The ACIT, Central Circle-2, Surat V. Shri Bharatbhai A.Patel, Surat

ITA 2610/AHD/2009

• Counselvise Citation: 261020514 RSA 2009
• Duration Of Justice: 2 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 18-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY RANJAN
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI G. D. AGARWAL, VP AND SHRI BHAVNESH SA INI, JM) ITA NO.2610/AHD/2009 A. Y.: 2006-07 THE A. C. I. T., CENT. CIRCLE-2, SURAT VS SHRI BHARATBHAI A. PATEL, 15, BHAGAT NAGAR SOCIETY, KATARGAM ROAD,SURAT PA NO. AAVPP 6664 N (APPELLANT) (RESPONDENT) C. O. NO.247/AHD/2009 (IN ITA NO.2610/AHD/2009 - A. Y.: 2006-07) SHRI BHARATBHAI A. PATEL, 15, BHAGAT NAGAR SOCIETY, KATARGAM ROAD,SURAT VS THE A. C. I. T., CENT. CIRCLE-2, SURAT PA NO. AAVPP 6664 N (APPELLANT) (RESPONDENT) DEPARTMENT BY SHRI VINOD TANWANI, SR. DR ASSESSEE BY SHRI VIJAY RANJAN, AR DATE OF HEARING: 29-09-2011 DATE OF PRONOUNCEMENT: 05-10-2011 O R D E R PER BHAVNESH SAINI: THE DEPARTMENTAL APPEAL AS WELL AS THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDER OF THE LEARNED CIT(A)-II, SURAT DATED 08-06-2009 FOR T HE ASSESSMENT YEAR 2006-07. ITA NO. 2610/AHD/2009 THE ACIT, CENT. CIRCLE-2, SURAT VS SHRI BHARATBHAI A. PATEL C. O. NO.247/AHD/2009 SHRI BHARATBHAI A. PATEL VS THE ACIT, CENT. CIRCLE- 2, SURAT 2 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. THE REVENUE IN THE DEPARTMENTAL APPEAL CHALLENGE D THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS.1 2,63,800/- MADE ON ACCOUNT OF UNEXPLAINED JEWELLERY OUT OF THE JEWELL ERY FOUND AT THE TIME OF SEARCH. THE AO HAS STATED THAT DURING THE C OURSE OF SEARCH AT THE ASSESSEES PREMISES GOLD JEWELLERY OF 2762.700 GRAMS WERE FOUND. THE AO HAS ACCEPTED THE JEWELLERY SHOWN AS P ER WEALTH TAX RECORD FOR 811 GRAMS, 35.07 GRAMS COVERED BY DISCLO SURE, PURCHASE OF 107.19 GRAMS DURING THE FINANCIAL YEAR 2005-06 A ND 101.61 GRAMS JEWELLERY FOR WHICH ADDITION HAS BEEN MADE IN THE A SSESSMENT YEAR 2003-04 AS BILL PERTAINED TO THAT YEAR AS EXPLAINED JEWELLERY. THE EXPLANATION OF THE ASSESSEE FOR THE BALANCE GOLD OF 1707.84 GRAMS WAS COVERED BY CBDT INSTRUCTION NO.1916 ACCORDING T O WHICH CREDIT TO FAMILY MEMBERS OF 2750 GRAMS IS AVAILABLE. THIS EXPLANATION OF THE ASSESSEE HAS NOT BEEN ACCEPTED BY THE AO AND STATED THAT NO EVIDENCE COULD BE PRODUCED FOR BALANCE GOLD OF 1707 .84 GRAMS AND ACCORDING TO THE BOARDS INSTRUCTION CERTAIN QUANTI TY OF JEWELLERY SHOULD NOT BE SEIZED AT THE TIME OF SEARCH AND SEIZ URE ACTION KEEPING IN MIND THE SENTIMENTAL VALUE OF JEWELLERY. SUCH IN STRUCTIONS NOWHERE SAY THAT EXCESS JEWELLERY SHOULD NOT BE TAXED AT TH E TIME OF FRAMING OF ASSESSMENT. IT WAS SUBMITTED BEFORE THE LEARNED CIT (A) THAT ON PERUSAL OF PANCHNAMA (ANNEXURE JF) THE JEWELLERY WH ICH HAS BEEN FOUND DURING THE COURSE OF SEARCH BELONGED TO THE A SSESSEE AND HIS FAMILY MEMBERS. IT IS STATED THAT SO FAR AS GOLD OR NAMENTS AND ITA NO. 2610/AHD/2009 THE ACIT, CENT. CIRCLE-2, SURAT VS SHRI