The ACIT, Central Circle-2, Surat V. Shri Jerambhai B.Khokharia, Surat

ITA 2613/AHD/2009

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94625 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 18-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: P M MEHTA
• Keywords: Unexplained investment; Gift; Search and seizure; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMADABAD , BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 2613/AHD/2009 ASSESSMENT YEAR : 2006-07 THE ASSISTANT COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE- 2, SURAT V/S . SHRI JERAMBHAI B. KHOKHARIA 3, GAYATRI SOCIETY, KATARGAM ROAD, SURAT PAN NO. ABGPK4119D (APPELLANT) .. (RESPONDENT) / BY REVENUE SMT. VIBHA BHALLA, SR. D.R. /BY ASSESSEE SHRI P. M. MEHTA, A.R. /DATE OF HEARING 25.08.2015 /DATE OF PRONOUNCEMENT 05.11.2015 O R D E R PER : MANISH BORAD, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, AHMEDABAD, DATED 08.06.2009 RELATING TO A.Y. 2006-0 7 AND ASSESSMENT WAS FRAMED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED AS THE ACT) ON 31.12.2007 BY DCIT, CENTRAL CIRCLE-2, SURA T. 2. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ITA NO. 2613/AHD/09 A.Y. 06-07 (ACIT VS. SHRI JERA MBHAI B. KHOKHARIA) PAGE 2 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS O F THE CASE IN DELETING THE ADDITION OF RS.14,32,922 MADE ON ACCOUNT OF UNEXPLA INED JEWELLERY OUT OF THE JEWELLERY FOUND AT THE TIME OF SEARCH. 2. THE LD.CIT(A) FAILED TO APPRECIATE THAT THE FACT S OF THE CASE ARE CLEARLY DISTINGUISHABLE FROM THAT OF THE CASES RELIED UPON. 3. THE LD.CIT(A) FAILED TO APPRECIATE THAT THE INST RUCTION NO.1916 DATED 11/05/1994 IS GUIDE LINES FOR SEIZURE OF JEWELLERY AND ORNAMENTS IN COURSE OF SEARCH WITH RESPECT TO THE SEIZURE IN THE CASE OF P ERSON NOT ASSESSED TO TAX AND NOT TO TREAT THE UNEXPLAINED JEWELLERY AS EXPLAINED TO THE EXTENT PROVIDED IN THE INSTRUCTION EVEN WHEN NO SUPPORTING EVIDENCES A ND BIFURCATION ABOUT ITS BELONGING TO MEMBERS OF THE FAMILY ARE GIVEN. 4. THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN RELYING UPON THE CASE LAW OF 'ITO VS MANILAL S DAVE (2001) 70 TTJ 801' WHICH IS CLEARLY DISTINGUISHABLE FROM THE FACTS OF THIS CASE, SINCE THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION BEFORE THE SEARCH PARTY NOR BEFORE THE A.O DURING T HE COURSE OF ASSESSMENT PROCEEDINGS IN RESPECT OF EXCESS JEWELLERY FOUND DU RING THE COURSE OF SEARCH . 5. THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN R ELYING UPON THE CASE LAW OF 'CIT VS RAMESHCHANDRA R PATEL( THIRD MEMBER DECISIO N )89 1TD 203(AHD)' WHICH IS NOT RELEVANT AS THAT DEALTS WITH THE UNACC OUNTED INVESTMENT IN SHARES 6. THE LD C1T(A) HAS ERRED IN LAW AND ON FACTS IN I GNORING THE RATIO LAID DOWN IN THE FOLLOWING CASE LAWS, WHICH CLEARLY STATE THAT T HE INSTRUCTIONS OF THE DEPARTMENT ARE IN RESPECT OF SEIZURE AND THEY DO NO T PRESCRIBE THAT TO THE EXTENT OF LIMITS GIVEN, JEWELLERY WILL BE TREATED & S EXPLAINED WITHOUT ANY EXPLANATION AND EVIDENCE:-. A) NEM CHAND DAGA V. ASSISTANT COMMISSIONER OF INCO ME-TAX [2005] 1 SOT 515 (DELHI) B) SMT. DHANVIDYA A. DALAI V. COMMISSIONER OF INCOM E-TAX [2007] 294 1TR 277 (BOM) 7. IT IS , THEREFORE, PRAYED THAT THE ORDER OF THE C1T(A) BE SET ASIDE AND THAT OF THE A.O BE RESTORED TO THE ABOVE EXTENT. ITA NO. 2613/AHD/09 A.Y. 06-07 (ACIT VS. SHRI JERA MBHAI B. KHOKHARIA) PAGE 3 2.1 REVENUE HAS RAISED SEVEN GROUNDS OF APPEAL ON T HE SINGLE ISSUE, WHEREIN LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .14,32,922/- MADE ON ACCOUNT OF UNEXPLAINED JEWELLERY OUT OF JEWELLERY FOUND AT THE TIME OF SEARCH. 3. BRIEFLY STATED FACTS ARE THAT A SEARCH AND SEIZ URE ACTION WAS CONDUCTED IN THE CASE OF ASSESSEE ON 21.02.2006. ASSESSEE FILED HIS RETURN OF INCOME ON 28.02.2007 DECLARING TOTAL INCOME OF RS.35,430/-. NOTICE U/S.143(2) WAS ISSUED ON 17.09.2007 FOR INITIATING ASSESSMENT PROCEEDINGS . ASSESSING OFFICER COMPLETED THE ASSESSMENT OF THE ASSESSEE AT A TOTAL INCOME OF RS.16,69,802/- BY MAKING TWO ADDITIONS; I. FOR UNACCOUNTED CASH AT RS .2,10,450/- AND II. FOR UNACCOUNTED INVESTMENT IN JEWELLERY AT RS.14,23,922 /-. 4. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE THE CIT (A) WHO DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. AGGRIEVED REVENUE IS IN APPEAL BEFORE US, ONLY A GAINST THE ACTION OF LD. CIT(A) ON DELETION OF ADDITION ON ACCOUNT OF UNACCO UNTED INVESTMENT IN JEWELLERY. LD. D.R. SUBMITTED THAT DURING COURSE OF SEARCH AND SEIZURE OPERATION JEWELLERY TOTALING TO 5607.90 GR. GOLD AN D 101.18 CARAT DIAMOND WERE FOUND FROM THE PREMISES OF THE ASSESSEE (967.9 GR. GOLD AND 16.95 CARAT DIAMOND WERE FOUND FROM THE RESIDENCE AND 4639.9 GR . GOLD AND 84.23 CARAT DIAMOND WERE FOUND FORM THE LOCKERS). OUT OF THIS, 1542.100 GR. GOLD WAS SEIZED BY THE DEPARTMENT. DURING THE ASSESSMENT PR OCEEDINGS, ASSESSEE WAS ASKED ABOUT THE SOURCE OF INVESTMENT IN THE GOLD JE WELLERY OF 5607.90 GR. AND ASSESSEE WAS ABLE TO EXPLAIN THE SOURCE OF JEWELLER Y OF 3683.68 GR. GOLD AND IN RELATION TO BALANCE JEWELLERY OF 192422 GR. GOLD, A SSESSEE PLEADED TO TAKE BENEFIT OF THE INSTRUCTION NO.1916 OF CBDT DATED 11 .05.1994, ACCORDING TO WHICH, CREDIT TO FAMILY MEMBERS WAS AVAILABLE UP TO 2100 GR. IN FOLLOWING MANNER: ITA NO. 2613/AHD/09 A.Y. 06-07 (ACIT VS. SHRI JERA MBHAI B. KHOKHARIA) PAGE 4 SR. NO. NAME RELATIONSHIP GOLD (GMS) 1. DEVKORBEN WIFE 500 2. RASHMITABEN DAUGHTER-IN-LAW 500 3. MAITRI GRAND- DAUGHTER 250 4. PURVA GRAND- DAUGHTER 250 5. JAGRUTIBEN PARESHBHAI DAUGHTER-IN-LAW 500 6. KARYA PARESHBHAI GRAND SON 100 TOTAL 2100 LD. D. R. SUBMITTED THAT CBDT INSTRUCTION NO.1916 S AYS THAT CERTAIN QUANTITY OF JEWELLERY SHOULD NOT BE SEIZED AT THE TIME OF SE ARCH AND SEIZURE ACTION, KEEPING IN MIND, THE SENTIMENTAL VALUE OF THE JEWEL LERY OF THE LADY MEMBERS OF THE ASSESSEE FAMILY NOWHERE THE INSTRUCTION SAYS TH AT THE EXCESS JEWELLERY SHOULD NOT BE TAXED AT THE TIME OF FRAMING ASSESSME NT. LD. D.R. FURTHER SUBMITTED THAT ASSESSING OFFICER HAS ALREADY ACCEPT ED THE EXPLAINED JEWELLERY OF 3683.68 GR. AND DIAMOND OF 117.63 CARAT AND FOR THE REMAINING JEWELLERY OF 1924.22 GR. AS THERE WAS NO JUSTIFIABLE EXPLANATION GIVEN BY THE ASSESSEE, HE HAS TAKEN SHELTER OF THE CBDT INSTRUCTION NO.1916 DATED 11.05.1994 WHICH SHOULD BE DENIED AND THE ADDITION OF UNACCOUNTED INVESTMEN T IN JEWELLERY AT RS.14,23,922/- TO BE CONFIRMED. 6. ON THE OTHER HAND, LD. A.R. OF THE ASSESSEE SUBM ITTED THAT ASSESSEES FAMILY IS A JOINT FAMILY, WHEREIN ASSESSEE LIVES WI TH HIS WIFE, TWO MARRIED SONS AND 3 GRAND CHILDREN, IN TOTAL, ASSESSEES FAMILY I S OF 9 PERSONS AND THE ASSESSEES FAMILY BELONGS TO PATEL COMMUNITY IN WHI CH GOLD AND GOLD VALUABLES ARE NORMALLY GIVEN AND TAKEN FROM AMONGST THE FAMIL Y MEMBERS ON VARIOUS SOCIAL OCCASIONS INCLUDING MARRIAGES. 6.1 DURING COURSE OF SEARCH OPERATION, TOTAL JEWELL ERY OF 5607.90 GR. GOLD AND 101.18 CARAT DIAMOND WERE FOUND TO THE PREMISES OF ASSESSEE AND SOURCES OF INVESTMENT AS SUBMITTED BEFORE THE ASSESSING OFFICE R WAS AS UNDER: ITA NO. 2613/AHD/09 A.Y. 06-07 (ACIT VS. SHRI JERA MBHAI B. KHOKHARIA) PAGE 5 SR. NO. NAMES OF THE MEMBERS GOLD.GMS DIAMOND CTS. 1. JEWELLERY AS PER W.T, RECORDS :& AS ON; 3 1.03. 2005 IN THE CASE OF ASSESSEE AS PER NOTE 1. BELOW : 1915.560 46.61 2. PURCHASED BY THE ASSESSEE AS PER NOTE 1 BELOW AS PER NOTE 2 BELOW 124.300 3. GIFT RECEIVED BY CHANDRAKANT (SON OF THE ASSESSEE) AS PER NOTE 3 BELOW 636.510 22.88 4. GIFT RECEIVED BY PARESHBHAI (SON OF THE ASSESSEE) AS PER NOTE A BELOW 1007.310 48.14 5. JEWELLERY AS PER CUSTOM & TRADITION PREVALING IN THE COMMUNITY OF THE ASSESSEE & THE INSTRUCTION NO. 191 6 DATED 11.05.1994, ISSUED BY CBDT OWNERSHIP / POSSESSION OF JEWELLERY AS PER NOTE 5 BELOW 2100.000 TOTAL 5783.680 117.63 6.2 LD. A.R. TOOK US THROUGH THE ABOVE CHART AND BR OUGHT TO OUR NOTICE THAT 5783.68 GR. GOLD AND 117.63 CARAT DIAMOND WAS DULY EXPLAINED ON THE BASIS OF WEALTH TAX RECORDS, PURCHASES DURING F.Y. 2005-06, GIFTS RECEIVED BY TWO SONS, NAMELY, SHRI CHANDRAKANT KHOKHARIYA AND SHRI PARESH BHAI KHOKHARIYA AND JEWELLERY OWNED AND POSSESSED IN THE JOINT NAME BY ASSESSEES WIFE, TWO DAUGHTERS-IN-LAW, THREE GRAND CHILDREN. LD. A.R. F URTHER SUBMITS THAT CBDT INSTRUCTION NO.1916 DATED 11.05.1994 REFERS TO A MI NIMUM QUANTITY OF GOLD JEWELLERY WHICH NORMALLY IS POSSESSED BY A MARRIED WOMAN, UNMARRIED WOMAN AND GRAND CHILDREN AND APPLYING THE SAME THE MINIMU M JUSTIFIED JEWELLERY WHICH COULD BE POSSESSED BY ASSESSEES WIFE, TWO DA UGHTERS-IN-LAW, TWO GRAND DAUGHTERS AND GRAND SON WILL WORK OUT AS UNDER: SR. NO. NAME RELATIONSHIP GOLD (GMS) 1. DEVKORBEN WIFE 500 2. RASHMITABEN DAUGHTER-IN-LAW 500 3. MAITRI GRAND- DAUGHTER 250 4. PURVA GRAND- DAUGHTER 250 5. JAGRUTIBEN PARESHBHAI DAUGHTER-IN-LAW 500 6. KARYA PARESHBHAI GRAND SON 100 TOTAL 2100 ITA NO. 2613/AHD/09 A.Y. 06-07 (ACIT VS. SHRI JERA MBHAI B. KHOKHARIA) PAGE 6 AS THE REMAINING JEWELLERY WHICH THE ASSESSING OFFI CER HAS TREATED UNEXPLAINED OF 1924.22 GR. AMOUNTING TO RS.14,23,922/- IS COVER ED WITHIN THE LIMIT OF 2100 GR. AND THEREFORE, LD. CIT(A) WAS JUSTIFIED IN DELE TING THE ADDITION. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. DURING SEARCH CONDUCTED ON 21.02.2006 AT THE RESIDE NCE AND LOCKERS OF THE ASSESSEE 5611.19 GR. GOLD JEWELLERY AND 101.18 CARA T DIAMOND WAS FOUND. OUT OF THE SAID JEWELLERY AND DIAMONDS, ASSESSING OFFIC ER ACCEPTED THE GOLD JEWELLERY OF 3683.68 GR. AND 101.18 CARAT OF DIAMON D. FROM GOING THROUGH THE SUBMISSION GIVEN BY LD. A.R. THAT THE EXPLAINED JEW ELLERY ACCEPTED BY ASSESSING OFFICER WAS RELATING TO THE JEWELLERY SHOWN IN THE WEALTH TAX RECORDS OF THE ASSESSEE AT 1915.560 GR. GOLD AND 46.61 CARAT DIAMO ND, PURCHASED BY THE ASSESSEE DURING F.Y. 2005-06 AT 124.300 GR., GIFT G IVEN BY ASSESSEE TO HIS SON CHANDRAKANT KHOKHARIYA AT 636.510 GR. GOLD JEWELLER Y AND 22.88 CARAT DIAMOND AND GIFT GIVEN BY ASSESSEE TO HIS SON PARESHBHAI KH OKHARIYA AT 1007.310 GR. GOLD JEWELLERY AND 48.14 CARAT DIAMOND. 7.1 ASSESSING OFFICER OUGHT TO HAVE APPRECIATED THA T THERE ARE SIX OTHER FAMILY MEMBERS INCLUDING ASSESSEES WIFE, TWO RECE NTLY MARRIED DAUGHTER-IN- LAW, 3 GRAND CHILDREN, WHO CERTAINLY HAD RECEIVED G IFT OF GOLD JEWELLERY FROM THEIR PARENTS, RELATIVES AND OTHER FAMILY MEMBERS O N VARIOUS AUSPICIOUS OCCASIONS, FESTIVALS AND MARRIAGE CEREMONIES. 7.2 THE CBDT INSTRUCTION NO.1916 DATED 11.05.1994 S UGGESTS THAT A FAMILY IS SUPPOSED TO HOLD CERTAIN JEWELLERY RECEIVED AT THE TIME OF MARRIAGES FROM PARENTS AND IN LAWS WITHIN THE LIMIT OF 500 GR. OF JEWELLERY FOR A MARRIED WOMAN, 250 GR. FOR UNMARRIED DAUGHTERS AND 100 GR. WITH UN MARRIED CHILD. THOUGH, THE INSTRUCTION SPEAKS OF NOT SEIZING THE SAME DURING S EARCH OPERATION EXTENDED MEANING OF THE SAME SHOWS EXTENSION THAT THE JEWELL ERY SHOULD BE TREATED AS ITA NO. 2613/AHD/09 A.Y. 06-07 (ACIT VS. SHRI JERA MBHAI B. KHOKHARIA) PAGE 7 EXPLAINED ONE AND IS NOT TO BE TREATED AS UNEXPLAIN ED FOR THE PURPOSE OF INCOME TAX. HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. RATANLAL VYAPARILAL JAIN (2010) 235 CTR 0568 (GUJ) HAS HELD AS UNDER: THOUGH IT IS TRUE THAT THE CBDT CIRCULAR NO. 1916, DT.11TH MAY, 1994 LAYS DOWN GUIDELINES FOR SEIZURE OF JEWELLERY AND ORNAMENTS I N THE COURSE OF SEARCH, THE SAME TAKES INTO ACCOUNT THE QUANTITY OF JEWELLERY WHICH WOULD GENERALLY BE HELD BY FAMILY MEMBERS OF AN ASSESSEE BELONGING TO AN ORDINARY HIN DU HOUSEHOLD. THE APPROACH ADOPTED BY THE TRIBUNAL IN FOLLOWING THE SAID CIRCU LAR AND GIVING BENEFIT TO THE ASSESSEE, EVEN FOR EXPLAINING THE SOURCE IN RESPECT OF THE JEWELLERY BEING HELD BY THE FAMILY IS IN CONSONANCE WITH THE GENERAL PRACTICE I N HINDU FAMILIES WHEREBY JEWELLERY IS GIFTED BY THE RELATIVES AND FRIENDS AT THE TIME OF SOCIAL FUNCTIONS, VIZ., MARRIAGES, BIRTHDAYS, MARRIAGE ANNIVERSARY AND OTHER FESTIVALS . THESE GIFTS ARE CUSTOMARY AND CUSTOMS PREVAILING IN A SOCIETY CANNOT BE IGNORED. THUS ALTHOUGH THE CIRCULAR HAD BEEN ISSUED FOR THE PURPOSE OF NON-SEIZURE OF JEWEL LERY DURING THE COURSE OF SEARCH, THE BASIS FOR THE SAME RECOGNIZES CUSTOMS PREVAILIN G IN HINDU SOCIETY. IN THE CIRCUMSTANCES, UNLESS THE REVENUE SHOWS ANYTHING TO THE CONTRARY, IT CAN SAFELY BE PRESUMED THAT THE SOURCE TO THE EXTENT OF THE JEWEL LERY STATED IN THE CIRCULAR STANDS EXPLAINED. THUS, THE APPROACH ADOPTED BY THE TRIBUN AL IN CONSIDERING THE EXTENT OF JEWELLERY SPECIFIED UNDER THE SAID CIRCULAR TOBE A REASONABLE QUANTITY, CANNOT BE FAULTED WITH. IN THE CIRCUMSTANCES, IT IS NOT POSSI BLE TO STATE THAT THE TRIBUNAL HAS COMMITTED ANY LEGAL ERROR SO AS TO GIVE RISE TO A Q UESTION OF LAW. FROM GOING THROUGH THE ABOVE JUDICIAL PRONOUNCEMENT , IT IS AMPLE CLEAR THAT GOLD JEWELLERY FOUND TO THE EXTENT OF LIMIT MENTION ED IN THE CIRCULAR IS TREATED AS EXPLAINED AND THIS CAN BE CLEARLY APPLIED ON THE AS SESSEES CASE, WHEREIN NO SPECIFIC DEDUCTION OF GOLD JEWELLERY POSSESSED BY F AMILY MEMBERS AND GRAND CHILDREN WAS GIVEN BY THE ASSESSING OFFICER FROM TH E TOTAL GOLD JEWELLERY FOUND AT THE TIME OF SEARCH AND SEIZURE OPERATION AND DIF FERENTIAL GOLD JEWELLERY OF 1924.22 GR. IS THE GOLD JEWELLERY POSSESSED BY THE FEMALE MEMBERS AND MINOR CHILDREN OF THE ASSESSEES JOINT FAMILY AND THIS QU ANTITY OF 1924.22 GR. IS WELL WITHIN THE TOTAL LIMIT OF JEWELLERY AT 2100 GR. AS PER THE CBDT INSTRUCTION NO.1916 DATED 11.05.1994. THEREFORE BY RESPECTFULL Y FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS . RATANLAL VYAPARILAL JAIN (SUPRA) AND IN VIEW OF OUR DISCUSSIONS MADE ABOVE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) SO AS TO WARRANT INTERFERENCE A ND ACCORDINGLY, THE GROUNDS ITA NO. 2613/AHD/09 A.Y. 06-07 (ACIT VS. SHRI JERA MBHAI B. KHOKHARIA) PAGE 8 TAKEN BY THE REVENUE ARE REJECTED. ACCORDINGLY APP EAL OF THE REVENUE IS DISMISSED. 8. ACCORDINGLY, THE APPEAL OF REVENUE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 05 TH NOV. 2015 SD/- SD/- ( RAJPAL YADAV) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ! '# $ / CONCERNED CIT 4. $ - / CIT (A) 5. %&' (('# , '# , ! / DR, ITAT, AHMEDABAD 6. '+, / GUARD FILE. BY ORDER/ , / '# , !