A.C.I.T., Circle-3(1), Gwalior V. Smt. Poonam Gupta, Gwalior

ITA 246/AGR/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0382 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 10 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 24-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L MAURYA
• Assessee Lawyers: MAHESH AGARWAL
• Keywords: Gift; Search and seizure
• Section: 69C; 153A; 205; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 246/AG/ 2011 ASSESSMENT YEAR 2008-09 ASSTT. COMMISSIONER OF INCOME TAX, VS. SMT. POONAM GUPTA CIRCLE-3(1), 61, LAXMI BAI COLONY, GWALIOR GWALIOR (PAN ACOPG 5442 Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.L. MAURYA, SR. D.R. RESPONDENT BY : SHRI MAHESH AGARWAL, C.A. DATE OF HEARING : 17.07.2013 DATE OF PRONOUNCEMENT : 31.07.2013 ORDER PER A.L. GEHLOT,ACCOUNTANT MEMBER: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER DATED 22.03.2011 PASSED BY THE LEARNED CIT(A), GWALIOR FO R A.Y. 2008-09. 2. THE GROUNDS RAISED IN THIS APPEAL ARE REPRODUCED AS BELOW:- 1. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE, THE CIT(APPEAL) HAS ERRED DELETING THE ADDITION OF RS.1 ,08,000/- MADE ON ACCOUNT OF HOUSE HOLD EXPENSES. 2. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE CIT(APPEAL) HAS ERRED IN DELETING THE ADDITION OF R S.10,33,397/- OUT OF TOTAL ADDITION OF RS.30,35,537/- MADE ON ACCOUNT OF UNEXPLAINED CASH AND JEWELLERY FOUND AT THE PREMISES OF THE ASS ESSEE. ITA NO.246 /AG./2011, A.Y. 2008-09 2 3. BRIEF FACTS OF THE CASE ARE THAT SEARCH OPERATI ON UNDER SECTION 132 OF THE I.T. ACT WAS CARRIED OUT ON 28.03.2008. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE SHARE OF WIT HDRAWAL FOR THE HOUSE HOLD EXPENSES IN THE FAMILY WAS RS.12,000/- ONLY. THE A. O. ESTIMATED HOUSEHOLD EXPENSES TO THE EXTENT OF RS.1,20,000/-, THEREFORE, HE HAS MADE THE ADDITION OF RS.1,08,000/-. THE CIT(A) HAS DELETED THE ADDITI ON AS UNDER :- (CIT(A) PAGE NO.4) THUS, THE AO HAS ESTIMATED THE HOUSEHOLD EXPENSES EACH YEAR BY INCREASING THEM CONSTANTLY BY RS.50,000/- WITHOUT G IVING ANY JUSTIFICATION FOR THE SAME. IT IS A SETTLED LEGAL P OSITION THAT SEIZED MATERIAL HAS TO BE READ AND ACCEPTED AS WHOLE AND I T IS NOT PERMISSIBLE TO MAKE FURTHER ESTIMATES THEREFROM UNL ESS AND UNTIL THERE IS COGENT MATERIAL IN SUPPORT OF UNDERTAKING SUCH AN EXERCISE. IN SEARCH CASES INCOME IS REQUIRED TO BE COMPUTED O N THE BASIS OF EVIDENCE FOUND DURING SEARCH OR BEING DIRECTLY RELA TED TO IT. THERE IS NO ROOM FOR MAKING ROUTINE DISALLOWANCES WHILE MAKI NG SEARCH CASES ASSESSMENTS WHEN THERE IS NO MATERIAL DETECTE D DURING THE COURSE OF SEARCH OPERATIONS FOR MAKING SUCH DISALLO WANCE. THIS HAS BEEN HELD BY HONBLE ITAT, MUMBAI IN CASE OF POOJA BHATT VS. ACIT (2000) 73 ITD 205 (MUM). THOUGH ASSESSMENT FOR THE YEAR HAS NOT BEEN MADE U/S 153A OR 153C, BUT IT IS FOUND BASED ON EARLIER YEARS SEARCH RELATED ASSESSMENTS OF THE APPELLANT. FURTHER TO INVOKE PROVISIONS OF SECTION 69C FOR UNEXPLAINED EXPENDITU RE, AO IS REQUIRED TO ESTABLISH CONDITION PRECEDENT AS TO EXI STENCE OF SUCH EXPENDITURE BY EVIDENCE/MATERIAL ON RECORD TO JUSTI FY ADDITION BY ENUMERATING VARIOUS ITEMS OF PROVED UNDISCLOSED EXP ENDITURE DURING THE RELEVANT PREVIOUS YEAR AS HELD BY HONBLE ITAT, AHEMDABAD BENCH IN CASE OF PRADEEP C. PATEL VS. CIT (1997) 58 TTJ 409. SINCE THE SAME HAS NOT BEEN DONE BY THE AO AND IN VIEW OF FACTS ABOVE, ESTIMATED ADDITION OF RS.1,08,000/- MADE ON ACCOUNT OF HOUSEHOLD EXPENSES IS, HEREBY, DELETED. SAME VIEW HAS BEEN HE LD BY ME IN CASE OF THE APPELLANT IN HER APPEALS FOR EARLIER YEARS W HERE SIMILAR ADDITION HAS BEEN MADE BY THE AO ON SAME GROUNDS. ITA NO.246 /AG./2011, A.Y. 2008-09 3 4. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. WE FIND THAT ON IDENTICAL SET OF FACTS ADDITION HAS BEEN DELETED BY THE CIT(A) IN A.Y. 2006-07 AND THAT ORDER OF THE CIT(A) HAS BEEN CONFIRMED IN ITA NO.344/AGRA/2011 IN THE CASE OF ACIT VS. SMT. J ULIE GUPTA ORDER EVEN DATED. THE RELEVANT FINDINGS IS REPRODUCED AS BELOW :- AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIVE S UBMITTED THAT THIS ISSUE IS SQUARELY COVERED BY THE ORDER OF I.T.A.T., AGRA BENCH IN ITA NOS.155/AGRA/2011 IN THE CASE OF SHRI PRAVEEN GUPTA VIDE ORDER DATED 23.03.2012. THE RELEVANT FI NDING OF I.T.A.T. IS REPRODUCED AS UNDER :- ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO N OT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVE NUE. THE AO PURELY MADE ESTIMATED ADDITION WITHOUT BRINGING ANY MATERIAL AGAINST THE ASSESSEE FOR ESTIMATING HOUSEHOLD EXPEN SES. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN OTHER CASES SIMILAR ADDITIONS HAVE BEEN DELETED, HAS NOT BEEN R EBUTTED THROUGH ANY MATERIAL ON RECORD. IN THE ABSENCE OF ANY MATERIAL ON RECORD IN FAVOUR OF THE REVENUE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD . CIT(A). SAME IS CONFIRMED AND THUS, THE APPEAL OF THE REVENUE IS DISMISSED. NO OTHER POINT IS ARGUED OR PRESSED. IN THE RESULT , THE APPEAL OF HE REVENUE IN THE CASE OF PRAVEEN GUPTA IS DISMISSE D. THE ABOVE FINDING HAS BEEN FOLLOWED BY I.T.A.T. IN THE CASE OF SMT. POONAM GUPTA IN ITA NO.156/AGRA/2011 VIDE ORDE R EVEN DATED . 5. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE FACTS OF THE CASE UNDER CONSIDERATION AND THE FACTS OF THE CASE DECID ED BY I.T.A.T., AGRA BENCH IN ITA NOS.155 & 156/AGRA/2011 IN THE CASE OF SHRI PRAVEEN GUPTA & SMT. POONAM GUPTA ARE IDENTICAL. THE CIT(A) HAS A LSO RELIED UPON HIS ORDER FOR EARLIER YEARS. SINCE THE FACTS ARE IDENTI CAL, THEREFORE, TO MAINTAIN ITA NO.246 /AG./2011, A.Y. 2008-09 4 CONSISTENCY, WE FOLLOW THE SAID ORDER OF I.T.A.T., AGRA BENCH. IN THE LIGHT OF ABOVE, WE FIND THAT THE CIT(A) HAS RIGHTLY DELET ED THE ADDITION OF RS.1,08,000/- 6. THE SECOND GROUND IS IN RESPECT OF DELETION OF A DDITION OF RS.10,33,397/- BY THE CIT(A) OUT OF TOTAL ADDITION OF RS.30,35,537/- MADE BY THE A.O. THE A.O. MADE FOLLOWING ADDITION AS THE ASSESSEE HAS FAILED TO EXPLAIN IN RESPECT OF JEWELLERY, CASH ETC. FOUND AT THE RESIDENCE. (A.O. PAGE NO.3) 1. CASH FOUND AT RESIDENCE RS.7,02,140/- 2. JEWELLERY AND MISCLL. SURRENDERED RS.8,00,000/- (LOCKER NO.70 AT ICICI BANK) 3. STAMP DUTY SURRENDERED FOR LAND AT SIROLE RS.5,00,000/- 4. JEWELLERY & SILVER ITEMS FOUND RS.10,15,397/- AT RESIDENCE ----------------- RS.30,35,537/- ----------------- 7. THE CIT(A) HAS REDUCED THE ADDITION TO THE EXTEN T OF RS.20,02,140/- AS UNDER :- (CIT(A) PAGE NO.8 TO 10) 5.3 REGARDING ADDITION ON ACCOUNT OF JEWELLERY AND SILVER ITEMS, THE APPELLANT HAS SURRENDERED RS.8,00,000/- AGAINST RS.10,15,397/- FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERA TIONS, THE APPELLANTS SUBMISSIONS EXPLAINING TOTAL JEWELLERY OF RS.10,15,397/- ARE FOUND ACCEPTABLE LOOKING TO THE QUANTUM OF ITS HOLDING AND CBDT CIRCULAR NO.1916 DATED 11.05.1994. THE APPELLA NT AND HER FAMILY MEMBERS HAVE ALREADY DECLARED JEWELLERY OF R S.15,32,290/- AND IN MY VIEW NO FURTHER PART OF JEWELLERY REMAINS UNEXPLAINED. IT IS ALSO SEEN THAT AS PER HER WEALTH TAX RETURN, NET WEALTH HAS BEEN DECLARED BY THE APPELLANT AND ASSESSED BY THE AO U/ S 16(3) OF WEALTH TAX ACT, 1957 AT RS.10,13,799/- FOR THE ASSE SSMENT YEAR ITA NO.246 /AG./2011, A.Y. 2008-09 5 UNDER CONSIDERATION. THE ASSESSED NET WEALTH CONSIS TS OF GOLD AND SILVER JEWELLERY/ORNAMENTS WEIGHING 1116.37 GMS. VA LUED AT RS.10,04,732/-. BY PLACING RELIANCE ON ABOVE MENTIO NED CBDT CIRCULAR, HONBLE GUJRAT HIGH COURT IN CASE OF CIT VS. RATAN LAL VYAPARI LAL JAIN (2010) 45 DTR (GUJ) 290 HAS HELD O N SIMILAR FACTS THAT THE JEWELLERY HELD BY THE APPELLANT AND HER FA MILY MEMBERS IS WELL WITHIN THE LIMIT LAID DOWN UNDER THE CBDT CIRC ULAR AND HAS DELETED THE ADDITION AS THE APPROACH ADOPTED BY THE ITAT IN FOLLOWING THE SAID CIRCULAR AND GIVING BENEFIT TO T HE ASSESSEE IS FOUND IN CONSONANCE WITH THE GENERAL PRACTICES IN H INDU FAMILIES WHEREBY JEWELLERY IS GIFTED BY THE RELATIVES AND FR IENDS AT THE TIME OF SOCIAL FUNCTIONS LIKEMARRIAGE, BIRTHDAY, ANNIVERSA RY AND OTHER FESTIVALS. THESE GIFTS ARE CUSTOMARY AND CUSTOMS PR EVAILING IN A SOCIETY CANNOT BE IGNORED. THE EXPLANATION GIVEN BY THE APPELLANT IS FOUND ACCEPTABLE DEPENDING UPON THE STANDARD OF THE FAMILY AND CUSTOMS PREVAILING IN HINDU SOCIETY. THUS THE AO IS NOT FOUND JUSTIFIED IN TREATING THE JEWELLERY AS UNEXPLAINED SINCE THE SAME IS COVERED BY THE SURRENDER MADE BY THE APPELLANT AND EXPLANATION SUBMITTED. THUS THE ADDITION OF RS.30,35,537/- IS R EDUCED TO RS.20,02,140/- WHICH INCLUDES SURRENDER OF RS.20,00 ,000/- AND ADDITION OF RS.2,140/- ON ACCOUNT OF CASH. 8. THE LD. AUTHORIZED REPRESENTATIVE TRIED TO DEMON STRATE THAT THE ASSESSEE HAS SURRENDERED AMOUNT OF RS.8,00,000/- AG AINST THE JEWELLERY OF RS.10,15,397/- FOUND AT THE TIME OF SEARCH. HE SUBM ITTED THAT A.O. WITHOUT APPRECIATING THE FACTS MADE ADDITION OF RS.10,15,39 7/- WHICH AMOUNTS TO DOUBLE ADDITION. 9. THE LD. D.R. RELIED UPON THE ORDER OF THE A.O. 10 WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. THE LD. AUTHORIZED REPRESENTATIVE POINTED OUT THE R ECONCILIATION OF JEWELLERY SEIZED AND EXPLANATION THEREON. COPY WHICH HAS BEEN PLACED AT PAGE NO.8 OF THE PAPER BOOK. THE SAME IS REPRODUCED AS BELOW :- ITA NO.246 /AG./2011, A.Y. 2008-09 6 WEIGHT IN GRMS GOLD VALUE IN RS. SILVR VALUE IN RS. 622.880 53.300 801.275 1477.455 500.000 100.000 250.000 100.000 950.000 883349 102900 787825 1774074 29158 29158 527.455 633473.46 29158 POONAM GUPTA & FAMILY SEIZED FROM RESIDENCE (AS PER PANCHNAMA ) SEIZED FROM PERS ON SI LVER ITEMS LOCKER NO.70 ICICI BANK TOTAL JEWELLERY FROM (AS PER PANCHNAM) LOCKER SEIZED 160 2.55 GM S WORTH 15,75,650/- H ALF OF WHICH IS TAKEN IN THE HANDS OF THE A SSESSEE AND HALF IS T AKEN IN THE HANDS OF S MT. JULIE GUPTA. S ILVER ITEMS TOTAL JEWELLERY FOUND (CIT-AS ORDER PG.8.) (RATE OF JEWELLERY WORKS OUT TO 1201/- PER GRAM BY DIVIDING TOTAL VALUE WITH TOTAL WEIGHT AS MENTIONED IN PANCHNAMA) LESS : BENEFIT AVAILABLE TO THE ASSESSEE AS PER CBDT INSTRUCTION NO.1916 DATED 11.05.1994- POONAM GUPTA (APPELLANT) PRAVEEN GUPTA (HUSBAND) TANYA GUPTA (DAUGHTER MINOR) DIVYANKAN GUPTA (SON-MINOR) TOTAL JEWELLERY REMAINING FOR EXPLANATION TOTAL REMAINING FOR EXPLANATION SURRENDER BY THE APPELLANT AGAINST JEWELLERY U/S 132(4) REMAINING UNEXPLAINED 662631.46 800000.00 NIL ITA NO.246 /AG./2011, A.Y. 2008-09 7 11. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THA T AS PER ABOVE RECONCILIATION, WE NOTICED THAT TOTAL REMAINING FOR EXPLANATION OF JEWELLERY WAS RS.6,62,631.46. THE ASSESSEE IN ABOVE RECONCILI ATION HAS CLAIMED THE BENEFIT OF CBDT CIRCULAR/INSTRUCTION AGAINST THE UN EXPLAINED JEWELLERY. AFTER THAT BENEFITS AGAINST BALANCE AMOUNT RS.6,62, 631.46 STATED TO BE SURRENDERED RS.8,00,000/-. 12. ON PERUSAL OF ORDER OF THE A.O., WE NOTICED THA T THE JEWELLERY FOUND IN POSSESSION OF THE ASSESSEE FROM HIS RESIDENCE WAS O F RS.10,15,397/- AND FROM LOCKER NO.70 AT ICICI BANK, RS.7,88,075/-. THE ASSESSEE HAS SURRENDERED RS.8,00,000/- AGAINST JEWELLERY FOUND I N THE LOCKER NO.70, ICICI BANK. THE RELEVANT ABSTRACT FROM A.OS ORDER AT PAGE NO.3 IS REPRODUCED AS BELOW :- (A.O. PAGE NO.3) AT THE TIME OF SEARCH OPERATION THE FOLLOWING CASH AND JEWELLERY WERE FOUND IN THE POSSESSION OF THE ASSESSEE:- I. CASH FOUND AT RESIDENE RS.7,02,140/- II JEWELLERY & SILVER ITEMS FOUND AT RESIDENCE RS.10,15,397/- III JEWELLERY FOUND IN LOCKER NO.70 AT ICICI BANK RS.7,88,075/- THE ASSESSEE WAS ASKED TO EXPLAIN THE NATURE AND S OURCE OF THE ABOVE CASH, JEWELLERY AND SILVER ITEMS FOUND IN RESPECT O F THE JEWELLERY AND SILVER ITEMS FOUND AT RESIDENCE NEITHER ANY EXPLANATION T O PROVE NATURE AND SOURCE HAVE BEEN GIVEN NOR ANY DOCUMENTARY EVIDENCE TO EXP LAINING THE SOURCE OF IT SUBMITTED. ON THE EXAMINATION OF RECORD IT HAS BEEN FOUND THAT THE ASSESSEE HAS SURRENDERED ONLY THE FOLLOWING BUT HAS NOT DECL ARED THE SAME IN HER RETURN OF INCOME:- ITA NO.246 /AG./2011, A.Y. 2008-09 8 1. CASH SURRENDERED RS.7,00,000/- 2. JEWELLERY AND MISCLL. SURRENDERED RS.8,00,000/- (LOCKER NO.70 AT ICICI BANK) 3. STAMP DUTY SURRENDERED FOR LAND AT SIROLE RS.5,00,000/- ---------------- RS.20,00,000/- ----------------- HENCE, IN THE ABSENCE OF ANY EXPLANATION IN RESPECT OF JEWELLERY CASH FOUND AT THE RESIDENCE AND LOOKING TO THE ABOVE SURRENDER ED AMOUNTS BUT NOT INCLUDED IN INCOME OF THE YEAR IN HER RETURN OF INC OME, THE FOLLOWING ARE ADDED TO THE INCOME OF THE ASSESSEE. 1. CASH SURRENDERED RS.7,00,000/- 2. JEWELLERY AND MISCLL. SURRENDERED RS.8,00,000/- (LOCKER NO.70 AT ICICI BANK) 3. STAMP DUTY SURRENDERED FOR LAND AT SIROLE RS.5,00,000/- 4. JEWELLERY & SILVR ITEMS FOUND AT RESIDENCE RS.10,15,397/- ------------------------- RS.30,35,537/- ------------------------- 13. THE CASE OF THE A.O. IS THAT THERE IS NO SURREN DER AGAINST JEWELLERY FOUND AT THE RESIDENCE RS.10,15,397/-. THE A.O. HAS RECORDED THE FACT THAT FOR THE JEWELLERY AND SILVER ITEMS FOUND AT RESIDEN CE, NEITHER ANY EXPLANATION TO PROVE NATURE AND SOURCE HAVE BEEN GIVEN NOR ANY DOCUMENTARY EVIDENCE TO EXPLAIN THE SOURCE OF IT WAS SUBMITTED. THE A.O. MADE THE ADDITION OF RS.10,15,397/- FOR WANT OF EXPLANATION. THE CIT(A), WITHOUT APPRECIATING THE CASE MADE BY THE A.O., DELETED THE ADDITION BY OBSERVING THAT THE BENEFIT OF CBDT CIRCULAR IS ALLOWABLE TO THE ASSESSEE AS J EWELLERY HAS BEEN DECLARED IN WEALTH TAX RETURN. THE JEWELLERY DECLAR ED IN THE WEALTH TAX IS A ITA NO.246 /AG./2011, A.Y. 2008-09 9 DIFFERENT ISSUE AS EVEN IF JEWELLERY IS DECLARED IN THE WEALTH TAX RETURN, THE SOURCE OF JEWELLERY IS STILL REQUIRED TO BE EXPLAIN ED AND SUCH EXPLANATION CAN BE GIVEN IN THE INCOME TAX PROCEEDING. MERELY ON TH E FACT THAT JEWELLERY HAS SHOWN IN THE WEALTH TAX RETURN THE ADDITION UND ER INCOME TAX ACT CANNOT BE DELETED UNLESS THE SOURCE OF THE JEWELLER Y IS EXPLAINED BY THE ASSESSEE. WE NOTICED THAT THE FINDING OF THE CIT(A) IS WITHOUT APPRECIATING THE CASE MADE BY THE A.O. AND WITHOUT RECORDING THE RELEVANT FACTS AND FINDING ON THE RECONCILIATION FILED BY THE ASSESSEE . THE BENEFIT OF CBDT CIRCULAR IN THE NAMES OF DIFFERENT MEMBERS IS ALSO SUBJECT TO VERIFICATION. WE FIND THAT THE FINDING OF THE CIT(A) IS WITHOUT C ONSIDERING ALL THE RELEVANT FACTS AND RECONCILIATION FILED BY THE ASSESSEE. IN THE LIGHT OF THESE FACTS, WE THINK IT PROPER TO SEND BACK THIS ISSUE TO THE FILE OF THE CIT(A) WITH DIRECTION TO RE-DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LA W AFTER CONSIDERING THE RECONCILIATION FILED BY THE ASSESSEE AND CASE MADE OUT BY THE A.O. BY RECORDING THE COMPLETE FACTS AND FINDING IN THE ORD ER. 14. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT.) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER AMIT/ ITA NO.246 /AG./2011, A.Y. 2008-09 10 COPY OF THE ORDER FORWARDED TO:- APPELLANT/RESPONDENT/CIT (APPEALS) CONCERNED CIT CONCERNED/D.R., ITAT, AGRA BENCH, AGRA GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY