ACIT, New Delhi V. Shri Krishan Kumar Basia, Delhi

ITA 2027/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86886 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-09-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Depreciation; Earning of tax free income; Source of fund; Question of law; Valuation report
• Section: 14A; 37(1); 69; 10

Judgement Text

DELHI BENCH B : NEW DELHI BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 2027 /DEL/ 2013 (ASSESSMENT YEAR: 2010 - 11 ) ACIT, CENTRAL CIRCLE - 5, ROOM NO.361, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTEN TION ., NEW DELHI VS. KRISHAN KUMAR BASIA, SU - 217, PITAMPURA, DELHI PAN:AAFPB5927L (APPELLANT) (RESPONDENT) DATE OF HEARING 09 .01.2015 DATE OF PRONOUNCEMENT 04 .0 3 .2015 O R D E R PER A. T. VARKEY, JUDICIAL MEMBER THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A)XXXI, NEW DELHI FOR THE ASSESSMENT YEAR 2010 - 11. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE WHIC H HAS BEEN WRONGLY NUMBER ED AS 5,6,7 AND 8 ARE AS FOLLOWS: - 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.1,53,348/ - MADE BY THE AO U/S.14A READ WITH RULE 80. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE OUT OF CAR & TELEPHONE EXPENSES TO 5% BY ALLOWING RELIEF OF RS.49,110/ - AS AGAINST THE DISALLOWANCE OF 10% OF TOTAL OF SUCH EXPENSES MADE BY THE A.O. 7. O N THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE TO THE TUNE OF RS.3,46,650/ - AS AGAINST ADDITION OF RS.83,18,044/ - MADE BY THE AO FOR NOT E XPLAINING THE SEIZED JEWELLERY. 3. GROUND NO. 1 WHICH IS WRONGLY NUMBERED AS 5 RELATES TO DELETION OF ADDITION OF RS.1,53,348/ - MADE BY THE AO U/S 14A OF THE INCOME TAX ACT, 1961 APPELLANT BY : SMT. SULEKHA VERMA, CIT DR RESPONDENT BY : SH. GAUTAM JAIN, CA PAGE 2 OF 13 (HEREIN AFTER THE ACT ) UNDER RULE 8D OF THE INCOME TAX RULES, 1962 (HEREIN AFTER THE RULES). 4. THE FACTS IN BRIEF ARE THAT DURING THE ASS ESSMENT PROCEEDING THE AO NOTED THAT THE ASSESSEE HAD MADE INVESTMENT OF RS.1, 17 ,17,330/ - . HE FURTHER NOTED THAT THE ASSESSEE DID NOT RECEIVE ANY DIVIDEND INCOME DURING THE INSTANT YEAR BUT HAD NOT MADE ANY DISALLOWANCE IN RESPECT OF EXPENDITURE INCURRED O N INVESTMENT. HE THEREFORE INVOKED RULE 8D AND COMPUTE D THE DISALLOWANCE @5% OF THE AFORESAID VALUE OF INVESTMENT I.E. RS.1,53,348/ - . T HE LD CIT(A) HOWEVER DELETED THE SAID DISALLOWANCE BY HOLDING AS UNDER: - 3.2.4 THE AO HAS CONSIDERED APPELLANT'S PERSONAL BALANCE SHEET AS WELL AS THAT OF HIS PROPRIETARY CONCERN WHILE MAKING THE DISALLOWANCE. I FIND THAT THERE IS NO MERIT IN THIS AS THE ASSESSEE MAINTAINS SEPARATE ACCOUNTS FOR HIS PROPRIETARY BUSINESS. HE HAS FILED A SEPARATE STATEMENT OF AFFAIRS INDEPENDENT OF HIS PROPRIETARY BUSINESS. HE HAS A PROPRIETARY BUSINESS BY NAME M/S. ROSE METAL INDUSTRIES WHOSE ACCOUNTS ARE AUDITED AND HAD A TURNOVER OF RS.14.49 CRORES FOR THE YEAR. THERE ARE NO INVESTMENTS APPEARING IN T HE BALANCE SHEET OF THE PROPRIETARY CONCERN. THE BANK LOAN AND OTHER EXPENDITURE ALL RELATE TO THE SAID PROPRIETARY BUSINESS. 3.2.5 AS AGAINST THE ABOVE, THE APPELLANT ALSO MAINTAINS HIS INDIVIDUAL PERSONAL BALANCE SHEET WHERE THERE IS A CLOSING CAPITAL BALANCE OF RS. 2.75 CRORES. THE INVESTMENTS REFERRED BY THE AO HAVE ALL BEEN MADE FROM THIS CAPITAL ACCOUNT AND ALL OF THEM APPEAR ON THE ASSET SIDE OF HIS PERSONAL BALANCE SHEET. THE CAPITAL BALANCE IN THE PROPRIETARY BUSINESS IS ALSO REFLECTED ON THE ASS ET SIDE OF HIS PERSONAL BALANCE SHEET. THUS IT IS SEEN THAT INVESTMENT IN THE SHARES OF GEE ISPAT PVT. LTD., UBI, GLOBAL HOUSEWARE, PNB MUTUAL FUND, RELIANCE POWER, RADHA RAMAN STEEL PVT. LTD. AND SHREE TREXIM PVT. LTD. (APPLICATION MONEY) HAVE BEEN MADE O UT OF HIS PERSONAL CAPITAL. NO LOAN APPEARS IN THE BALANCE SHEET. APPELLANT HAS NOT CLAIMED ANY EXPENDITURE RELATING TO THIS INVESTMENT AS DEDUCTION WHILE COMPUTING HIS INCOME. 3.2.6 THEREFORE, THIS IS NOT A FIT CASE TO INVOKE PROVISIONS OF SECTION 14A. THE AO NEEDS TO FIRST EXAMINE WHETHER APPELLANT HAS INCURRED ANY EXPENDITURE TO EARN AN EXEMPT INCOME. ONLY THEREAFTER, HE CAN CHECK WHETHER SUCH EXPENDITURE HAS BEEN CLAIMED AS A DEDUCTION IN MIXED ACCOUNTS. IN THE INSTANT CASE THE APPELLANT HAS MADE INVE STMENTS IN HIS PERSONAL CAPACITY NOT AS PROPRIETOR OF M/S. ROSE METAL INDUSTRIES. FURTHER THERE IS NO EXPENDITURE INCURRED FOR THESE SMALL INVESTMENTS. HE HAS A HUGE CAPITAL (PERSONAL) BALANCE WHICH HE HAS INVESTED IN THE PROPRIETARY BUSINESS AS WELL AS IN THE SHARES. THE EXPENSES DEBITED IN P&L A/C ONLY RELATE TO THE PROPRIETARY BUSINESS ACTIVITY. NO FURTHER EXPENDITURE HAS BEEN CLAIMED IN HIS PERSONAL CAPACITY. IN VIEW OF THIS PAGE 3 OF 13 ACTION OF THE AO CANNOT BE SUSTAINED. DISALLOWANCE MADE U/S 14A IS THEREFORE DE LETED. 5. BEFORE US THE LD CIT DR SUBMITTED THAT IN VIEW OF THE INVESTMENT MADE BY THE ASSESSEE THE DISALLOWANCE MADE BY THE AO, WAS JUSTIFIED. ON THE OTHER HAND THE LD COUNSEL SHRI GAUTAM JAIN FOR THE ASSESSEE SUBMITTED THAT SINCE THERE WAS NO DIVIDEND INCOME EARNED DURING THE YEAR THE DISALLOWANCE MADE IS CONTRARY TO THE JUDGEMENT DATED 05.09.2014 OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. HOLCIM INDIA (P) LTD. IN ITA NO.486 AND 299/2014. 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORDS, WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT WHEREIN IT HAS BEEN HELD THAT NO DISALLOWANCE CAN BE MADE U/S 14A IN A YEAR WHEN THERE IS NO DIVIDEND INCOME EARNED BY THE ASSESSEE. IN THE INS TANT CASE IT IS AN UNDISPUTED FACT AS HELD BY THE AO THAT IN THE YEAR OF ASSESSMENT NO DIVIDEND INCOME HAS BEEN EARNED BY THE ASSESSEE. IN SUCH CIRCUMSTANCES THE HONBLE DELHI HIGH IN THE CASE OF CIT VS. HOLCIM INDIA (P) LTD. HAS HELD AS UNDER: - 14. ON THE ISSUE WHETHER THE RESPONDENT - ASSESSEE COULD HAVE EARNED DIVIDEND INCOME WAS EARNED, YET SECTION 14A CAN BE INVOKED AND DISALLOWANCE OF EXPENDITURE CAN BE MADE, THERE ARE THREE DECISIONS OF THE DIFFERENT HIGH COURTS DIRECTLY ON THE ISSUE AND AGAINST THE APPELLANT - REVENUE. NO CONTRARY DECISION OF A HIGH COURT HAS BEEN SHOWN TO US. THE PUNJAB AND HARYANA HIGH COURT IN COMMISSIONER OF INCOME TAX, FARIDABAD VS. M/S. LAKHANI MARKETING INCL., ITA NO. 970/2008, DECIDED ON TWO EARLIER DECISIONS OF THE SAME CO URT IN CIT VS. HERO CYCLES LIMITED, [2010] 323 ITR 518 AND CIT VS. WINSOME TEXTILE INDUSTRIES LIMITED, [2009] 319 ITR 204 TO HOLD THAT SECTION 14A CANNOT BE INVOKED WHEN NO EXEMPT INCOME WAS EARNED. THE SECOND DECISION IS OF THE GUJARAT HIGH COURT IN COMMI SSIONER OF INCOME TAX - I VS. CORRTECH ENERGY (P.) LTD. [2014] 223 TAXMANN 130 (GUJ.). THE THIRD DECISION IS OF THE ALLAHABAD HIGH COURT IN INCOME TAX APPEAL NO.88 OF 2014, COMMISSIONER OF INCOME TAX (II) KANPUR, VS. VS. M/S SHIVAM MOTORS (P) LTD. DECIDED ON 05.05.2014. IN THE SAID DECISION IT HAS BEEN HELD: - 'AS REGARDS THE SECOND QUESTION, SECTION 14A OF THE ACT PROVIDES THAT FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME UNDER THE CHAPTER, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED B Y ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. HENCE, WHAT SECTION 14A PROVIDES IS THAT IF THERE IS ANY INCOME WHICH PAGE 4 OF 13 DOES NOT FORM PART OF THE INCOME UNDER THE ACT, THE EXPENDITURE WHICH IS INCURRED FOR EARNING THE INCOME IS NOT AN ALLOWABLE DEDUCTION. FOR THE YEAR IN QUESTION, THE FINDING OF FACT IS THAT THE ASSESSEE HAD NOT EARNED ANY TAX FREE INCOME. HENCE, IN THE ABSENCE OF ANY TAX FREE INCOME, THE CORRESPONDING EXPENDITURE COULD NOT BE WORKED OUT FOR DISALL OWANCE. THE VIEW OF THE CIT(A), WHICH HAS BEEN AFFIRMED BY THE TRIBUNAL, HENCE DOES NOT GIVEN RISE TO ANY SUBSTANTIAL QUESTION OF LAW. HENCE, THE DELETION OF THE DISALLOWANCE OF RS.2,03,752/ - MADE BY THE ASSESSING OFFICER WAS IN ORDER' . 15. INCOME EXEMPT UNDER SECTION 10 IN A PARTICULAR ASSESSMENT YEAR, MAY NOT HAVE BEEN EXEMPT EARLIER AND CAN BECOME TAXABLE IN FUTURE YEARS. FURTHER, WHETHER INCOME EARNED IN A SUBSEQUENT YEAR WOULD OR WOULD NOT BE TAXABLE, MAY DEPEND UPON THE NATURE OF TRANSA CTION ENTERED INTO IN THE SUBSEQUENT YEAR. FOR EXAMPLE, LONG TERM CAPITAL GAIN ON SALE OF SHARES IS PRESENTLY NOT TAXABLE WHERE SECURITY TRANSACTION TAX HAS BEEN PAID, BUT A PRIVATE SALE OF SHARES IN AN OFF MARKET TRANSACTION ATTRACTS CAPITAL GAINS TAX. IT IS AN UNDISPUTED POSITION THAT RESPONDENT ASSESSEE IS AN INVESTMENT COMPANY AND HAD INVESTED BY PURCHASING A SUBSTANTIAL NUMBER OF SHARES AND THEREBY SECURING RIGHT TO MANAGEMENT. POSSIBILITY OF SALE OF SHARES PRIVATE PLACEMENT ETC. CANNOT BE RULED OUT AN D IS NOT AN IMPROBABILITY. DIVIDEND MAY OR MAY NOT BE DECLARED. DIVIDEND IS DECLARED BY THE COMPANY AND STRICTLY IN LEGAL SENSE, A SHAREHOLDER HAS NO CONTROL AND CANNOT INSIST ON PAYMENT OF DIVIDEND. WHEN DECLARED, IT IS SUBJECTED TO DIVIDEND DISTRIBUTION TAX. 16. WHAT IS ALSO NOTICEABLE IS THAT THE ENTIRE OR WHOLE EXPENDITURE HAS BEEN DISALLOWED AS IF THERE WAS NO EXPENDITURE INCURRED BY THE RESPONDENT - ASSESSEE FOR CONDUCTING BUSINESS. THE CIT(A) HAS POSITIVELY HELD THAT THE BUSINESS WAS SET UP AND HAD CO MMENCED. THE SAID FINDING IS ACCEPTED. THE RESPONDENT - ASSESSEE, THEREFORE, HAD TO INCUR EXPENDITURE FOR THE BUSINESS IN THE FORM OF INVESTMENT IN SHARES OF CEMENT COMPANIES AND TO FURTHER EXPAND AND CONSOLIDATE THEIR BUSINESS. EXPENDITURE HAD TO BE ALSO I NCURRED TO PROTECT THE INVESTMENT MADE. THE GENUINENESS OF THE SAID EXPENDITURE AND THE FACT THAT IT WAS INCURRED FOR BUSINESS ACTIVITIES WAS NOT DOUBTED BY THE ASSESSING OFFICER AND HAS ALSO NOT BEEN DOUBTED BY THE CIT(A). 7. FOLLOWING THE ABOVE BINDING PRECEDENT WE UPHOLD THE DELETION OF DISALLOWANCE OF RS.1 , 53 , 348/ - U/S 14A OF THE ACT. 8. THE NEXT ISSUE INVOLVED RELATES TO RELIEF GRANTED BY THE LD CIT(A) OF RS. 49,110/ - IN RESPECT OF CAR AND TELEPHONE EXPENSES. IN THE INSTANT CASE THE AO MADE THE DISAL LOWANCE OF 10% OF CAR AND TELEPHONE EXPENSES AGGREGATING OUT OF RS. 9,82,069/ - I.E. 98,207/ - WHICH WAS RESTRICTED @5% I.E. RS.49,103 / - BY THE LD CIT(A) BY CONCLUDING AS UNDER: - PAGE 5 OF 13 3.5.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR AND THE ASSESSMENT ORDER. NO FACTS HAVE BEEN BROUGHT ON RECORD AS TO WHETHER THE APPELLANT HAD ANY OTHER VEHICLE FOR HIS OWN USE OR NOT. SIMILARLY WHETHER THE TELEPHONE WAS INSTALLED IN THE OFFICE PREMISES OR AT THE RESIDENCE IS NOT KNOWN. NO SAMPLE CHECKING OF THE EXPENDITURE HAS BEEN CARRIED OUT. AS SUCH NO ADVERSE FACTS HAVE BEEN BROUGHT ON RECORD. CONSIDERING ALL THESE ASPECTS I DO NOT FIND ANY MERIT IN MAKING SUCH DISALLOWANCES. HOWEVER, EVEN DURING THE APPELLATE PROCEEDINGS THE APPELLANT HAS NOT BROUGHT ON RECORD ANY FACT TO S HOW THAT HE WAS MAINTAINING SEPARATE VEHICLES FOR HIS PERSONAL USE OR THAT HE WAS HAVING INDEPENDENT TELEPHONE FOR HIS PERSONAL USE. UNDER SECTION 37(1) IT IS ONLY THAT EXPENDITURE WHICH IS WHOLLY AND EXCLUSIVELY LAID OUT OR EXPENDED FOR THE PURPOSE OF BUS INESS, WHICH IS ALLOWABLE AS A DEDUCTION. IN THE INSTANT CASE, THE APPELLANT IS RUNNING A PROPRIETARY BUSINESS FOR WHICH HE HAS MAINTAINED SEPARATE BOOKS OF ACCOUNTS. HOWEVER, EVEN DURING THE APPEAL PROCEEDINGS HE HAS NOT DEFENDED HIMSELF BY LEADING EVIDEN CES THAT HE WAS HAVING SEPARATE CAR AND TELEPHONE FOR HIS PERSONAL USE. IN VIEW OF THIS PERSONAL ELEMENT IN THE USE OF VEHICLE, TELEPHONE ETC. CANNOT BE RULED OUT. THE DISALLOWANCE MADE BY THE AD, HOWEVER, APPEARS TO BE ON THE HIGHER SIDE, AS MAJOR AMOUNT IS ON ACCOUNT OF DEPRECIATION ON THE CAR. CONSIDERING ALL THESE FACTORS, I HOLD THAT 5% INSTEAD OF 10% OF THE SAID EXPENDITURE SHOULD BE DISALLOWED TO TAKE CARE OF THE PERSONAL ELEMENT IN THE SAID EXPENDITURE. HENCE, THE DISALLOWANCE IS RESTRICTED TO RS.49 ,110/ - . 9. HAVING CONSIDERED THE RIVAL SUBMISSION WE FIND THAT THE ESTIMATE MADE BY THE LD CIT(A) IS REASONABLE AND NOTHING HAS BEEN BROUGHT BEFORE US SO AS TO REJECT THE ESTIMATE MADE BY THE LD CIT(A) AND THEREFORE WE AGREE WITH THIS CONCLUSION AND REJEC T THE CLAIM OF THE REVENUE. 10. THE NEXT ISSUE INVOLVED IN THE INSTANT APPEAL RELATES TO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY. IN THE INSTANT CASE THE AO NOTED THAT DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF THE ASSES SEE, JEWELLERY VALUED AT RS. 59,59,006/ - WAS FOUND AND IN THE SUBSEQUENT SEARCH OF LOCKER JEWELLERY VALID AT RS.23,59,038/ - WAS FOUND OUT OF WHICH , JEWELLERY OF RS.4 0 ,02,001/ - WAS SEIZED. IN THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSEE WAS REQUIRED TO SUBMIT EXPLANATION IN RESPECT OF JEWELLERY FOUND AND SEIZED. IN A WRITTEN REPLY THE ASSESSEE EXPLAINED THE SOURCE OF ACQUISITION OF JEWELLERY. THE AO ON PERUSAL OF THE DETAILS HELD THAT JEWELLERY FOUND AND SEIZED IS NOT MATCHI NG IN QUANTITY FOR WHICH , NO PLAUSIBLE EXPLANATION HAS BEEN FILED. HE FURTHER HELD FROM THE RETURNS OF INCOME OF THE ASSESSEE I N THE STATEMENT OF AFFAIRS , NO JEWELLERY IS APPEARING. IN SUCH PAGE 6 OF 13 CIRCUMSTANCES HE HELD THAT INVESTMENT IN JEWELLERY TO THE TUNE OF RS.83,18,044/ - IS CONSIDERED UNEXPLAINED WITHIN THE PROVISIONS OF SECTION 69 OF THE ACT. IN APPEAL THE LD CIT(A) FURTHER RESTRICTED THE ADDITION FROM RS.83 , 18 ,0 44/ - TO RS.3,46,650/ - BY CONCLUDING AS UNDER: - 3.6.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR AND EXAMINED THE FACTS OF THE CASE. THE AO'S ORDER ON THE ISSUE IS BRIEF. HE HAS STATED THAT THE JEWELLERY FOUND AND SEIZED IS NOT MATCHING IN QUANTITY FOR WHICH NO PLAUSIBLE EXPLANATION HAS BEEN FILED. HE HAS A LSO HELD THAT IN THE STATEMENT OF AFFAIRS OF THE APPELLANT FILED WITH RETURN OF INCOME THERE IS NO MENTION OF JEWELLERY. THEREAFTER HE HAS TREATED THE ENTIRE JEWELLERY AS UNEXPLAINED INVESTMENT AND ADDED U/S 69. 3.6.4 THE WARRANT OF THE AUTHORIZATION IS IN THE NAME OF THE APPELLANT AND HIS TWO SONS NAMELY SH. MANISH BASIA AND SH. DINESH BASIA TO SEARCH THEIR RESIDENTIAL PREMISE AT SU - 217, PRITAM PURA, NEW DELHI. THE APPELLANT LIVES WITH HIS FAMILY CONSISTING OF HIS WIFE, TWO SONS AND TWO DAUGHTERS - IN - LAW . THE JEWELLERY WAS NOT FOUND IN THE PERSONAL CUSTODY OF THE APPELLANT ALONE. THE SAME HAS BEEN FOUND IN THE PERSONAL CUSTODIES OF HIS WIFE, HIMSELF, THE DAUGHTERS - IN - LAW SEPARATELY. THE JEWELLERY WAS FOUND AT THE APPELLANT'S RESIDENCE AT PRITAM PURA AND A LSO IN THE LOCKER NOS. 1573 (STANDING INIE NAME OF MANISH BASIA AND SHRUTI BASIA), 279 (SANTOSH BASIA AND KRISHANA BASIA) AND 1225 (STANDING IN THE NAME OF SH. DINESH BASIA AND SMT. SHANTI BASIA). ALL THESE PERSONS ARE SEPARATELY ASSESSED TO TAX FOR QUITE SOME TIME AS UNDER: - S.NO. PARTICULARS OF THE ASSESSEE ASSESSMENT YEAR IN WHICH THE RETURN OF INCOME WAS FILED FOR THE FIRST TIME 1. SH. KRISHAN KUMAR BASIA 1981 - 1982 2. SMT. SANTOSH KUMAR BASIA 1985 - 1986 3. SH. DINESH BASIA 2002 - 2003 4. SMT. SHRUTI BASIA 2002 - 2003 5. SH. MANISH BASIA 2002 - 2003 6. SMT. NIDHI BASIA 2003 - 2004 3.6.5 THE APPELLANT AND HIS WIFE HAVE BEEN FILING WEALTH TAX RETURNS IN ADDITION TO INCOME TAX RETURNS. BOTH THE DAUGHTERS - IN - LAW HAVE FILED RETURNS OF WEALTH, THOUGH FILED FOR THE FIRST TIME ON 07 - 10 - 2010. IT HAS BEEN SUBMITTED BY THE AR THAT THE JEWELLERY REPRESENTS THEIR STREEDHAN THE BREAKUP OF JEWELLERY SHOWN IN THE WEALTH TAX RETURNS THESE AS UNDER: ASSESSEE'S NAME A.Y. QUANTITY OF JEWELLERY (GM) VALUE OF JEWELLERY SANTOSH DEVI BASIA 2007 - 09 1,206.97 13,26,795 KRISHAN KUMAR BASIA 2008 - 09 1,010.97 14,65,070 PAGE 7 OF 13 NIDHI BASIA 2009 - 10 892 14,87,050 SHRUTI BASIA 2009 - 10 1010.97 14,92,302 3.6.6 IN A CASE WHERE MORE THAN ONE INCOME TAX ASSESSEE, ARE RESIDING TOGETHER, IT WOULD NOT BE CORRECT TO ASSESS THE JEWELLERY FOUND IN THE PREMISES ONLY IN THE HANDS OF THE HEAD OF THE FAMILY, ESPECIALLY, WHEN THE JEWELLERY HAS BEEN FOUND IN THE LOCKERS AND PERSONAL CUSTODIES OF DIFFERENT MEMBERS OF THE FAMILY AND ALL ARE INDEPENDENTLY ASSESSED TO INCOME TAX. SEPARATE INVENTORY HAS BEEN PREPARED FOR THE JEWELLERY FOUND IN THE HANDS OF DIFFERENT MEMBERS OF THE FAMILY. VALUATION OF JEWELLERY BY THE INCOME TAX DEPARTMENT'S VALUER HAS ALSO BEEN DONE SEPA RATELY - FAMILY WISE. 3.6.7 EVEN THOUGH JEWELLERY WAS FOUND SEPARATELY IN THE PERSONAL CUSTODY OF THE APPELLANT AND HIS WIFE INDIVIDUALLY, THE SAME HAS BEEN CLUBBED AND ONLY ONE VALUATION REPORT HAS BEEN PREPARED. THE VALUATION REPORT DATED 07/01/2010 IS F OR THE JEWELLERY FOUND IN THE CASE OF APPELLANT AND HIS WIFE (SMT. SANTOSH BASIA). THE SECOND VALUATION REPORT DATED 07/10/2010 IS IN THE NAME OF SMT. NIDHI BASIA AND SH. MANISH BASIA (DAUGHTER - IN - LAW AND SON). THE THIRD VALUATION REPORT IS IN THE NAME OF SH. MANISH BASIA AND SMT. NIDHI BASIA WHICH IS DATED 26/07/2010. THE FOURTH VALUATION REPORT IS DATED 07/01/2010 WHICH IS IN THE NAME OF SMT. SHRUTI BASIA AND SH. DINESH BASIA AND (SECOND DAUGHTER - IN - LAW AND SECOND SON). THERE IS ANOTHER VALUATION REPORT D ATED 26/2/2010 WHICH IS IN THE NAME OF SMT. SHRUTI BASIA AND SH. DINESH BASIA. 3.6.8 IN VIEW OF THESE FACTS, I HOLD THAT THE WHOLE OF JEWELLERY FOUND AT THE APPELLANT'S PREMISES AND LOCKERS DOES NOT BELONG TO THE APPELLANT ALONE. HE CAN ONLY BE ASKED TO SUBSTANTIATE THE SOURCE OF JEWELLERY FOUND IN THE PERSONAL CUSTODY OF HIS WIFE AND HIMSELF (DUE TO COMMON INVENTORY MADE). THE BALANCE JEWELLLERY WAS FOUND IN THE PERSONAL CUSTODY OF THE APPELLANT'S DAUGHTER'S IN LAW. THE APPELLANT'S TWO SONS AND THEIR WIV ES ARE HAVING INDEPENDENT SOURCES OF INCOME, ASSESSED TO INCOME TAX AND WEALTH TAX (THOUGH THE RETURN OF WEALTH HAS BEEN FILED ONLY ON 07/10/2010). AS PER THE VALUATION REPORT GOT DONE BY THE INCOME TAX DEPARTMENT, 2581.70 GM BELONG TO THE APPELLANT AND HI S WIFE. OUT OF THE REMAINING JEWELLERY, 1161.45 GM HAS BEEN VALUED BY THE INCOME TAX DEPARTMENT IN THE HANDS OF SH. DINESH BASIA AND SMT. SHRUTI BASIA AND THE BALANCE 961.47 GM HAS BEEN VALUED IN THE HANDS OF SH. MANISH BAISA AND SMT. NIDHI BASIA. 3.6.9 AS AGAINST 2581.70 GM FOUND IN THEIR CUSTODY, THE APPELLANT AND HIS WIFE, TOGETHER, HAVE DECLARED 2222.94 GM OF JEWELLERY IN THEIR WEALTH TAX RETURN. THUS THERE IS EXCESS JEWELLERY OF 358.76 GM WHICH HAS TO BE TAXED IN THE HANDS OF THE APPELLANT AND HIS WI FE. THE SAID EXCESS JEWELLERY NEEDS TO BE DIVIDED INTO TWO PARTS AND ONLY ONE OF THE PARTS BECOMES ACCESSIBLE IN THE HAND OF THE APPELLANT AS UNEXPLAINED INVESTMENT U/S 69A. THUS THE ADDITION ON ACCOUNT OF EXCESS JEWELLERY IN THE HANDS OF THE APPELLANT IS RESTRICTED TO 179.38 GM ONLY. AS PER THE VALUATION REPORT THE AVERAGE RATE ADOPTED PER GRAM OF JEWELLERY PAGE 8 OF 13 COMES TO RS. 1,933/ - (RS.4989069 2581.700 GM). THUS THE ADDITION U/S 69A WOULD BE RS.3,46,650/ - . 11. BEFORE US THE LD CIT DR SULEKHA VERMA CONTEDED THAT LD CIT(A) DID NOT COUNTER THE OBJECTION RAISED BY THE AO I.E. TO RECONCILE THE QUANTITY OF JEWELLERY FOUND DURING THE SEARCH AND DECLARED IN THE WEALTH TAX RETURN. SHE ALSO CONTENDED THAT LD CIT(A) IGNORED THE SUBMISSION OF THE APPELLANT BEFO RE THE AO IN WHICH THE APPELLANT HAD ACCEPTED THAT HE GIFTED 300 GMS OF JEWELLERY TO EACH OF DAUGHTER S IN LAW AND THEREFORE, ASSESSEE OUGHT TO HAVE RECONCILE D 600 GMS OF JEWELLERY WITH THE JEWELLERY DECLARED IN THE WEALTH TAX RETURN. SHE FURTHER CONTENDED THAT LD CIT(A) WAS NOT JUSTIFIED TO DECIDE THE ISSUE IN LIGHT OF THE WEALTH TAX RETURN OF THE DAUGHTER IN LAW AFTER THE DATE OF SEARCH I.E. ON 07.01.2010 . IT WAS FURTHER CONTENDED THAT A PLEA TAKEN BY THE COUNSEL FO R THE ASSESSEE WITH THE DIFFERENCE IN THE JEWELLERY IS ON ACCOUNT OF CONVERSION OF JEWELLERY IS A NEW PLEA AND NO SUCH PLEA WAS EVE R TAKEN BEFORE THE AO OR LD CIT(A). IN VIEW THEREOF IT WAS PRAYED THAT IN THE INTEREST OF JUSTICE , THE MATTER DESERVES TO BE RESTORED TO THE FILE OF THE AO WITH A DIR ECTION TO THE ASSESSEE TO RECONCILE THE JEWELLERY FOUND DURING SEARCH AND DECLARED BY THE ASSESSEE AND HIS WIFE. IT WAS ALSO PRAYED THAT THE ASSESSEE SHOULD HAVE EXPLAINED THE SOURCE OF JEWELLERY CLAIMED TO HAVE BEEN GIFTED TO THE DAUGHTER IN LAW. ON OTHER HAND THE LD COUNSEL FOR THE ASSESSEE CONTENDED IN THE COURSE OF HEARING , SUPPORTED THE ORDER OF THE LD CIT(A) STATING THAT JEWELLERY DECLARED IN THE WEALTH TAX RETURN HAS BEEN HELD TO BE VALID EVIDENCE DESPITE VARIATIONS IN MATCHING IN ITEMS OF J EWELLERY AND IN ABSENCE OF EVIDENCE OF RE - MAKING OF JEWELLERY. HE RELIED UPON THE FOLLOWING JUDGEMENT: - I. DCIT VS. ARJUN DASS KALWANI 102 TTJ 977 (JODH) (P. 168 - 169) II. ACIT VS. SHRI ARVIND AGARWAL, ITA NO.455/IND/2013 (P.184 - 185) III. RAKESH R. PUROHIT VS. ACIT 14DTR 414 (JAIPUR) (P.206) IV. BHAIJIBHAI ALIAS BHUPENDRA HHIMATLAL SHAH VS. DCIT 107 TAXMAN 831 (AHD) 12. IT WAS FURTHER SUBMITTED T HAT POSSESSION OF JEWELLERY TO THE EXTENT OF QUANTITY MENTIONED IN THE CIRCULAR INSTRUCTION ISSUED BY THE BOARD TO BE PAGE 9 OF 13 EXPLAINED JEWELL ERY IN THE FOLLOWING DECISIONS: - CIT VS. GHANSHAM DAS JOHRI ITA NO. 19/2005 (ALLAHABAD), SMT. PATI DEVI VS. ITO 240 ITR 727 (KARNATAKA). 13 . HAVING CONSIDERED THE RIVAL SUBMISSION AND PERUS ED THE MATERIAL ON RECORD WE FIND THAT THE IN THE INSTANT CASE , WE FIND THAT JEWELLERY FOUND AT THE RESIDENCE OF THE ASSESSEE ON 07.01.2010 AND LOCKERS OF THE FAMILY MEMBER OF ASSESSEE AND A SSESSEE IS TABULAT ED HEREUNDER: - 14 . THE AO HAS MADE ADDITION OF RS.83,18,044/ - BY CONSIDERING THE JEWELLERY OF RS.59,59,006/ - FOUND FROM THE RESIDEN CE OF THE ASSESSEE AND JEWELLERY OF RS.23, 3 9,038/ - FOUND FROM THE LOCKER OF THE ASSESSEE BOTH OF WHICH AGGREGATE TO RS.83,18 ,044/ - AS PER THE AO. THE LD CIT(A) FURTHER HELD THAT OUT OF JEWELLERY FOUND FROM THE RESIDEN CE OF THE ASSESSEE OF RS.35,08,975/ - SPECIFICALLY PERTAINS TO THE TWO SONS OF THE ASSESSEE NAMELY DINESH BASIA AND MANISH BASIA . THIS FACT IS ALSO SUPPORTED FROM THE VALUATION REPORT PLACED AT PAGE 37 AND 39 OF THE PB WHICH SHOWS THAT JEWELLERY FOUND FROM THE RESIDENTS INCLUDES JEWELLERY OF RS.13 , 95 , 392/ - PERTAINS TO DINESH BASIA AND JEWELLERY OF RS.21 , 13 , 583/ - PERTAINS TO MANISH BASIA . THUS , JEWELLERY FOUND FROM T HE RESIDEN CE AND LOCKER OF ASSESSEE AGGREGATED TO RS.49 , 89 , 076/ - BREAK UP OF EXTRACTED WHICH IS AS UNDER: - SL. NO NAME OF PERSON JEWELLERY FOUND AT RESIDENCE AT SU 217, PITAMPURAM, DELHI ON 7.1.2010 (PAGES OF PANCHNMANA) LOCKER TOTAL QUANTITY VALUE QUANTITY VALUE DATE QUANTITY VALUE I) KRISHAN KUMAR BASIA AND SANTOSH BASIA 1079.50 24,50,031 (PAGE 33 - 36 OF PAPER BOOK AT PAGE 36) 1502.20 - 25,39,038 (PAGES 40 - 42 OF PAPER BOOK) (B) 23.2.2010 2581.70 49,89,069 II) DINESH BASIA AND SHRUTI BASIA (ELDER SON OF ASSESSEE) 666.7 13,95,392 (PAGE 33 READ WITH PAGE 37 OF PAPER BOOK) 494.55 7,89,194 (PAGES 47 - 49 OF PAPER BOOK) 26.2.2010 1161.25 21,84,586 III) MANISH BASIA AND NIDHI BASIA (YOUNGER SON OF ASSESSEE) 890.46 21,13,583 (PAGE 33 READ WITH PAGE 390 O F P APER BOOK) 71.01 1,14,819 (PAGES 43 - 45 OF PAPER BOOK) 26.2010 961.47 22,28,402 TOTAL 2636.66 59,59,006 (A) 2067.76 34,43,051 4704.42 94,02,057 PAGE 10 OF 13 SR. NO. NAME OF PERSON JEWELLERY FOUND AT RESIDENCE AT SU 217, PITAMPURAM, DELHI ON 7.1.2010 (PAGES OF PANCHNMANA ) I) RESIDENCE QUANTITY VALUE 1079.50 24,50,031/ - (PAGE 33 - 36 OF PAPER BOOK AT PAGE 36) II LOCKER 1502.50 25,39,038/ - TOTAL 2581.70 49,89,076/ - 15 . THE LD CIT(A) HAS FURTHER HELD THAT TOTAL JEWELLERY DECLARED AS PER THE WEALTH TAX RETURN OF SHRI KRISHNA KUMAR BASIA AND SANTOSH BASIA IS 2217.94 GM AS AGAINST THE JEWELLERY FOUND 2581. 70 GMS. HE THEREFORE TREATED THE JEWELLERY OF 2217.94 GMS AS EXPLAINED AND THE DIFFERENCE OF RS.363.71 GMS AS UNEXPLAINED. HE FURTHER RESTRICTED THE ADDITION TO 179.38 GMS ON THE BASIS SUC H JEWELLERY PERTAINS TO BOTH ASSESSEE AND HIS WIFE AND AS SUCH HE SUSTAINED AN ADDITION OF RS.3 , 46 , 650/ - . THE EVIDENCE OF WEALTH TAX RETURN HAVING BEEN FILED PRIOR TO SEARCH BOTH BY THE ASSESSEE NAMELY KRISHAN KUMAR BASIN I.E. ON 31.03.2009 AT P.53 TO 54 PB AND WIFE OF THE ASSESSEE I.E. 03.11.2007 I.E. AT P.60 - 62 OF PB. WE FURTHER NOTICE THAT ALLAHABAD HIGH COURT IN THE CASE CIT VS. G H ANSHAM DAS J O HRI ITA NO. 19/2005 DATED 25.10.2013 HAS HELD FOLLOWING THE JUDGEMENT OF KARNATKA HIGH COURT IN THE CASE OF S MT. PATI DEVI VS. ITO 240 ITR 72 7 THAT THE SEIZED JEWELLERY CAN BE HELD TO BE EXPLAINED IN TERMS OF INSTRUCTION ISSUED BY CBDT, THE INSTRUCTION NO.1916 DATED 11.05.1994, WHICH HAS BEEN PROVIDED THAT IN THE CASE OF WEALTH TAX THE ASSESSEE , GOLD JEWELLERY AN D ORNAMENTS FOUND IN EXCESS OF THE GROSS WEIGHT DECLARED IN THE WEALTH TAX RETURN ONLY NEED WITH BE SEIZED. TH US THE DECISION OF LD CIT(A) IS IN ACCORDANCE WITH THE INSTRUCTION ISSUED BY THE CBDT WHICH HAS BEEN ACCEPTED TO BE VALID BASIS FOR ACCEPTING THE EXPLANATION OF THE VIS - A - VIS THE SEIZED CEA SED JEWELLERY. ALSO IN THE CASE OF KRISHNA WANTI B A TRA VS. ACIT 85 TTJ 550 (DEL) IT HAS BEEN HELD AS UNDER: - 6. IT IS FURTHER CLEAR FROM RECORD THAT JEWELLERY OF VALUE OF RS.13,89,530/ - WAS FOUND FROM THE PREMISES SUBJECTED TO SEARCH. IT HAS BEEN ADMITTED BY THE REVENUE THAT ABOVE JEWELLERY BELONGED NOT ONLY TO THE ASSESSEE BUT TO HER DAUGHTER - IN - LAW AND HER UNMARRI ED DAUGHTER. JEWELLERY OF VALUE OF MORE THAN RS. 12 LAKHS HAS BEEN ACCEPTED AS EXPLAINED. THE ADDITION IN DISPUTE HAS BEEN MADE ON PAGE 11 OF 13 ACCOUNT OF SLIGHT VARIATION IN DESCRIPTION OF JEWELLERY DISCLOSED IN THE REPORTS FILED WITH THE RETURN AND REPORTS OF THE DEP ARTMENTAL VALUERS PREPARED AT THE TIME OF SEARCH. HERE AGAIN REVENUE AUTHORITIES WENT BACK TO REPORT FOR ASST. YR. 1978 - 79 WITHOUT CONSIDERING LATEST REPORT AT. YR. 1984 - 85. IN MY VIEW ASSESSEES WERE ENTITLED TO BENEFIT OF WEIGHT OF JEWELLERY DISCLOSED IN THE RETURNS WELL - KNOWN FACT THAT INDIAN LADIES KEEP CHANGING DESIGN OF JEWELLERY FROM TIME TO TIME. HAVING IN MIND DETAILED EXPLANATION RENDERED BY THE ASSESSEE (COPIES AVAILABLE AT PP. 104 TO 113 OF THE PAPER BOOK) I AM INCLINED TO TREAT THE ENTIRE JEWELL ERY FOUND WITH ASSESSEE AS FULLY EXPLAINED. THE ADDITION MADE IN THE HANDS OF ASSESSEE FOR UNDISCLOSED INCOME, IS UNJUSTIFIED AND IS DIRECTED TO BE DELETED. 16 . FURTHER IN THE CASE OF DCIT VS. ARJUN DAS KALU 102 TTJ 977 (JODH), IT HAS BEEN HELD AT PAGE 16 8 - 169 AS UNDER: - 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AS REGARDS THE JEWELLERY OF 667.3 GMS CLAIMED TO BE BELONGING TO SMT MEERA BAI, WIFE OF THE ASSESSEE, WE FIND THAT THE AD HAD ACCEPTED ONLY 94.2 GMS ON T HE GROUND THAT THE DESCRIPTION OF ITEMS IN LIST DT. 20TH DEC., 1983 AND THOSE FOUND IN THE PRESENT SEARCH WAS NOT TALLYING. PAGES 13 AND 14 OF THE PAPER BOOK ARE THE COPY OF THE ASSESSMENT ORDER PASSED IN THE HANDS OF SMT. MEERA BAI UNDER S. 16(3) OF THE W T ACT FOR ASST. YR. 1978 - 79 IN WHICH THE GOLD ORNAMENTS AT 1100 GMS. (NET) HAVE BEEN ASSESSED BY THE REVENUE. PAGE NOS. 15 TO 21 OF THE PAPER BOOK ARE THE WEALTH - TAX ASSESSMENT ORDERS PASSED UNDER S. 16(3) IN THE HANDS OF SMT. MEERA KALWANI FOR THE ASST. Y RS. 1988 - 89 AND 1989 - 90 IN WHICH GOLD ORNAMENTS OF 667.300 GMS HAVE BEEN ACCEPTED. NOT ONLY THAT, THE LADY HAD CLAIMED BEFORE THE AUTHORITIES BELOW THAT SHE WAS IN POSSESSION OF JEWELLERY WHICH WAS COMING FROM THE PERIOD ANTERIOR TO THE EARLIER SEARCH COND UCTED ON THE ASSESSEE IN 1983. SIMPLY BECAUSE THE ASSESSEE COULD NOT LEAD EVIDENCE FOR CONVERSION OR REMAKING OF THE JEWELLERY, THE POSSESSION OF WHICH IS OTHERWISE ACCEPTED, IT CANNOT BE SAID THAT THE HOLDING OF GOLD JEWELLERY TO THIS EXTENT CANNOT BE ACC EPTED, WHEN OVERWHELMING EVIDENCE IS AVAILABLE IN WHICH THE REVENUE HAS ASSESSED HER AT MUCH MORE JEWELLERY IN THE ASST. YR. 1978 - 79 AND TO THE PRESENT HOLDING OF JEWELLERY IN THE ASST YEARS. 1988 - 89 AND 1989 - 90. IN OUR CONSIDERED OPINION, THE LEARNED CIT( A) WAS JUSTIFIED IN ACCEPTING THE CLAIM OF THE ASSESSEE WITH REGARD TO THE POSSESSION OF GOLD JEWELLERY BY SMT. MEERA KALWANI TO THE TUNE OF 667.300 GMS OF GOLD JEWELLERY, INSOFAR AS SMT. INDRA, THE DAUGHTER - IN - LAW OF THE ASSESSEE IS CONCERNED, SHE WAS CLA IMED TO BE THE OWNER OF 350.5 GMS. OF GOLD JEWELLERY. IT WAS EXPLAINED DURING THE ASSESSMENT PROCEEDINGS THAT SHE RECEIVED 194 GMS. OF GOLD ORNAMENTS AS WEDDING GIFT FROM HER PARENTS AND BROTHERS WHO RESIDED AT DUBAI AND TAIWAN. SHE FURTHER CLAIMED THAT SH E RECEIVED FOUR GOLD BANGLES FROM HER MOTHER - IN - LAW AS PRENUPTIAL GIFT AND FOUR MORE BANGLES ON THE OCCASION OF DIWALI IN 1987. THUS, THE TOTAL PAGE 12 OF 13 POSSESSION OF GOLD CLAIMED TO BE BELONGING TO HER IS 350.5 GMS. WE ARE REMINDED OF THE ORDER PASSED BY THE CHAND IGARH BENCH OF THE TRIBUNAL IN THE CASE OF SMT NEENA SYAL AS. ASSTT. CIT (2000) 69 TTJ (CM) 516 : (1999) 70 ITD 62 (CM) IN WHICH IT WAS HELD THAT CBDT INSTRUCTION NO. F. 288/63/93 - IT (INV.) - II DT. 11TH MAY, 1994 CONTAINING GUIDELINES FOR SEIZURE OF JEWELLE RY AND ORNAMENTS IN THE COURSE OF SEARCH, WAS RELEVANT WITH REFERENCE TO THE DEEMING PROVISION OF S. 69A AS WELL. IN THIS INSTRUCTION, THE POSSESSION OF GOLD JEWELLERY BY MARRIED LADIES UPTO 500 GMS. HAS BEEN HELD TO BE IMMUNE FROM SEIZURE. THE CHANDIGARH BENCH IN THIS CASE HELD THAT THE POSSESSION OF GOLD JEWELLERY BY MARRIED LADIES TO THE EXTENT OF 500 GMS. SHOULD BE CONSIDERED AS EXPLAINED. SEVERAL ORDERS HAVE BEEN PASSED ALL OVER INDIA BY DIFFERENT BENCHES OF THE TRIBUNAL ACCEPTING THE POSSESSION OF GOL D JEWELLERY TO THE EXTENT OF 500 GMS. PER MARRIED LADY. SINCE SMT INDRA HAD CLAIMED JEWELLERY OF 350.5 GMS. IN HER POSSESSION, WHICH IS MUCH BELOW THE PRESCRIBED LIMIT OF 500 GMS. WE ARE OF THE CONSIDERED OPINION THAT NO ADDITION CAN BE HELD TO BE SUSTAINA BLE ON THIS COUNT AND THE LEARNED CIT(A),WAS JUSTIFIED IN DELETING IT. AS REGARDS THE TWO DAUGHTERS OF THE ASSESSEE, NAMELY SMT KRISHNA AND SMT USHA KHUBANI FOR WHICH 101 GMS. AND 177.2 GMS., HAVE BEEN CLAIMED RESPECTIVELY TO BE BELONGING TO THEM, WE FIND THAT BOTH OF THEM HAD CLAIMED TO HAVE LEFT THE JEWELLERY WITH THEIR MOTHER FOR CONVERSION. IT IS A COMMON PRACTICE IN OUR SOCIETY THAT THE DAUGHTERS RELY UPON THE EXPERIENCE AND WISDOM OF THEIR MOTHER WITH REGARD TO THE CONVERSION OR PURCHASE OF JEWELLERY. BOTH OF THEM HAD ASSERTED THROUGH AFFIDAVITS THE RETENTION OF GOLD JEWELLERY WITH THEIR MOTHER TO THIS EXTENT. NOT ONLY THIS, THE ASSESSEE IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH ALSO ACCEPTED THIS FACT THAT SOME JEWELLERY, IVPS AND KVPS BEL ONGING TO HIS DAUGHTERS WAS LYING WITH HIM. APART FROM THAT, ANOTHER IMPORTANT ASPECT, WHICH CANNOT BE LOST SIGHT OF IS THAT THE GOLD JEWELLERY WAS FOUND IN PACKETS BEARING THE NAMES OF THE LADIES CONCERNED. COPY OF PANCHNAMA PLACED AT P. 65 ONWARDS OF THE PAPER BOOK CLEARLY ADMITS THE FACT OF DIFFERENT BOXES CONTAINING JEWELLERY BELONGING TO THESE LADIES SEPARATELY. THESE FACTS INDICATE THAT THE JEWELLERY TO THE EXTENT CLAIMED DID BELONG TO THE CONCERNED LADIES. IN OUR CONSIDERED OPINION, THE LEARNED CIT(A ) WAS JUSTIFIED IN DELETING THE ADDITION WHICH WAS ERRONEOUSLY MADE BY THE AO. WE, THEREFORE, UPHOLD HIS ACTION. 17 . FROM THE ABOVE JUDGEMENT S , IT IS EVIDENT THAT JEWELLERY DECLARED IN WEALTH TAX RETURN HAS TO BE GRANTED BENEFIT WHILE DETERMIN ING UNEXPLAINED INVESTMENT IN JEWELLERY. IN SUCH CIRCUMSTANCE WE FIND NO INFIRMITY IN THE ORDER OF THE LD CIT(A) FOR ACCEPTING THE EXPLANATION OF JEWELLERY DECLARED IN THE WEALTH TAX RETURN BY THE ASSESSEE AND HIS WIFE. THEREFORE DELETION OF ADDITION BY THE LD CIT(A) IS HELD TO BE VALID IN ACCORDANCE WITH LAW. THE LD DR DURING THE COURSE OF HEARING CONTENDED THAT THERE IS VARIATION/ DISCREPANCIES OF PAGE 13 OF 13 JEWELLERY IN AS PER THE WEALTH TAX RETURN AND AS PER THE VALUATION REPORT PREPARED AT THE TIME OF SEARCH WHICH TO OUR OPINION IN THE LIGHT OF THE JUDGEMENT STATED ABOVE IS NOT A VALID CONTENTION AND DOES NOT NECESSARILY ESTABLISH THAT THE ASSESSEE IS NOT ENTITLED TO BE GRANTED THE BENEFIT OF JEWELLERY DECLARED IN THE WEALTH TAX RETURN. IN SUCH CIRCUMSTANCES WE UPHOLD THE CONCLUSION OF THE LD CIT(A) AND REJECT THE CLAIM MADE BY THE REVENUE. 18 . IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 4 . 03 .2015 . - S D / - - S D / - ( S.V.MEHROTRA ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 4 / 03 / 2015 * A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELH I