Shri K.K.Shukla, Lucknow V. Asstt. Commissioner of Income Tax, Lucknow

ITA 235/LKW/2012

• Counselvise Citation: 23523714 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-11-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 01-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VIVEK MISHRA
• Keywords: Unexplained investment; Capital asset; Search and seizure; Principle of natural justice; Cost of acquisition; Fair market value; Onus to prove; Reason to believe
• Section: 153A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS.235 TO 241/LKW/2012 A. YRS:2003 - 04 TO 2009 - 2010 SHRI K. K. SHUKLA, 62 - B, ASHOK NAGAR, NEAR DHANIA MAHRI PUL, ALAMNAGAR ROAD, LUCKNOW. PAN:AOTPS5115H VS. A.C.I.T., CENTRAL CIRCLE - 1, LUCKNOW. (APPELLANT) (RESPONDENT) SHRI SHASHANK DHAON, ADVOCATE APPELLANT BY SHRI VIVEK MISHRA, C.I.T., D. R. RESPONDENT BY 26/11/2014 DATE OF HEARING 1 6 /01/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA: ALL THESE SEVEN APPEALS ARE FILED BY THE ASSESSEE, WHICH ARE DIRECTED AGAINST A COMBINED ORDER OF CIT(A) - III, LUCKNOW DATED 25/11/2011 FOR ASSESSMENT YEARS 2003 - 04 TO 2009 - 10. A LL THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2003 - 04 I.E. I.T.A. NO.235/LKW/2012. IN THIS APPEAL TH E ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 2 1. BECAUSE THERE EXISTED NO MATERIAL/INFORMATION WHICH COULD LEAD TO THE FORMATION OF 'REQUISITE REASON TO BELIEVE AS WAS A PREREQUISITE FOR ISSUANCE OF WARRANT OF AUTHORIZATION UNDER SECTION 132(1 ) AND ACCORDINGLY THE 'APPELLANT' COULD NOT HAVE BEEN TREATED TO BE THE 'PERSON IN WHOSE CASE SEARCH HAD BEEN INITIATED UNDER SECTION 132(1) OF THE 'ACT'. 2. BECAUSE THE ASSESSING OFFICER COULD NOT HAVE BEEN TREATED TO HAVE ASSUMED JURISDICTION UNDER SECTI ON 153A, AS THE 'APPELLANT'S' OBJECTION TO THE SAID INITIATION REMAINED UNRESOLVED AND ACCORDINGLY THE INITIATION OF PROCEEDINGS UNDER SECTION 153A AS ALSO THE ASSESSMENT MADE IN PURSUANCE THEREOF ARE VOID AB - INITIO. 3. BECAUSE THE ISSUE OF ASSUMPTION OF JURISDICTION UNDER SECTION 153A AND ASSESSMENT MADE IN PURSUANCE THEREOF, WAS JUSTICEABLE IN THE APPELLATE PROCEEDINGS AND MERELY BECAUSE THE ASSESSING OFFICER HAD REJECTED THE APPELLANT'S OBJECTION IN THIS RESPECT, THE 'CIT(A ) ' COULD NOT HAVE HELD THAT AP PEAL ON THIS ISSUE WAS NOT MAINTAINABLE. WITHOUT PREJUDICE TO THE AFORESAID 4. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN TREATING AGRICULTURAL INCOME OF RS.30,000 / - AS HAD BEEN SHOWN IN THE RETURN, AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES', AND IN SUBJECTING THE SAME TO ASSESSMENT ACCORDINGLY. 5. BECAUSE THE 'APPELLANT' HAD BEEN SHOWING AGRICULTURAL INCOME IN PAST AND THERE BEING NO MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH COULD IMPINGE UPON OR CONTRADICT THE SAID DISCLOSURE, THE TREATMENT GIVEN TO THE INCOME SHOWN UNDER THE HEAD 'AGRICULTURAL INCOME', BY THE AUTHORITIES BELOW IS ILLEGAL AND UNJUSTIFIED. 6. BECAUSE ASSESSMENT OF AGRICULTURAL INCOM E SHOWN AT RS.30,000 / - AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES', IS BEYOND THE AMBIT AND SCOPE OF THE SAID SECTION AND ACCORDINGLY TAXATION OF THE SAME IN 3 TERMS OF THE ASSESSMENT ORDER DATED 28.12.2010 IS WHOLLY ILLEGAL. 7. BECAUSE THE ORDER A PPEALED AGAINST, TO THE EXTENT THE SAME HAS BEEN IMPUGNED IN THIS APPEAL, IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. GROUND NO. 1, 2 & 3 WERE NOT PRESSED BY LEARNED A.R. OF THE ASSESSEE AND HENCE, THE SAME ARE REJECTED AS NOT PRESSED. 4. REGARDING GROUND NO. 4 TO 7 IN RELATION TO ONLY ONE ISSUE I.E. REGARDING TREATING AGRICULTURAL INCOME OF RS.30,000/ - SHOWN IN THE RETURN OF INCOME AS INCOME FROM OTHER SOURCES, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE BEFORE US THAT TH E LAND WAS OWNED BY PARENTS OF THE ASSESSEE AND THE AGRICULTURAL ACTIVITY WAS UNDERTAKEN BY THE ASSESSEE HIMSELF AND THEREFORE, THE CLAIM OF THE ASSESSEE SHOULD BE ACCEPTED. OUR ATTENTION WAS DRAWN TO PAGES 8 TO 13 OF THE PAPER BOOK IN SUPPORT OF THE CLAI M THAT THE PARENTS OF THE ASSESSEE WERE HOLDING AGRICULTURAL LAND DURING THIS PERIOD. 5. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA 3.2.2 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 3.2.2 I HAVE CONSIDERED THE REPLY. THE OWNERSHIP OF ANCESTRAL LAND IN T HE HANDS OF THE PARENTS CANNOT BE EQUATED WITH THE OWNERSHIP OF AGRICULTURAL LAND IN THE HANDS OF THE APPELLANT SO AS TO JUSTIFY ANY AGRICULTURAL INCOME IN THE INDIVIDUAL STATUS. FURTHER, MERE OWNERSHIP OF THE LAND HAS NO RELATIONSHIP WITH THE QUANTUM OF A GRICULTURAL INCOME AS INCOME IS WHAT IS ARRIVED AT AFTER DEDUCTING EXPENSES FROM THE GROSS RECEIPTS AND NO SUCH EVIDENCE OF RECEIPT OF SALE PROCEEDS OR INCURRING OF 4 EXPENSES FOR AGRICULTURAL OPERATIONS WAS FOUND IN THE COURSE OF THE SEARCH. IT HAS BEEN HEL D IN CIT VS. R. VENKATASWAMY NAIDU [1956] 29 ITR 529 (SC) THAT THE ASSESSEE HAS TO PLACE BEFORE THE INCOME - TAX AUTHORITIES PROPER MATERIALS WHICH WILL ENABLE THEM TO COME TO A CONCLUSION THAT THE INCOME WHICH IS SOUGHT TO BE ASSESSED, IS AGRICULTURAL INCOM E. IT IS NOT FOR THE INCOME - TAX AUTHORITIES TO PROVE THAT IT IS NOT AGRICULTURAL INCOME. IT IS ALSO HELD IN CIT V. RAMAKRISHNA DEO [1959] 35 ITR 312 (SC) THAT A PERSON WHO CLAIMS THE BENEFIT TO AN EXEMPTION HAS TO ESTABLISH IT. THUS, BURDEN OF PROOF IS ON ASSESSEE TO PROVE THAT HIS INCOME IS AGRICULTURAL INCOME WHICH IS EXEMPT FROM TAX. THE NET AGRICULTURAL INCOME HAS TO BE COMPUTED AS PER PART - IV OF THE FIRST SCHEDULE TO THE FINANCE ACT AND IT IS NOT CORRECT TO STATE THAT THE APPELLANT IS NOT REQUIRED TO M AINTAIN SUCH DETAILS AND THE LAND REVENUE RECORD IS SUFFICIENT TO PROVE THE CARRYING OUT OF AGRICULTURAL ACTIVITY AND THEREBY IMPLYING THAT THE QUANTUM OF AGRICULTURAL INCOME CANNOT BE DISBELIEVED. AS NO EVIDENCE FOR THE SAID AGRICULTURAL INCOME WAS FILED BEFORE THE ASSESSING OFFICER NOR THE DETAILS OF SALE PROCEEDS AND EXPENSES INCURRED WERE FILED IN THE COURSE OF THE APPEAL DESPITE A SPECIFIC QUERY IN THIS REGARD, THEREFORE, THE AGRICULTURAL INCOME HAS BEEN RIGHTLY TREATED AS INCOME FROM OTHER SOURCES AND ADDED TO THE TOTAL INCOME OF THE APPELLANT AND DOES NOT ENTITLE THE APPELLANT FOR ANY RELIEF IN THE ABSENCE OF ANY OWNERSHIP OVER THE AGRICULTURAL LAND. HENCE, THESE TWO GROUNDS OF APPEAL ARE ALSO REJECTED. 6.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT THE ISSUE WAS DECIDED BY CIT(A) AGAINST THE ASSESSEE ON TWO COUNTS; FIRST BASIS OF THE DECISION OF CIT(A) IS THAT THE OWNERSHIP OF ANCESTRAL LAND IN THE HANDS OF THE PARENTS CANNOT BE EQUATED WITH THE OWNERSHIP OF AG RICULTURAL LAND IN THE HANDS OF TH E ASSESSEE AND THEREFORE, THERE CANNOT BE ANY AGRICULTURAL INCOME IN THE HANDS OF THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. THE SECOND BASIS OF THE DECISION OF CIT(A) IS THAT APART FROM FAILURE OF THE ASSESSEE TO ESTABLISH THE OWNERSHIP OF THE LAND IN QUESTION, THE ASSESSEE HAS ALSO NOT BROUGHT ON RECORD ANY EVIDENCE FOR THE SAID AGRICULTURAL INCOME BY BRINGING ON RECORD BILLS OF SALE PROCEEDS AND EXPENSES INCURRED FOR AGRICULTURAL 5 OPERATIONS. BEFORE US ALSO, NONE OF THESE TWO ASPECTS WERE ESTABLISHED BY THE ASSESSEE I.E. THE OWNERSHIP OF THE AGRICULTURAL LAND IN THE HANDS OF THE ASSESSEE AND THE BASIS OF COMPUTING AGRICULTURAL INCOME BY BRINGING EVIDENCE ON RECORD IN RESPECT OF AGRICULTURAL SALE PROCEEDS AND EXPENSES INCUR RED FOR CARRYING OUT AGRICULTURAL ACTIVITIES. UNDER THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. HENCE, THESE GROUNDS OF THE ASSESSEE ARE REJECTED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 8. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2004 - 05 I.E. I.T.A. NO.236/LKW/2012. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THERE EXISTED NO MATERIAL/INFORMATION WHICH COULD LEAD TO THE FORMATION OF 'REQUISITE REASON TO BELIEVE AS WAS A PREREQUISITE FOR ISSUANCE OF WARRANT OF AUTHORIZATION UNDER SECTION 132(1) AND ACCORDINGLY THE 'APPELLANT' COULD NOT HAVE BEEN TREATED TO BE THE 'PERSON IN WH OSE CASE SEARCH HAD BEEN INITIATED UNDER SECTION 132(1) OF THE 'ACT'. 2. BECAUSE THE ASSESSING OFFICER COULD NOT HAVE BEEN TREATED TO HAVE ASSUMED JURISDICTION UNDER SECTION 153A, AS THE 'APPELLANT'S' OBJECTION TO THE SAID INITIATION REMAINED UNRESOLVED A ND ACCORDINGLY THE INITIATION OF PROCEEDINGS UNDER SECTION 153A AS ALSO THE ASSESSMENT MADE IN PURSUANCE THEREOF ARE VOID AB - INITIO. 3. BECAUSE THE ISSUE OF ASSUMPTION OF JURISDICTION UNDER SECTION 153A AND ASSESSMENT MADE IN PURSUANCE THEREOF, WAS JUSTICEABLE IN THE APPELLATE PROCEEDINGS AND MERELY BECAUSE THE ASSESSING OFFICER HAD REJECTED THE APPELLANT'S OBJECTION IN THIS RESPECT, THE 'CIT(A)' COULD NOT HAVE HELD THAT APPEAL ON THIS ISSUE WAS NOT MAINTAINABLE. 6 WITHOUT PREJUDICE TO THE AFORESAID 4. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN TREATING AGRICULTURAL INCOME OF RS.48,000/ - AS HAD BEEN SHOWN IN THE RETURN, AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES', AND IN SUBJECTING THE SAME TO ASSESSMENT ACCORDINGLY. 5. BECAUSE THE 'APPELLANT' HAD BEEN SHOWING AGRICULTURAL INCOME IN PAST AND THERE BEING NO MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH COULD IMPINGE UPON OR CONTRADICT THE SAID DISCLOSURE, THE TREATMENT GIVEN TO THE INCOME SHOWN UNDER THE HEAD 'AGRICULTU RAL INCOME', BY THE AUTHORITIES BELOW IS ILLEGAL AND UNJUSTIFIED. 6. BECAUSE ASSESSMENT OF AGRICULTURAL INCOME SHOWN AT RS.48,000/ - AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES', IS BEYOND THE AMBIT AND SCOPE OF THE SAID SECTION AND ACCORDINGLY TAX ATION OF THE SAME IN TERMS OF THE ASSESSMENT ORDER DATED 28.12.2010 IS WHOLLY ILLEGAL. 7. BECAUSE THE ORDER APPEALED AGAINST, TO THE EXTENT THE SAME HAS BEEN IMPUGNED IN THIS APPEAL, IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 9. GROUND NO. 1, 2 & 3 WERE NOT PRESSED BY LEARNED A.R. OF THE ASSESSEE AND HENCE, THE SAME ARE REJECTED AS NOT PRESSED. 10. REGARDING GROUND NO. 4 TO 7, IT WAS AGREED BY BOTH THE SIDES THAT THE ISSUE AND FACTS IN THIS YEAR ARE IDENTICAL WITH THE ISSUE AND FACTS OF THE ASSESSMENT YEAR 2003 - 04. SINCE THIS ISSUE WAS DECIDED BY US AGAINST THE ASSESSEE IN ASSESSMENT YEAR 2003 - 04, IN THE PRESENT YEAR ALSO, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE ON THE SAME LINE. THESE GROUNDS OF THE ASSESSEE ARE REJECTED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 7 12. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2005 - 06 I.E. I.T.A. NO.237/LKW/2012. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THERE EXISTE D NO MATERIAL/INFORMATION WHICH COULD LEAD TO THE FORMATION OF 'REQUISITE REASON TO BELIEVE AS WAS A PREREQUISITE FOR ISSUANCE OF WARRANT OF AUTHORIZATION UNDER SECTION 132(1) AND ACCORDINGLY THE 'APPELLANT' COULD NOT HAVE BEEN TREATED TO BE THE 'PERSON I N WHOSE CASE SEARCH HAD BEEN INITIATED UNDER SECTION 132(1) OF THE 'ACT'. 2. BECAUSE THE ASSESSING OFFICER COULD NOT HAVE BEEN TREATED TO HAVE ASSUMED JURISDICTION UNDER SECTION 153A, AS THE 'APPELLANT'S' OBJECTION TO THE SAID INITIATION REMAINED UNRESOLV ED AND ACCORDINGLY THE INITIATION OF PROCEEDINGS UNDER SECTION 153A AS ALSO THE ASSESSMENT MADE IN PURSUANCE THEREOF ARE VOID AB - INITIO. 3. BECAUSE THE ISSUE OF ASSUMPTION OF JURISDICTION UNDER SECTION 153A AND ASSESSMENT MADE IN PURSUANCE THEREOF, WAS JUSTICEABLE IN THE APPELLATE PROCEEDINGS AND MERELY BECAUSE THE ASSESSING OFFICER HAD REJECTED THE APPELLANT'S OBJECTION IN THIS RESPECT, THE 'CIT(A)' COULD NOT HAVE HELD THAT APPEAL ON THIS ISSUE WAS NOT MAINTAINABLE. WITHOUT PREJUDICE TO THE AFORESAID 4. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN TREATING AGRICULTURAL INCOME OF RS. 52 ,000/ - AS HAD BEEN SHOWN IN THE RETURN, AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES', AND IN SUBJECTING THE SAME TO ASSESSMENT ACCORDINGLY. 5. BECAUSE THE 'APPELLANT' HAD BEEN SHOWING AGRICULTURAL INCOME IN PAST AND THERE BEING NO MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH COULD IMPINGE UPON OR CONTRADICT THE SAID DISCLOSURE, THE TREATMENT GIVEN TO THE 8 INCOME SHOWN UNDER THE HEAD 'AGRICULTU RAL INCOME', BY THE AUTHORITIES BELOW IS ILLEGAL AND UNJUSTIFIED. 6. BECAUSE ASSESSMENT OF AGRICULTURAL INCOME SHOWN AT RS. 52 ,000/ - AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES', IS BEYOND THE AMBIT AND SCOPE OF THE SAID SECTION AND ACCORDINGLY TAX ATION OF THE SAME IN TERMS OF THE ASSESSMENT ORDER DATED 28.12.2010 IS WHOLLY ILLEGAL. 7. BECAUSE THE CIT(A) HAS ERRED IN LAW AND FACTS IN UPHOLDING AN ADDITION OF RS.2,63,400/ - REPRESENTING THE COLLECTION OF CHEQUE (RECEIVED BY THE APPELLANT ON SALE OF JEWELLERY) IN HIS BANK ACCOUNT, BY INVOKING THE PROVISIONS OF SECTION 69A OF THE ACT. 8. BECAUSE LOOKING TO THE QUANTITY OF JEWELLERY THAT HAS BEEN SUBJECTED TO SALE (PROCEEDS OF WHICH HAD BEEN COLLECTED/CREDITED IN THE BANK ACCOUNT OF THE APPELLANT) THE OWNERSHIP OF THE APPELLANT/HIS WIFE OVER THE SAME COULD NOT HAVE BEEN LEGITIMATELY DISPUTED AND ADVERSE INFERENCE THAT HAD BEEN DRAWN BY THE AUTHORITIES BELOW (ON THIS ISSUE) IS WHOLLY ILLEGAL AND UNJUSTIFIED, AND ACCORDINGLY THE ADDITION IN QUESTION DESE RVES TO BE DELETED. 9. BECAUSE ADDITION OF RS.2,63,400/ - AS HAD BEEN SUSTAINED BY THE 'CIT(A)' IS BASED ON A WHOLLY WRONG PREMISE AND EVEN ON SURMISES AND CONJUNCTURES AND THE SAME IS NOT SUSTAINABLE. 10. BECAUSE WITHOUT CAUSING IN ANY MANNER ANY PREJUDICE TO THE CONTENTIONS RAISED IN GROUNDS NO.7, 8 & 9 HEREINFORE, IN CONSEQUENCE OF HIS OWN FINDINGS THAT THE JEWELLERY (SOLD BY THE APPELLANT) CONSTITUTES CAPITAL ASSET, TAXABLE PART OF THE CONSIDERATION WAS LIABLE TO BE COMPUTED AS PER CHARGING SECT ION 45 OF THE 'ACT'. 11. BECAUSE THE ORDER APPEALED AGAINST, TO THE EXTENT THE SAME HAS BEEN IMPUGNED IN THIS APPEAL, IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 9 13. GROUND NO. 1, 2 & 3 WERE NOT PRESSED BY LEARNED A.R. OF THE ASSESSEE AND HENCE, THE SAME ARE REJECTED AS NOT PRESSED. 14. REGARDING GROUND NO. 4 TO 6, IT WAS AGREED BY BOTH THE SIDES THAT THE ISSUE AND FACTS IN THIS YEAR ARE IDENTICAL WITH THE ISSUE AND FACTS OF THE PRECEDING TWO ASSESSMENT YEARS. SINCE THIS ISSU E WAS DECIDED BY US AGAINST THE ASSESSEE IN PROCEEDING TWO ASSESSMENT YEARS, IN THE PRESENT YEAR ALSO, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE ON THE SAME LINE. THESE GROUNDS OF THE ASSESSEE ARE REJECTED. 15. REGARDING GROUND NO. 7, IT WAS SUBMITTED B Y LEARNED A.R. OF THE ASSESSEE THAT THE SALE BILL OF JEWELLERY OF THE ASSESSEE IN THE PRESENT YEAR IS AVAILABLE ON PAGE NO. 55 OF THE PAPER BOOK. HE ALSO SUBMITTED THAT AS PER THIS BILL, IT CAN BE SEEN THAT GOLD ORNAMENTS WERE SOLD BY THE ASSESSEE IN THIS YEAR ON 17/08/2004 FOR AN AMOUNT OF RS.2,63,400/ - . HE ALSO SUBMITTED THAT ON PAGE NO. 56 OF THE PAPER BOOK IS THE SALE BILL REGARDING SALE OF JEWELLERY BY THE WIFE OF THE ASSESSEE ON 23/02/2007 TO THE EXTENT OF 389.930 GMS FOR RS.3,43,150/ - . HE ALSO SUB MITTED THAT GOLD JEWELLERY TO THE EXTENT OF 500 GMS FOR A MARRIED LADY AND 100 GMS. F OR A MALE MEMBER IS TO BE ACCEPTED AS PER CBDT CIRCULAR NO. 1916 DATED 11 TH MAY 1994. HE ALSO SUBMITTED THAT AS PER VARIOUS JUDGMENTS AS NOTED BY THE ASSESSEE ON PAGES 20 6 TO 211 OF THE PAPER BOOK, BENEFIT HAS TO BE ALLOWED TO THE ASSESSEE IN LINE WITH CBDT CIRCULAR NO. 1916 DATED 11 TH MAY 1994. THESE JUDGMENTS ARE AS UNDER: ( I ) SMT. PATI DEVI VS. INCOME TAX OFFICER [1999] 240 ITR 727 (KAR) ( II ) DR. SUSHIL RASTOGI VS. DIRECTOR OF INVESTIGATIONS, INCOME TAX DEPARTMENT & ORS. [2003] 260 ITR 249 (ALL) ( III ) CIT VS. KAILASH CHAND SHARMA [2005] 198 CTR (RAJ) 201 ( IV ) CIT VS. M. S. AGARWAL (HUF) [2008] 11 DTR (MP) 169 10 ( V ) CIT VS. RATANLAL VYAPARILAL JAIN [2011] 339 ITR 3 51 (GUJ) ( VI ) ACIT VS. CHANDMAL SONI [2008] 6 DTR (JD) (TRIB) 571 ( VII ) SADHNA RANI VS. ACIT [2012] 34 CCH 143 (DEL) (TRIB.) ( VIII ) SMT. NEENA SYAL VS. ACIT [1999] 70 ITD 62 (CHD) ( IX ) INCOME TAX OFFICER VS. MANILAL S. DAVE [2001] 70 TTJ (AHD) 801 ( X ) IDEAL PLOT VIKRI KENDRA & ORS. VS. ACIT [2000] 74 ITD 117 (PUNE) (TM) ( XI ) P. C. MUNDRA VS. ACIT [2003] 80 TTJ (JP) 945 ( XII ) SMT. SULOCHANA DEVI JAISWAL VS. DCIT [2004] 90 TTJ (JAB) 974 ( XIII ) JAI KUMAR JAIN VS. ACIT [2006] 99 TTJ (JP) 744 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THI S ISSUE WAS DECIDED BY CIT(A) AS PER 5.3.2 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 5.3.2 I HAVE CONSIDERED THE REPLY. AS THE EVIDENCE FOR SAFE OF JEWELLERY TO THE JEWELER WAS FOUND IN THE COURSE OF THE SEARCH, HENCE IN VIEW OF THE PROVISIONS OF SECTION 292C, THE SAME HAS AN EVIDENTIARY VALUE. THE APPELLANT CONTENDS THAT THE CBDT HAS CLARIFIED THAT G OLD JEWELLERY TO THE EXTENT OF 500 GMS PER MARRIED LADY, 250 GMS PER UNMARRIED LADY AND 100 GMS PER MALE MEMBER CANNOT BE SEIZED. HOWEVER, THE SAME IS RELEVANT ONLY FOR THE PURPOSE OF SEIZURE OF THE JEWELLERY AT THE TIME OF THE SEARCH AND DOES NOT RENDER THE NATURE AND SOURCE OF ACQUISITION OF SUCH JEWELLERY FOUND IN THE COURSE OF THE SEARCH AS EXPLAINED. HOWEVER, SINCE JEW ELLERY IS INCLUDED IN THE DEFINITION OF 'CAPITAL ASSET' AS PER THE DEFINITION IN SECTION 2(14)(II)(A), THEREFORE, THE SALE OF JEWELLERY WAS LIABLE TO BE SUBJECTED TO CAPITAL GAINS. THERE IS NO EVIDENCE FOR THE PURCHASE OF THE JEWELLERY AND THE APPELLANT HA S ONLY GIVEN GENERAL REMARK THAT THE JEWELLERY HAD BEEN RECEIVED BY HIM AND HIS WIFE ON VARIOUS OCCASIONS WITHOUT EVEN MENTIONING THE DATE OF SUCH OCCASION OR THE DATE OF RECEIPT OF THE JEWLLERY. THE ASSESSING OFFICER HAS HELD THAT THE SOURCE OF ACQUISITIO N OF THIS JEWELLERY HAD NOT BEEN SATISFACTORILY EXPLAINED AND THE SAME REMAINED QUESTIONABLE AND THE APPELLANT WAS ALSO FOUND TO HAVE MADE SUBSTANTIAL INVESTMENTS IN KVPS, NSCS AND FDRS AS WELL AS IN SHARES AND IN IMMOVAB L E PROPERTIES IN THE NAME OF HIMSEL F AND HIS WIFE, FOR WHICH THE RECEIPT HAD BEEN 11 OBTAINED FROM THE JEWELER SO THAT THE SOURCE OF ACQUISITION COULD BE EXPLAINED. AS PER THE PROVISIONS OF SECTION 69A, WHERE AN ASSESSEE IS FOUND TO BE THE OWNER OF ANY JEWELLERY IN ANY FINANCIAL YEAR AND HE OF FERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THE JEWELLERY, THE VALUE OF THE JEWELLERY MAY BE DEEMED TO BE THE INCOME OF THE APPELLANT FOR SUCH FINANCIAL YEAR. HENCE, THE VALUE OF THE JEWELLERY SOLD AT RS. 2,63,400 / - IS LIABLE TO BE ADDED U/S 69A IN THE FINANCIAL YEAR, AS THERE IS NO EVIDENCE FOR THE SOURCE OF ACQUISITION OF THE SAME AND IT IS AGAINST HUMAN PROBABILITIES THAT ORNAMENTS RECEIVED ON CEREMONIAL OCCASION AND WITH WHICH A LOT OF EMOTIONAL ATTACHMENT IS INV OLVED WOULD BE SOLD WHEN THE APPELLANT ALSO HAD OTHER ASSETS, AS HAS BEEN MENTIONED BY THE ASSESSING OFFICER. HENCE, THE SALE OF JEWELLERY HAS BEEN RIGHTLY TREATED AS AN ACCOMMODATION ENTRY AND HAS BEEN ADDED TO THE INCOME OF THE APPELLANT AND THIS GROUND OF APPEAL IS REJECTED. 16.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT ALTHOUGH THE CIT(A) HAS NOTED DOWN THE CONTENTS OF THE CBDT CIRCULAR NO. 1916 DATED 11 TH MAY 1994 BUT NO BENEFIT IN THIS REGARD WAS ALLOWED BY HIM ON THE BASIS THAT THE ASSESSEE HAS NOT EXPLAINED THE NATURE AND SOURCE OF ACQUISITION OF JEWELLERY . IN OUR CONSIDERED OPINION, SINCE THE ASSESSEE IS A MALE MEMBER, IT SHOULD BE ACCEPTED THAT 100 G MS OF GOLD JEWELLERY WAS OWNED BY HIM OUT OF EXPLAINED SOURCES EVEN IN THE ABSENCE OF ANY DETAILS AND EVIDENCE REGARDING NATURE AND SOURCE OF ACQUISITION BECAUSE IT IS UNDISPUTED FACT THAT THE ASSESSEE IS MARRIED AND THIS IS THE CLAIM OF THE ASSESSEE THAT THE JEWELLERY WAS RECEIVED AT THE TIME OF MARRIAGE. RECEIPT OF JEWELLERY TO THE EXTENT OF 100 GMS. O N ACCOUNT OF MARRIAGE SHOULD BE ACCEPTED IN THE FACTS OF THE PRESENT CASE. WE HOLD THAT JEWELLERY TO THE EXTENT OF 100 GMS. SHOULD BE ACCEPTED SUBJECT TO C OMPUTATION OF LONG TERM CAPITAL GAIN ON SALE OF THIS JEWELLERY AND THE ADDITION AS UNEXPLAINED JEWELLERY SHOULD BE RESTRICTED TO THE BALANCE AMOUNT OF JEWELLERY BEING 378.900 GMS. THE ASSESSING OFFICER SHOULD WORK OUT THE PROPORTIONATE 12 AMOUNT OF ADDITION. ACCORDINGLY, GROUND NO. 7 TO 9 ARE PARTLY ALLOWED IN THE TERMS INDICATED ABOVE . 17. REGARDING GROUND NO. 10, WE ARE OF THE CONSIDERED OPINION THAT IN RESPECT OF 100 GMS. OF JEWELLERY HELD TO BE EXPLAINED BY US, THE ASSESSING OFFICER SHOULD COMPUTE LONG TERM CAPITAL GAIN ON THE SALE OF THE JEWELLERY AND FOR DOING SO , THE ASSESSEE HAS TO BRING EVIDENCE ON RECORD REGARDING ITS COST AND YEAR OF ACQUISITION AND IF THE ASSESSEE CAN ESTABLISH THAT THE JEWELLE RY WAS ACQUIRED PRIOR TO 01/04/198 1 THEN THE FAIR MAR KET VALUE ON 01.04.1981 SHOULD BE TAKEN AS COST OF ACQUISITION OF THE JEWELLERY AND THEREAFTER , INDEXATION OF BENEFIT SHOULD BE ALLOWED TO THE ASSESSEE AND LONG TERM CAPITAL GAIN, IF ANY, SHOULD BE COMPUTED. THE BALANCE AMOUNT OF JEWELLERY FOR WHICH THE A SSESSEE COULD NOT EXPLAIN THE SOURCE, THE ENTIRE ADDITION HAS TO BE MADE U/S 69A AND THERE IS NO QUESTION OF COMPUTING ANY CAPITAL GAIN IN RESPECT OF UN EXPLAINED JEWELLERY SOLD BY THE ASSESSEE IN THE PRESENT YEAR. IN THIS MANNER, GROUND NO. 7 TO 10 ARE PA RTLY ALLOWED IN THE TERMS INDICATED ABOVE. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. 19. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2006 - 07 I.E. I.T.A. NO.238/LKW/2012. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THERE EXISTED NO MATERIAL/INFORMATION WHICH COULD LEAD TO THE FORMATION OF 'REQUISITE REASON TO BELIEVE AS WAS A PREREQUISITE FOR ISSUANCE OF WARRANT OF AUTHORIZATION UNDER SECTION 132(1) AND ACCORDINGLY THE 'APP ELLANT' COULD NOT HAVE BEEN TREATED TO BE THE 'PERSON IN WHOSE CASE SEARCH HAD BEEN INITIATED UNDER SECTION 132(1) OF THE 'ACT'. 13 2. BECAUSE THE ASSESSING OFFICER COULD NOT HAVE BEEN TREATED TO HAVE ASSUMED JURISDICTION UNDER SECTION 153A, AS THE 'APPELLANT'S' OBJECTION TO THE SAID INITIATION REMAINED UNRESOLVED AND ACCORDINGLY THE INITIATION OF PROCEEDINGS UNDER SECTION 153A AS ALSO THE ASSESSMENT MADE IN PURSUANCE THEREOF ARE VOID AB - INITIO. 3. BECAUSE THE ISSUE OF ASSUMPTION OF JURISDICTION UND ER SECTION 153A AND ASSESSMENT MADE IN PURSUANCE THEREOF, WAS JUSTICEABLE IN THE APPELLATE PROCEEDINGS AND MERELY BECAUSE THE ASSESSING OFFICER HAD REJECTED THE APPELLANT'S OBJECTION IN THIS RESPECT, THE 'CIT(A)' COULD NOT HAVE HELD THAT APPEAL ON THIS ISS UE WAS NOT MAINTAINABLE. WITHOUT PREJUDICE TO THE AFORESAID 4. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN TREATING AGRICULTURAL INCOME OF RS.4 5 ,000/ - AS HAD BEEN SHOWN IN THE RETURN, AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCE S', AND IN SUBJECTING THE SAME TO ASSESSMENT ACCORDINGLY. 5. BECAUSE THE 'APPELLANT' HAD BEEN SHOWING AGRICULTURAL INCOME IN PAST AND THERE BEING NO MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH COULD IMPINGE UPON OR CONTRADICT THE SAID DISCLOSURE, THE TREATMENT GIVEN TO THE INCOME SHOWN UNDER THE HEAD 'AGRICULTURAL INCOME', BY THE AUTHORITIES BELOW IS ILLEGAL AND UNJUSTIFIED. 6. BECAUSE ASSESSMENT OF AGRICULTURAL INCOME SHOWN AT RS.4 5 ,000/ - AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES', IS BEYO ND THE AMBIT AND SCOPE OF THE SAID SECTION AND ACCORDINGLY TAXATION OF THE SAME IN TERMS OF THE ASSESSMENT ORDER DATED 28.12.2010 IS WHOLLY ILLEGAL. 7. BECAUSE THE ORDER APPEALED AGAINST, TO THE EXTENT THE SAME HAS BEEN IMPUGNED IN THIS APPEAL, IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 14 20. GROUND NO. 1, 2 & 3 WERE NOT PRESSED BY LEARNED A.R. OF THE ASSESSEE IN THIS YEAR ALSO AND HENCE, THE SAME ARE REJECTED AS NOT PRESSED. 21. REGARDING GROUND NO. 4 TO 7, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA 6.2 & 6.2.1 OF HIS ORDER AND IN TH ESE PARAS , IT IS NOTED BY CIT(A) ALSO THAT THE ASSESSEE HAS PURCHASED SOME AGRICULTURAL LAND I N THIS YEAR ON 29/07/2005. HE SUBMITTED THAT WHEN IT IS ACCEPTED THAT SOME AGRICULTURAL LAND WAS PURCHASED BY THE ASSESSEE, THE AGRICULTURAL INCOME SHOULD HAVE BEEN ACCEPTED IN FULL. 22. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN THIS YEAR , THE ASSESSEE HAS DECLARED AGRICULTURAL INCOME OF RS.95,000/ - OUT OF WHICH, THE ASSESSING OFFICER ACCEPTED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF RS.50,000/ - AND THE BALANCE AMOU NT WAS NOT ACCEPTED BY HIM ON THE BASIS THAT NO SUPPORTING DOCUMENTS WERE PROVIDED BY THE ASSESSEE. NEITHER BEFORE CIT(A), NOR BEFORE US, THESE DOCUMENTS WERE BROUGHT BY THE ASSESSEE. CONSIDERING THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT NO INTE RFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) ON THIS ISSUE. 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 25. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 I.E. I.T.A. NO.239/LKW/2012. IN THIS APPEAL , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THERE EXISTED NO MATERIAL/INFORMATION WHICH COULD LEAD TO THE FORMATION OF 'REQUISITE REASON TO BELIEVE AS WAS A PREREQUISITE FOR ISSUANCE OF WARRANT OF AUTHORIZATION UNDER SECTION 132(1) AND AC CORDINGLY THE 15 'APPELLANT' COULD NOT HAVE BEEN TREATED TO BE THE 'PERSON IN WHOSE CASE SEARCH HAD BEEN INITIATED UNDER SECTION 132(1) OF THE 'ACT'. 2. BECAUSE THE ASSESSING OFFICER COULD NOT HAVE BEEN TREATED TO HAVE ASSUMED JURISDICTION UNDER SECTION 153A , AS THE 'APPELLANT'S' OBJECTION TO THE SAID INITIATION REMAINED UNRESOLVED AND ACCORDINGLY THE INITIATION OF PROCEEDINGS UNDER SECTION 153A AS ALSO THE ASSESSMENT MADE IN PURSUANCE THEREOF ARE VOID AB - INITIO. 3. BECAUSE THE ISSUE OF ASSUMPTION OF JURISDI CTION UNDER SECTION 153A AND ASSESSMENT MADE IN PURSUANCE THEREOF, WAS JUSTICEABLE IN THE APPELLATE PROCEEDINGS AND MERELY BECAUSE THE ASSESSING OFFICER HAD REJECTED THE APPELLANT'S OBJECTION IN THIS RESPECT, THE 'CIT(A)' COULD NOT HAVE HELD THAT APPEAL ON THIS ISSUE WAS NOT MAINTAINABLE. WITHOUT PREJUDICE TO THE AFORESAID 4. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN TREATING AGRICULTURAL INCOME OF RS. 48 ,000/ - AS HAD BEEN SHOWN IN THE RETURN, AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES', AND IN SUBJECTING THE SAME TO ASSESSMENT ACCORDINGLY. 5. BECAUSE THE 'APPELLANT' HAD BEEN SHOWING AGRICULTURAL INCOME IN PAST AND THERE BEING NO MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH COULD IMPINGE UPON OR CONTRADICT THE SAID DISCLOSURE, THE TREATMENT GIVEN TO THE INCOME SHOWN UNDER THE HEAD 'AGRICULTURAL INCOME', BY THE AUTHORITIES BELOW IS ILLEGAL AND UNJUSTIFIED. 6. BECAUSE ASSESSMENT OF AGRICULTURAL INCOME SHOWN AT RS. 48 ,000/ - OUT OF RS.98,000/ - DISCLOSED AS AGRICULTURAL I NCOME BY THE APPELLANT UNDER THE HEAD 'INCOME FROM OTHER SOURCES', IS BEYOND THE AMBIT AND SCOPE OF THE SAID SECTION AND ACCORDINGLY TAXATION OF THE SAME IN TERMS OF THE ASSESSMENT ORDER DATED 28.12.2010 IS WHOLLY ILLEGAL. 16 7. BECAUSE THE CIT(A) HAS ERRED IN LAW AND FACTS IN UPHOLDING AN ADDITION OF RS. 3 , 4 3, 15 0/ - REPRESENTING THE COLLECTION OF CHEQUE (RECEIVED BY THE APPELLANT ON SALE OF JEWELLERY) IN HIS BANK ACCOUNT, BY INVOKING THE PROVISIONS OF SECTION 69A OF THE ACT. 8. BECAUSE LOOKING TO THE QUANTITY OF JEWELLERY THAT HAS BEEN SUBJECTED TO SALE (PROCEEDS OF WHICH STOOD COLLECTED/CREDITED IN THE BANK ACCOUNT OF THE APPELLANT /HIS WIFE ) THE OWNERSHIP OF THE APPELLANT/HIS WIFE OVER THE SAME COULD NOT HAVE BEEN LEGITIMATELY D ISPUTED AND ADVERSE INFERENCE THAT HAD BEEN DRAWN BY THE AUTHORITIES BELOW (ON THIS ISSUE) IS WHOLLY ILLEGAL AND UNJUSTIFIED, AND ACCORDINGLY THE ADDITION IN QUESTION DESERVES TO BE DELETED. 9. BECAUSE ADDITION OF RS. 3 , 4 3, 15 0/ - AS HAD BEEN SUSTAINED BY TH E 'CIT(A)' IS BASED ON A WHOLLY WRONG PREMISE AND EVEN ON SURMISES AND CONJUNCTURES AND THE SAME IS NOT SUSTAINABLE. 10. BECAUSE WITHOUT CAUSING IN ANY MANNER ANY PREJUDICE TO THE CONTENTIONS RAISED IN GROUNDS NO.7, 8 & 9 HEREINFORE, IN CONSEQUENCE OF HIS OWN FINDINGS THAT THE JEWELLERY (SOLD BY THE APPELLANT) CONSTITUTES CAPITAL ASSET, TAXABLE PART OF THE CONSIDERATION WAS LIABLE TO BE COMPUTED AS PER CHARGING SECTION 45 OF THE 'ACT'. 11. BECAUSE THE ORDER APPEALED AGAINST, TO THE EXTENT THE SAME HAS BEE N IMPUGNED IN THIS APPEAL, IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 26. GROUND NO. 1, 2 & 3 WERE NOT PRESSED BY LEARNED A.R. OF THE ASSESSEE IN THIS YEAR ALSO AND HENCE, THE SAME ARE REJECTED AS NOT PRESSED. 27. REGARDING GROUND NO. 4 TO 6 IN RESPECT OF AGRICULTURAL INCOME, IT WAS AGREED BY BOTH THE SIDES THAT THE FACTS OF THE ISSUE IN THIS YEAR ARE IDENTICAL TO THE FACTS IN THE ASSESSMENT YEAR 2006 - 07. IN ASSESSMENT YEAR 2006 - 07, THE ASSESSEE HAS CLAIMED AGRICUL TURAL INCOME OF RS.95,000/ - OUT OF WHICH 17 THE ASSESSING OFFICER ACCEPTED THE CLAIM TO THE EXTENT OF RS.50,000/ - AND REJECTED THE CLAIM OF RS.45,000/ - . IN THE PRESENT YEAR, THE ASSESSEE HAS CLAIMED AGRICULTURAL INCOME OF RS.98,000/ - OUT OF WHICH, THE ASSESS ING OFFICER ACCEPTED RS.5 0 ,000/ - AND REJECTED THE BALANCE CLAIM FOR THE SAME REASONING, AS HAS BEEN GIVEN BY HIM IN ASSESSMENT YEAR 2006 - 07. SINCE THE FACTS IN THE PRESENT YEAR ARE IDENTICAL, ON THE SAME LINE , AS PER OUR DECISION IN ASSESSMENT YEAR 2006 - 0 7, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) IN THE PRESENT YEAR ALSO. ACCORDINGLY, GROUND NO. 4 TO 6 ARE REJECTED. 28. REGARDING GROUND NO. 7 TO 9, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE SALE BILL OF JEWELLERY BY THE WIFE OF THE ASSESSEE IN THIS YEAR IS AVAILABLE ON PAGE NO. 56 OF THE PAPER BOOK AND THE SAME IS FOR 389.930 GMS OF GOLD JEWELLERY. HE SUBMITTED THAT SINCE THE WIFE OF THE ASSESSEE IS A MARRIED LADY, BENEFIT SHOULD BE ALLOWED TO THE ASSESSEE TO THE EXTENT OF 500 GMS. OF GOLD JEWELLERY OWNED BY THE WIFE OF THE ASSESSEE AS PER CBDT CIRCULAR NO. 1916 DATED 11 TH MAY 1994. IN ASSESSMENT YEAR 2005 - 06, WE HAVE ALREADY HELD THAT BENEFIT SHOULD BE ALLOWED TO THE ASSESSEE TO THE EXTENT OF 100 GMS. OF GOLD JEWELLERY AS PER CBDT CIRCULAR NO. 1916 DATED 11 TH MAY 1994 AND ON THE SAME LINE , IN THE PRESENT YEAR ALSO, WE HOLD THAT THE BENEFIT SHOULD BE ALLOWED TO THE ASSESSEE IN RESPECT OF OWNERSHIP OF JEWELLERY BY HIS WIFE TO THE EXTENT OF ENTIRE JEWELLERY BECAUSE THE SAME IS LESS THA N 500 GMS. HOWEVER, THE CAPITAL GAIN ON SALE OF THIS JEWELLERY HAS TO BE ASSESSED AND FOR THIS REASON, WE RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION. THE ASSESSEE HAS TO BRING EVIDENCE ON RECORD REGARDING COST AND YEA R OF ACQUISITION. IF THE ASSESSEE CAN ESTABLISH THAT THE SAID JEWELLERY WAS ACQUIRED PRIOR TO 01/04/ 1 9 8 1 THEN FAIR MARKET VALUE AS ON 01.04.1981 18 SHOULD BE ACCEPTED AS COST OF JEWELLERY AND THEREAFTER INDEXATION OF BENEFIT SHOULD BE ALLOWED TO THE ASSESSEE AND LONG TERM CAPITAL GAIN, IF ANY, SHOULD BE COMPUTED. WITH THESE OBSERVATIONS, THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER. THESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 29. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 30. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 I.E. I.T.A. NO.240/LKW/2012. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THERE EXISTED NO MATERIAL/INFORMATI ON WHICH COULD LEAD TO THE FORMATION OF 'REQUISITE REASON TO BELIEVE AS WAS A PREREQUISITE FOR ISSUANCE OF WARRANT OF AUTHORIZATION UNDER SECTION 132(1) AND ACCORDINGLY THE 'APPELLANT' COULD NOT HAVE BEEN TREATED TO BE THE 'PERSON IN WHOSE CASE SEARCH HAD BEEN INITIATED UNDER SECTION 132(1) OF THE 'ACT'. 2. BECAUSE THE ASSESSING OFFICER COULD NOT HAVE BEEN TREATED TO HAVE ASSUMED JURISDICTION UNDER SECTION 153A, AS THE 'APPELLANT'S' OBJECTION TO THE SAID INITIATION REMAINED UNRESOLVED AND ACCORDINGLY THE INITIATION OF PROCEEDINGS UNDER SECTION 153A AS ALSO THE ASSESSMENT MADE IN PURSUANCE THEREOF ARE VOID AB - INITIO. 3. BECAUSE THE ISSUE OF ASSUMPTION OF JURISDICTION UNDER SECTION 153A AND ASSESSMENT MADE IN PURSUANCE THEREOF, WAS JUSTICEABLE IN THE APPELL ATE PROCEEDINGS AND MERELY BECAUSE THE ASSESSING OFFICER HAD REJECTED THE APPELLANT'S OBJECTION IN THIS RESPECT, THE 'CIT(A)' COULD NOT HAVE HELD THAT APPEAL ON THIS ISSUE WAS NOT MAINTAINABLE. WITHOUT PREJUDICE TO THE AFORESAID 19 4. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN TREATING AGRICULTURAL INCOME OF RS. 65 ,000/ - AS HAD BEEN SHOWN IN THE RETURN, AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES', AND IN SUBJECTING THE SAME TO ASSESSMENT ACCORDINGLY. 5. BECAUSE THE 'AP PELLANT' HAD BEEN SHOWING AGRICULTURAL INCOME IN PAST AND THERE BEING NO MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH COULD IMPINGE UPON OR CONTRADICT THE SAID DISCLOSURE, THE TREATMENT GIVEN TO THE INCOME SHOWN UNDER THE HEAD 'AGRICULTURAL INCOME', BY THE AUTHORITIES BELOW IS ILLEGAL AND UNJUSTIFIED. 6. BECAUSE ASSESSMENT OF AGRICULTURAL INCOME SHOWN AT RS. 65 ,000/ - OUT OF RS.1,15,000/ - DISCLOSED AS AGRICULTURAL INCOME BY THE APPELLANT UNDER THE HEAD 'INCOME FROM OTHER SOURCES', IS BEYOND THE AMBIT AND SCOPE OF THE SAID SECTION AND ACCORDINGLY TAXATION OF THE SAME IN TERMS OF THE ASSESSMENT ORDER DATED 28.12.2010 IS WHOLLY ILLEGAL. 7. BECAUSE THE ORDER APPEALED AGAINST, TO THE EXTENT THE SAME HAS BEEN IMPUGNED IN THIS APPEAL, IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 31. GROUND NO. 1, 2 & 3 WERE NOT PRESSED BY LEARNED A.R. OF THE ASSESSEE AND HENCE, THE SAME ARE REJECTED AS NOT PRESSED. 32. REGARDING REMAINING GROUNDS, IT WAS AGREED BY BOTH THE SIDES THAT THE FACTS IN THIS YEAR ARE ALSO IDENTICAL AND THEREFORE, THE ISSUE CAN BE DECIDED ON SIMILAR LINE AS IN ASSESSMENT YEAR 2006 - 07 AND 2007 - 08. IN THE PRESENT YEAR, THE ASSESSEE HAS DECLARED RS.1,15,000/ - AS AGRICULTURAL INCOME OUT OF WHICH THE ASSESSING OFFICER ACCEPTED RS.50,00 0/ - AND REJECTED THE BALANCE CLAIM OF RS.65,000/ - FOR THE SAME REASON THAT THE ASSESSEE DID NOT BRING ANY EVIDENCE FOR THE RECEIPT OF SALE OF AGRICULTURAL PRODUCE AND REGARDING THE EXPENSES INCURRED FOR AGRICULTURAL ACTIVITIES. SINCE THE FACTS ARE IDENTIC AL IN THE PRESENT YEAR, WE DECLINE TO INTERFERE IN 20 THE ORDER OF CIT(A) AS IN THE PRECEDING TWO YEAR S . THESE GROUNDS OF THE ASSESSEE ARE REJECTED. 33. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 34. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 10 I.E. I.T.A. NO.241/LKW/2012. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE SEARCH AND SEIZURE ACTION ITSELF NOT BEING VALID, THE ACIT, CENTRAL CIRCLE - I, LUCKNOW COULD NOT BE SAID TO HAVE BE EN VALIDLY VESTED WITH THE JURISDICTION OF THE ASSESSING OFFICER IN THE CASE OF THE 'APPELLANT' AND THE ASSESSMENT ORDER DATED 28.12.2010 IS VOID AB - INITIO. WITHOUT PREJUDICE TO THE AFORESAID 2. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACT S IN DISBELIEVING THE AGRICULTURAL INCOME SHOWN BY THE APPELLANT TO THE EXTENT OF RS.45,000/ - AND IN TREATING THE SAME AS 'INCOME FROM OTHER SOURCES' SO AS TO LEVY TAX ON THE SAME. 3. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN TREATIN G THE CASH AMOUNTING TO RS.8 LAKHS, OUT OF CASH AGGREGATING RS.8,65,735/ - AS HAD BEEN FOUND DURING THE COURSE OF SEARCH AND SEIZURE ACTION, AS BELONGING TO THE 'APPELLANT' AND IN ADDING THE SAME TO HIS INCOME AS UNEXPLAINED INVESTMENT UNDER SECTION 69A OF THE 'ACT'. 4. BECAUSE WHILE MAKING/UPHOLDING THE SAID ADDITION, THE AUTHORITIES BELOW HAVE MISSED TO NOTE AND FAILED TO APPRECIATE THAT; ( A ) THE APPELLANT HAS BEEN ONE OF THE DIRECTORS IN PATEL PAN PRODUCTS LTD.; ( B ) IN THE SAID PATEL PAN PRODUCTS LTD., SHRI K. N. SINGH PATEL WAS ALSO ONE OF THE CO - DIRECTORS; 21 ( C ) DURING THE COURSE OF SEARCH AND SEIZURE ACTION IN THE CASE OF PATEL GROUP AS A WHOLE (NOMENCLATURE ADOPTED BY THE INCOME - TAX DEPARTMENT) SHRI K.N. SINGH PATEL HAD DULY OWNED THE SAME BY MAKING A STATEMENT UNDER SECTION 132(4) OF THE ACT; ( D ) IN PURSUANCE OF THE STATEMENT SO GIVEN, WHICH WAS SUBJECTED TO CROSS EXAMINATION ALSO, SHRI K.N. SINGH PATEL HAD DULY FILED THE RETURN FOR ASST. YEAR 2009 - 10 (SO ALSO FOR THE EARLIER YEARS WHEREIN THE INCOME SO DISCLOSED FE LL) AND HAD PAID DUE TAXES ON THE SAME; ( E ) WHILE COMPLETING THE ASSESSMENT IN THE CASE OF SHRI K.N. SINGH PATEL, THE ADDITIONAL INCOME SO DISCLOSED BY HIM YEAR AFTER YEAR (INCLUDING THE ASSESSMENT YEAR 2009 - 10, WHICH IS THE YEAR OF SEARCH ALSO) SUCH ADDITIONA L INCOME HAD DULY BEEN SUBJECTED TO TAXATION; AND ACCORDINGLY THE 'APPELLANT' COULD NOT HAVE BEEN TREATED TO BE THE OWNER OF THE SAME AS ENVISAGED IN SECTION 69A OF THE 'ACT' AND ACCORDINGLY NO ADDITION ON THIS SCORE WAS CALLED FOR. 5. BECAUSE THE ORDER APPEALED AGAINST, TO THE EXTENT THE SAME HAS BEEN IMPUGNED IN THIS APPEAL, IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 35. GROUND NO. 1 WAS NOT PRESSED BY LEARNED A.R. OF THE ASSESSEE AND HENCE, THE SAME IS REJECTED AS NO T PRESSED. 36. REGARDING GROUND NO. 2 IN RESPECT OF AGRICULTURAL INCOME, IT WAS AGREED BY BOTH THE SIDES THAT FACTS IN THE PRESENT YEAR ARE IDENTICAL TO THE FACTS IN PRECEDING THREE YEARS. IN THE PRESENT YEAR, WE FIND THAT THE ASSESSEE HAS DECLARED AGRIC ULTURAL INCOME OF RS.95,000/ - OUT OF WHICH, THE ASSESSING OFFICER ACCEPTED TO THE EXTENT OF RS.50,000/ - AND REJECTED THE BALANCE CLAIM FOR THE SAME REASONING THAT THE ASSESSEE COULD NOT BRING EVIDENCE REGARDING RECEIPT OF SALE PROCEEDS OF AGRICULTURAL PROD UCE AND EXPENSES INCURRED FOR CARRYING OUT AGRICULTURAL ACTIVITIES. SINCE THE FACTS IN THE PRESENT YEAR ARE IDENTICAL, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) IN THE PRESENT YEAR ALSO. GROUND NO. 2 IS REJECTED. 22 37. REGARDING GROUND NO. 3 & 4, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT CASH FOUND IN COURSE OF SEARCH, WAS INCLUDED BY SHRI K. N. SINGH PATEL IN HIS DISCLOSURE OF RS.10 CRORE S . HE DRAWN OUR ATTENTION TO THE ASSESSMENT ORDER DATED 31/12/2010 FOR ASSESSMENT YEAR 2009 - 10 IN THE CASE OF SHRI K. N. SINGH PATEL APPEARING ON PAGE NO. 215 TO 235 OF THE PAPER BOOK AND IN PARTICULAR, OUR ATTENTION WAS DRAWN TO PAGE NO. 234 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT THIS DISCLOSURE OF RS.10 CRORE S INCLUDED RS. 25 LAC S AS CASH SEIZED F ROM VARIOUS SEARCH PLACES . IT WAS ALSO SUBMITTED THAT THE NAME OF THE ASSESSEE IS ALSO APPEARING ON PAGE NO. 220 IN THE LIST OF SEARCHES CARRIED OUT U/S 132(1) IN RESPECT OF WHICH THIS DISCLOSURE WAS MADE BY SHRI K. N. SINGH PATEL. HE SUBMITTED THAT IN VIEW OF THIS, IT SHOULD BE ACCEPTED THAT THIS CASH WAS ALREADY DISCLOSED AND THEREFORE, NO SEPARATE ADDITION SHOULD BE MADE. 38. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 39. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA 9.3.2 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 9.3.2 I HAVE CONSIDERED THE REPLY AND ALSO GONE THROUGH THE ASSESSMENT ORDER. IN VIEW OF THE PROVISION OF SECTION 292 C, THERE IS A PRESUMPTION THAT THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN THE POSSESSION AND CONTROL OF ANY PERSON BELONGS TO SUCH PERSON. THE APPELLANT HAS RELIED UPON THE STATEMENT OF SHRI K.N. SINGH WHICH WAS MADE SUBSEQUE NT TO THE SEARCH AND AS HAS BEEN RIGHTLY HELD BY THE ASSESSING OFFICER THAT SHRI K.N. SINGH HAD ONLY OWNED CASH BELONGING TO HIMSELF AND HIS FAMILY MEMBERS LIKE HIS BROTHER AND HIS MOTHER. NOWHERE HAS IT BEEN ADMITTED BY SHRI K.N. SINGH THAT THE CASH FOUND AT THE RESIDENTIAL PREMISES OF 23 THE APPELLANT ALSO BELONGED TO HIM. THE TOTAL CASH FOUND WAS RS.8,65,735/ - AND THE ADDITION HAS BEEN MADE FOR RS.8,00,000/ - . IT IS NOT THE CASE OF THE APPELLANT THAT HE WAS A BENAMIDAR OF SHRI K.N. SINGH. HENCE, THE EXPLANAT ION REGARDING THE SOURCE THAT THE CASH SEIZED BELONGING TO SHRI K.N, SINGH IS NOT ACCEPTED AND THESE GROUNDS OF APPEAL ARE REJECTED AND THE ACTION OF THE ASSESSING OFFICER IS HEREBY CONFIRMED. 39.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), IT IS SEEN THAT IT IS NOTED BY HIM THAT THE TOTAL CASH FOUND WAS RS.8,65,735/ - AND THE ADDITION HAS BEEN MADE FOR RS.8 LAC ONLY. AS PER THE ASSESSMENT ORDER IN THE CASE OF SHRI K. N. SINGH PATEL, WE FIND THAT NO DOUBT DISCLOSURE HAS BEEN MADE OF RS.10 CRORE WHICH INCLUDED RS.25 LAC ON ACCOUNT OF CASH SEIZED BUT IT IS ALSO SEEN IN THE SAME ASSESSMENT ORDER THAT THE SEARCHES WERE CARRIED OUT AT 19 PLACES, AS LISTED ON PAGE NO. 220 OF THE PAPER BOOK. THE NAME OF THE ASSESSEE IS ALS O APPEARING IN THAT LIST AT S.NO. 13 BUT IT IS NOT SHOWN TO US OR TO ANY OF THE AUTHORITIES BELOW THAT HOW MUCH CASH WAS FOUND AND SEIZED AT THESE 19 PLACES WHERE SEARCHES WERE CARRIED OUT. IF THE ASSESSEE COULD HAVE SHOWN THAT THE CASH FOUND AND SEIZED W ERE RS.25 LAC OR LESS THEN IT CAN BE ACCEPTED THAT THE ENTIRE CASH FOUND AND SEIZED IN ALL SEARCHES WERE COVERED IN THE DISCLOSURE MADE BY SHRI K. N. SINGH PATEL BUT IN THE ABSENCE OF THAT, IT CANNOT BE SAID THAT ALL THE CASH FOUND AND SEIZED IN COURSE OF ALL THESE 19 SEARCHES WERE INCLUDED IN THE DISCLOSURE MADE BY SHRI K. N. SINGH PATEL ON ACCOUNT OF CASH FOUND. HENCE, WE DO NOT FIND ANY MERIT IN THIS EXPLANATION OF THE ASSESSEE REGARDING THE CASH FOUND AND SEIZED IN T HE HANDS OF THE PRESENT ASSESSEE. B ENEFIT TO THE EXTENT OF RS.65,375/ - IS ALREADY ALLOWED BY THE AUTHORITIES BELOW BECAUSE AGAINST THE CASH FOUND OF RS.8,65,365/ - , ADDITION OF RS. 8 LAC ONLY WAS MADE. CONSIDERING ALL THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE 24 ORDER OF CIT(A) ON THIS ISSUE ALSO. ACCORDINGLY, GROUND NO. 3 & 4 ARE REJECTED. 40. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 41. IN THE COMBINED RESULT, THE APPEAL FOR ASSESSMENT YEAR 2005 - 06 AND 2007 - 08 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND OTHER APPEALS OF THE ASSESSEE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 / 01 /201 5 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR