF SEARCH, THEREFOR E, NO ADDITION SHOULD BE MADE. IN HIS ALTERNATE CONTENTION, HE SUBMITTED TH AT ONLY THE DIFFERENCE IN THE WEIGHT IN CARAT AT BEST CAN BE AD DED AND THE ENTIRE AMOUNT CANNOT BE ADDED. 6. THE LEARNED DR, ON THE OTHER HAND, STRONGLY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT DURING THE VALUAT ION OF THE ITEMS AFTER THE ORDER OF THE TRIBUNAL, THE ASSESSEE HAS NOT RAI SED ANY OBJECTION. EVEN THE APPEAL BEFORE THE CIT(A) WAS ALSO FILED BE LATEDLY WHICH INDICATES THAT THE ASSESSEE HAD ACCEPTED THE VALUAT ION. THE LEARNED DR FURTHER SUBMITTED THAT THERE IS A DIFFERENCE BET WEEN THE VALUATION OF THE DIAMONDS IN CTS. FOUND FROM THE RESIDENCE OF THE ASSESSEE AS WELL AS FROM THE RESIDENCE OF HIS BROTHER VIS--VIS THE VALUATION REPORT PREPARED PRIOR TO THE DATE OF SEARCH IN THE CASE OF WIFE OF THE ASSESSEE. SINCE THERE IS A DIFFERENCE IN WEIGHT, T HE CONTENTION OF THE ASSESSEE THAT BOTH THE ITEMS ARE ONE AND THE SAME I S NOT CORRECT. 7. THE LEARNED COUNSEL FOR THE ASSESSEE IN HIS REJOIND ER SUBMITTED THAT THE CIT(A) HAS CONDONED THE DELAY IN FILING OF THE APPEAL BEFORE HIM. THEREFORE, IT IS NOT PROPER ON THE PART OF TH E LEARNED DR TO SAY THAT THE ASSESSEE HAS NOT OBJECTED TO THE VALUATION MADE BY THE VALUER AND ACCEPTED THE ADDITION MADE BY THE ASSESSING OFF ICER. AS REGARDS THE DIFFERENCE IN WEIGHT, HE SUBMITTED THAT SINCE T HE SMALL DIAMOND PIECES ARE STUDDED IN THE JEWELLERY, THEREFORE, IN ABSENCE OF TAKING THEM OUT AND WEIGHING SEPARATELY THERE WILL BE BOUN D TO BE SOME DIFFERENCE IN THE WEIGHT BY TWO DIFFERENT PERSONS. HE SUBMITTED THAT SUCH WEIGHT IS ONLY ON APPROXIMATE BASIS. SINCE TH E DIFFERENCE IS ONLY 1.1 CT, THEREFORE, THE SAME SHOULD BE IGNORED. FOR THIS PROPOSITION HE RELIED ON A COUPLE OF DECISION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND ITA NO. 2021/MUM/2007 MR. JAYENDRA CHOKSI ===================== 6 THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND FROM THE RECONCILIATION OF ONE PAIR OF DIAMOND EAR TOPS AS F URNISHED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT AS PER THE VA LUATION REPORT OF SURAJMALL LALLUBHAI & CO. DATED 26 TH FEBRUARY, 1981 IN THE CASE OF MRS. INDIRABEN J. CHOKSI SUCH EAR TOPS CONTAINED 64 DIAM OND PIECES WEIGHING APPROXIMATELY 6 CTS. WE FIND FROM THE VAL UATION REPORT OF PRADEEPKUMAR J. JHAVERI DATED 7 TH MARCH, 2006 PURSUANT TO DIRECTION OF THE TRIBUNAL VIDE ORDER DATED 20 TH OCTOBER, 2004, THE VALUATION REPORT CONTAINS 50 DIAMONDS WEIGHING 6.1 CTS. THER EFORE, THESE TWO ITEMS DID NOT TALLY BOTH IN NUMBER OF DIAMONDS AS W ELL AS WEIGHT IN CARATS. EVEN THE ARGUMENT OF THE ASSESSEE THAT IF THE ITEM FOUND AT THE PREMISES OF CHANDULAL CHOKSI, I.E., THE BROTHER OF THE ASSESSEE IS COMBINED TOGETHER WITH THE ITEM FOUND FROM THE RESI DENCE OF THE ASSESSEE IS CONSIDERED WE FIND EVEN THEN ALSO THE W EIGHT DOES NOT TALLY SINCE AS PER THE VALUATION REPORT OF SURAJ RATAN AG ARWAL, THE ITEM NO. 19/S-18 CONSISTS OF 14 DIAMONDS WEIGHING AT 1.1 CT. WE FIND WHEN BOTH THE ITEMS ARE COMBINED TOGETHER THE NUMBER OF DIAMO NDS TALLY, HOWEVER, THE WEIGHT IN CT. COMES TO 7.2 CTS WHEREAS AS PER THE VALUATION REPORT OF SURAJMALL LALLUBHAI & CO. ON 26 TH FEBRUARY, 1981 IN THE CASE OF MRS. INDIRABEN J. CHOKSI SUCH WEIGHT CO MES TO 6 CTS. APPROXIMATELY. IN OUR OPINION, IT IS NOT POSSIBLE THAT THERE WILL BE WIDE VARIATION OF 1.2 CT ON A VALUATION OF 6 CT. EARLIER . THEREFORE, IT CANNOT BE SAID THAT THE ITEM DISCLOSED IN THE WEALTH-TAX RETU RN OF MRS. INDIRABEN J. CHOKSI PRIOR TO THE DATE OF SEARCH IS THE SAME ITEM FOUND DURING THE COURSE OF SEARCH. 9. HOWEVER, THE ALTERNATE CONTENTION OF THE ASSESSEE I S ACCEPTABLE I.E., ONE HAS TO SEE THE OVERALL CARATS ONLY AND THE DIFFERENCE ONLY CAN BE ADDED. WE, THEREFORE, SET A SIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO FIND OUT THE VALUE OF 1.2 CT. BEING THE DIFFERENCE BETWEEN WEIGHT IN CTS IN THE WEALTH-TAX RETURN OF MRS. INDIRABEN J. CHOKSI AND THE WEIGHT OF DIAMO NDS FOUND FROM THE ITA NO. 2021/MUM/2007 MR. JAYENDRA CHOKSI ===================== 7 RESIDENCE OF THE ASSESSEE AND HIS BROTHER AND ADD T HE DIFFERENCE TO THE TOTAL INCOME OF THE ASSESSEE. WE HOLD AND DIRE CT ACCORDINGLY. THIS GROUND BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWE D. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED ON 24 TH MARCH, 2010 SD/- (R.V. EASWAR) SR. VICE PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 24 TH MARCH, 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-XIV, MUMBAI 4. THE CIT-14, MUMBAI 5. THE DR J BENCH. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES, MUMBAI TPRAO