BHARATBHAI A. PATEL C. O. NO.247/AHD/2009 SHRI BHARATBHAI A. PATEL VS THE ACIT, CENT. CIRCLE- 2, SURAT 3 JEWELLERY FOUND WAS RECEIVED BY THE FAMILY MEMBERS OF THE ASSESSEE ON OCCASION OF MARRIAGE, FESTIVALS, SOCIAL OCCASION S FROM PARENTS, IN- LAWS AND VARIOUS OTHER RELATIVES AS PER SOCIAL CUST OMS AND TRADITION. IT WAS SUBMITTED THAT DURING THE COURSE OF SEARCH, STA TEMENT OF THE ASSESSEE WAS RECORDED U/S 132 (4) OF THE IT ACT WHE REIN HE HAS CATEGORICALLY STATED THAT THE AFORESAID JEWWELLERY BELONGED TO HIMSELF AND HIS FAMILY MEMBERS INCLUDING HIS WIFE, CHILDREN , GRANT MOTHER, FATHER AND MOTHER, BROTHER AND HIS WIFE ALONG WITH THEIR CHILDREN. THE ASSESSEE ALSO SUBMITTED THAT IN ACCORDANCE WITH CBD T INSTRUCTION NO.1916 DATED 11-05-1994, THE JEWELLERY POSSESSED B Y VARIOUS MEMBERS OF THE FAMILY AND FOUND TO THE EXTENT OF 27 50 GRAMS IS WELL WITHIN THE REASONABLE LIMIT PARTICULARLY WHEN THEY ARE HAILING FROM THE COMMUNITY IN WHICH IT IS VERY COMMON TO POSSESS AND GIVE ON THE OCCASION OF MARRIAGE AT LEAST 40 TO 45 TOLAS. THE L EARNED CIT(A) REPRODUCED THE PARTICULARS OF 10 PERSONS IN THE APP ELLATE ORDER, THEIR RELATIONSHIP WITH THE ASSESSEE AND THE GOLD POSSESS ED BY THEM RANGES FROM 100 GRAMS, 250 GRAMS AND 500 GRAMS TOTA LING TO 2750 GRAMS OF GOLD JEWELLERY. IT WAS, THEREFORE EXPLAINE D THAT REMAINING GOLD FOR WHICH ADDITION HAS BEEN MADE BY THE AO IS 170.784 GRAMS WHICH IS MUCH LESS THAN 2750 GRAMS AS PER THE BOARD CIRCULAR. THEREFORE, ADDITION IS UNJUSTIFIED. THE ASSESSEE RE LIED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF CIT VS RAMES HCHANDRA R. PATEL , ( TM ) REPORTED IN 89 ITD 203, ITO VS MANI LAL S. DAVE 70 TTJ 801 AND DCIT VS SMT. JAYITA BOSE (2004) (003)- SO T 525. THE LEARNED CIT(A) FOUND THAT THE AO HAD ALREADY GIVEN BENEFIT OF THE GOLD ORNAMENTS DECLARED IN WEALTH TAX RETURN OF 811 GRAMS AND THE ITA NO. 2610/AHD/2009 THE ACIT, CENT. CIRCLE-2, SURAT VS SHRI BHARATBHAI A. PATEL C. O. NO.247/AHD/2009 SHRI BHARATBHAI A. PATEL VS THE ACIT, CENT. CIRCLE- 2, SURAT 4 GOLD PURCHASED IN THE ASSESSMENT YEAR 2003-04. HOWE VER, THE ADDITION IS MADE ON BALANCE OF 1707.84 GRAMS AND AC CORDING TO THE EXPLANATION OF THE ASSESSEE AS PER BOARD CIRCULAR T HE FAMILY MEMBERS OF THE ASSESSEE HAS AVAILABILITY OF 2750 GR AMS OF GOLD JEWELLERY, THEREFORE, SUCH BENEFIT SHALL HAVE TO BE GIVEN TO THE ASSESSEE AND THIS VIEW IS SUPPORTED BY THE DECISION S OF THE TRIBUNAL IN THE CASES NOTED ABOVE IN WHICH SIMILAR ADDITIONS HAVE BEEN DELETED BY FOLLOWING THE BOARD CIRCULAR. ADDITION W AS ACCORDINGLY DELETED. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF SMT. DHANVIDYA A. DALAL V S CIT, 294 ITR 277 AND REFERRED TO THE OBSERVATION OF THE HONBLE HIGH COURT THAT THE CIRCULAR DATED 23-11-1982 ISSUED BY THE BOARD DOES NOT SUPPORT THE CASE OF THE ASSESSEE BECAUSE THE SAID CIRCULAR IS I SSUED FOR THE PURPOSE OF SEIZING THE JEWELLERY DURING THE COURSE OF SEARCH. IT WAS ALSO OBSERVED THAT THE SAID CIRCULAR IS NOT APPLICA BLE TO THE FACTS OF THE PRESENT CASE BECAUSE FIRSTLY, THE VALUE OF THE JEWE LLERY SEIZED WAS MORE THAN RS.1,00,000/-. ON THE OTHER HAND, THE LEA RNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND RELIED UPON THE DECISION OF THE HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT VS RATANLAL VYAPARILAL JAI N, 235 CTR 568 IN WHICH IT WAS HELD THAT THOUGH IT IS TRUE THAT THE CBDT CIRCULAR NO.1916, DT. 11 TH MAY, 1994 LAYS DOWN GUIDELINES FOR SEIZURE OF JEWELLERY AND ORNAMENTS IN THE COURSE OF SEARCH, TH E SAME TAKES INTO ACCOUNT THE QUANTITY OF JEWELLERY WHICH WOULD GENERALLY BE ITA NO. 2610/AHD/2009 THE ACIT, CENT. CIRCLE-2, SURAT VS SHRI BHARATBHAI A. PATEL C. O. NO.247/AHD/2009 SHRI BHARATBHAI A. PATEL VS THE ACIT, CENT. CIRCLE- 2, SURAT 5 HELD BY FAMILY MEMBERS OF AN ASSESSEE BELONGING TO AN ORDINARY HINDU HOUSEHOLD. THUS ALTHOUGH THE CIRCULAR HAD BEE N ISSUED FOR THE PURPOSE OF NON-SEIZURE OF JEWELLERY DURING THE COURSE OF SEARCH, THE BASIS FOR THE SAME RECOGNIZES CUSTOMS P REVAILING IN HINDU SOCIETY. IN THE CIRCUMSTANCES, UNLESS THE REV ENUE SHOWS ANYTHING TO THE CONTRARY, IT CAN SAFELY BE PRESUMED THAT THE SOURCE TO THE EXTENT OF THE JEWELLERY STATED IN THE CIRCULAR STANDS EXPLAINED. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LE ARNED CIT(A) IN DELETING THE ADDITION. THE ASSESSEE APART FROM RELYING UPON THE BOARD CIRCULAR FOR DELETING THE ADDITION BEFORE THE LEARNED CIT(A) ALSO CONTENDED THAT THE PANCHNAMA OF THE JEWELLERY SAYS THAT THE G OLD JEWELLERY BELONGED TO THE ASSESSEE AND HIS FAMILY MEMBERS. S O FAR AS JEWELLERY WAS OBTAINED BY THE FAMILY MEMBERS ON SOC IAL OCCASIONS, EVEN IN THE STATEMENT OF THE ASSESSEE RECORDED DURI NG THE COURSE OF SEARCH, IT WAS EXPLAINED THAT THE JEWELLERY BELONGE D TO HIMSELF AND LARGE NUMBER OF HIS FAMILY MEMBERS. THE STATEMENT O F THE ASSESSEE IS RECORDED IN THE APPELLATE ORDER ALONG WITH NAMES OF THE RELATIVES AND FAMILY MEMBERS AND THE GOLD POSSESSED BY THEM. THUS, THE ASSESSEE HAS NOT TAKEN ANY PLEA AFTERTHOUGHT AND TH E SUBMISSION OF THE ASSESSEE WAS BASED ON RECORDS OF THE REVENUE DE PARTMENT. THE GOLD JEWELLERY POSSESSED BY THE FAMILY MEMBERS CANN OT BE ADDED IN THE HANDS OF THE ASSESSEE. THEREFORE, THE LEARNED C IT(A) REFERRING TO THE BOARD CIRCULAR RIGHTLY DELETED THE ADDITION IN THE MATTER BECAUSE ITA NO. 2610/AHD/2009 THE ACIT, CENT. CIRCLE-2, SURAT VS SHRI BHARATBHAI A. PATEL C. O. NO.247/AHD/2009 SHRI BHARATBHAI A. PATEL VS THE ACIT, CENT. CIRCLE- 2, SURAT 6 THE AVAILABILITY OF GOLD JEWELLERY WITH THE ASSESSE E AND FAMILY MEMBERS WAS MORE THAN THE GOLD JEWELLERY FOR WHICH THE AO MADE THE ADDITION. SIMILAR VIEW IS TAKEN BY ITAT AHMEDAB AD BENCH ALSO IN DIFFERENT CASES AS HAVE BEEN REFERRED TO ABOVE. TH E DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RA TANLAL VYAPARILAL JAIN (SUPRA) CLEARLY SUPPORT THE VIEW OF THE LEARNE D CIT(A). THE DECISION CITED BY THE LEARNED DR OF OTHER HIGH COUR T CANNOT BE GIVEN PREFERENCE AS AGAINST THE DECISION OF THE HONBLE J URISDICTIONAL HIGH COURT. CONSIDERING THE FACTS AND CIRCUMSTANCE AND T HE DISCUSSIONS ABOVE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF TH E REVENUE. THE SAME IS ACCORDINGLY DISMISSED. 6. THE ASSESSEE IN THE CROSS OBJECTION, CHALLENGE D THE ADDITION OF RS.2,35,000/- WHICH IS MADE ON THE BASIS OF NOTI NG ON THE SEIZED PAPERS. THE AO OBSERVED THAT ON PERUSAL OF THE SEI ZED DOCUMENTS BEING PAGE 5 OF ANNEXURE A/2, THE ASSESSEE HAS EXTE NDED LOAN OF RS.7,35,000/- TO DIFFERENT INDIVIDUALS. THE ASSESSE E HAS OFFERED FOR TAXATION ONLY RS.5,00,000/- OUT OF THE ABOVE AMOUNT . THEREFORE, ADDITION OF RS.2,35,000/- IS MADE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE PAPER IN QUESTION DOES NOT INDICATE ANY TRANSACTION WHICH TOOK PLACE. THE PAPERS DO NOT CONTAIN NATURE OF THE TRANSACTION AND THE FIGURE GIVEN THEREON HAS NO RELEVANCE. THE PAPERS DO NOT INDICATE WHETHER IT PERTAIN TO ASSETS OR LIABILITY OR LOAN ETC. IT WAS, THEREFORE, SUBMITTED THAT ADDITION SHOULD NOT BE MA DE ON SUCH NOTING AND IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS ALREADY OFFERED RS.5,00,000/- FOR TAXATION, THEREFORE, NO FURTHER A DDITION SHOULD BE ITA NO. 2610/AHD/2009 THE ACIT, CENT. CIRCLE-2, SURAT VS SHRI BHARATBHAI A. PATEL C. O. NO.247/AHD/2009 SHRI BHARATBHAI A. PATEL VS THE ACIT, CENT. CIRCLE- 2, SURAT 7 MADE. THE LEARNED CIT(A) NOTED THAT THE SEIZED MATE RIALS SHOW THE AMOUNT OF RS.7,35,000/- OUT OF WHICH THE ASSESSEE H AS OFFERED RS.5,00,000/- FOR TAXATION WHICH IS ACCEPTED BY THE AO, THEREFORE, THERE IS NO REASON FOR NOT MAKING THE ADDITION OF R S.2,35,000/-. THIS GROUND OF CROSS OBJECTION WAS ACCORDINGLY DISMISSED . 7. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. ON T HE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHOR ITIES BELOW. 8. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE A UTHORITIES BELOW. THE ASSESSEE ADMITTED THE NOTING IN THE SEIZED PAPERS A ND OFFERED FOR TAXATION RS.5,00,000/-. THE COPY OF THE SEIZED PAPE RS IS FILED IN THE PAPERS OF CO. AND EXPLANATION THEREOF TO SHOW THAT TOTAL SUM OF THE SAME COMES TO RS.7,35,000/-. NO EXPLANATION IS GIVE N BY THE ASSESSEE AS TO WHY THE BALANCE AMOUNT OF RS.2,35,00 0/- WAS NOT OFFERED FOR TAXATION. IN THE ABSENCE OF ANY EXPLANA TION, FURTHER ADDITION CANNOT BE DELETED. SINCE, THE ASSESSEE ADM ITTED EXECUTION OF THE SEIZED PAPERS AND CONTENTS OF THE SAME BY OF FERING THE AMOUNT OF RS.5,00,000/- FOR TAXATION, THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE CANNOT BE ACCEPTED FOR DELETION OF THE ADDITION. IN THE RESULT, THIS GROUND OF THE CROSS OBJECTION IS DISMI SSED. 9. THE CROSS OBJECTION OF THE ASSESSEE IS ACCORDING LY DISMISSED. 10. NO OTHER POINT IS RAISED IN BOTH THE MATTERS. ITA NO. 2610/AHD/2009 THE ACIT, CENT. CIRCLE-2, SURAT VS SHRI BHARATBHAI A. PATEL C. O. NO.247/AHD/2009 SHRI BHARATBHAI A. PATEL VS THE ACIT, CENT. CIRCLE- 2, SURAT 8 11. IN THE RESULT, THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD