The ACIT, Central Circle-4, Surat V. Shri Bipinchandra D.Jariwala, Surat

ITA 2617/AHD/2009

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94439 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 18-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Keywords: Search and seizure

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.2617/AHD/2009 WITH CO NO.240/AHD/2009 /BLOCK ASSTT. YEAR: 2007-2008 ACIT, CENT.CIR.4 SURAT. VS SHRI BIPINCHANDRA D. JARIWALA SURVEY NO.91 OPP: NAVINE FLORINE UDHANA-NAVSARI ROAD SURAT. PAN : ABTPK 3091 P ./ ITA NO.2618/AHD/2009 WITH CO NO.241/AHD/2009 /BLOCK ASSTT. YEAR: 2007-2008 ACIT, CENT.CIR.4 SURAT. VS SHRI RAMESHCHANDRA D. KABUTARWALA SURVEY NO.91 OPP: NAVINE FLORINE UDHANA-NAVSARI ROAD SURAT. PAN : ABTPK 3067 B ./ ITA NO.2620/AHD/2009 WITH CO NO.243/AHD/2009 /BLOCK ASSTT. YEAR: 2007-2008 ACIT, CENT.CIR.4 SURAT. VS ASUMATIBEN D. KABUTARWALA SURVEY NO.91 OPP: NAVINE FLORINE UDHANA-NAVSARI ROAD, SURAT. PAN : AFJPK 9873 R %& / (APPELLANT) '( %& / (RESPONDENT) REVENUE BY : SMT.VIBHA BHALLA ASSESSEE BY : SHRI SANJAY KAPADIA WITH SHRI ANKUR D. SHAH ITA NO.2617/AHD/2009 WITH CO & OTHER 4 APPEALS 2 / DATE OF HEARING : 25/08/2015 / DATE OF PRONOUNCEMENT: 11/09/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT THREE APPEALS ARE DIRECTED AT THE INST ANCE OF THE REVENUE AGAINST SEPARATE ORDERS OF EVEN DATED I.E. 17.6.2009 PASSED BY THE LD.CIT(A)-II, AHMEDABAD ON RESPECTIVE APPEAL S OF THE RESPONDENT-ASSESSEES IN THE ASSTT.YEAR 2007-08. 2. ON RECEIPT OF NOTICE IN THE REVENUES APPEAL, TH E ASSESSEES HAVE FILED CROSS OBJECTIONS BEARING NO.240, 241 AND 243/ AHD/2009. SINCE COMMON ISSUE ARE INVOLVED, THEREFORE, WE HEARD TOGE THER AND DEEM IT APPROPRIATE TO DISPOSE OF THEM BY THIS COMMON ORDER . 3. THE ASSESSEES ARE MEMBERS RELATED TO COLOURTEX G ROUP OF SURAT. A SEARCH AND SEIZURE OPERATIONS WAS CARRIED AT THEI R RESIDENTIAL PREMISES ON 26.7.2006. SHRI BIPINCHANDRA D. KABUTA RWALA AND SHRI RAMESCHANDRA D. KABUTARWALA HAD FILED THEIR RETURNS OF INCOME ON 28.2.2008 DECLARING TOTAL INCOME OF RS.34,48,124/- AND RS.68,65,421/- RESPECTIVELY. SMT. ASUMATIBEN D. KABUTARWALA HAD F ILED HER RETURN ON 29.12.2007 DECLARING TOTAL INCOME OF RS.2,50,565/-. THE CASES OF THE ASSESSEES WERE SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE ACT DATED 3.3.2008 WAS ISSUED TO ALL THE ASSESSEES WHICH WERE DULY SERVED UPON THEM. DURING THE COURSE OF SEARCH, THE ASSESSEES WERE FOUND IN POSSESSION OF G OLD JEWELLERY. SHRI BIPINCHANDRA D. KABUTARWALA WAS POSSESSING GOLD JEW ELLERY AND OTHER ORNAMENTS WEIGHING 1913 GRAMS, WHICH WAS VALUED AT RS.17,03,350/-. OUT OF WHICH, JEWELLERY WORTH OF RS.8,74,130/- WAS SEIZED. SHRI RAMESHCHANDRA D. KABUTARWALA WAS FOUND IN POSSESSIO N OF JEWELLERY AND OTHER ORNAMENTS WEIGHING 2162.4 GRAMS HAVING VA LUE OF ITA NO.2617/AHD/2009 WITH CO & OTHER 4 APPEALS 3 RS.20,93,960. OUT OF WHICH, JEWELLERY OF RS.2,98,4 00/- WAS SEIZED. SMT. ASUMATIBEN D. KABUTWARALA WAS ALSO FOUND TO BE IN POSSESSION OF JEWELLERY WEIGHING 2155.800 GRAMS HAVING VALUE OF R S.20,93,960/-. THE ENTIRE AMOUNT WERE SEIZED. THE LD.AO HAS CONFR ONTED THE ASSESSEES TO EXPLAIN THE SOURCE OF ACQUISITION OF J EWELLERY. ACCORDING TO THE AO, THE ASSESSEES HAVE FAILED TO EXPLAIN THE SO URCE OF THE JEWELLERY. THE OBSERVATIONS MADE BY THE AO IN THE LAST PARAGRA PHS OF THE PAGE NO.3 OF THE ASSESSMENT IS VERBATIM IN ALL THREE ASS ESSMENT YEARS. RATHER, WE FIND THAT COMPLETE ASSESSMENT ORDERS ARE VERBATIM EXCEPT VARIATION OF AMOUNTS AND FEW DATES. THE OBSERVATIO NS OF THE AO WHILE REJECTING THE EXPLANATION IN THE CASE OF SHRI BIPIN CHANDRA D. KABUTARWALA READ AS UNDER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE - CLAIMED THAT ALL THE VALUABLES AND JEWELLERY ARE AC COUNTED AND FURNISHED LEDGERS AND OTHER EXTRACTS FROM BOOKS OF ACCOUNT. HOWEVER, IT IS CLEAR AND EVIDENT THAT THE ASSESSEE HAS FAILED TO SATISFACTORILY EXPLAIN AND ACCOUNT FOR THE SOURCE O F SUCH VALUABLES FOUND AND/OR SEIZED. THE SUBSEQUENT EXPLANATIONS AS TENDERED DURING THE COURSE OF SEARCH ASSESSMENT PROCEEDINGS ARE TREATED AS ATTEMPTS TO EXPLAIN UNACCOUNTED ASSETS THROUGH A DVISED AFTER- THOUGHT, AND REJECTED. 4. ON APPEAL, THE ASSESSEE HAS CONTENDED THAT JEWEL LERIES HAVE DULY BEEN ACCOUNTED FOR IN THE BOOKS. THESE HAVE BEEN S HOWN IN THE WEALTH-TAX RETURNS. THE ASSESSEES HAVE DULY EXPLAI NED THE SOURCE OF ACQUISITION AND THE ADDITIONS MADE BY THE AO ARE UN CALLED FOR. THE LD.FIRST APPELLATE AUTHORITY HAS CALLED FOR REMAND REPORT FROM THE AO WHO HAD SENT HIS REMAND REPORT DATED 13.5.2009. TH IS REMAND REPORT HAS BEEN REPRODUCED BY THE LD.FIRST APPELLATE AUTHO RITY IN EACH CASE. THE LD.FIRST APPELLATE AUTHORITY HAS FURTHER DELETE D THE ADDITION BY OBSERVING AS UNDER: IN THE CASE OF BIPINCHANDRA D. JARIWALA: I HAVE CONSIDERED THE FACTS AND SUBMISSIONS OF THE APPELLANT. THE APPELLANT HAS FILED THE DOCUMENTARY EVIDENCES I N THE FORM ITA NO.2617/AHD/2009 WITH CO & OTHER 4 APPEALS 4 OF LEDGER ACCOUNT OF GOLD AND JEWELLERY, PURCHASE B ILLS OF JEWELLERY, COPY OF BALANCE SHEETS, WEALTH TAX RETUR NS, ETC. AS FURNISHED BEFORE THE ASSESSING OFFICER TO JUSTIFY T HAT THE ITEMS OF JEWELLERY FOUND DURING THE SEARCH PROCEEDINGS AR E ACCOUNTED AND FULLY EXPLAINED. IN THE WEALTH TAX RETURN FILED BY THE ASSESSEE FOR A.Y. 1994-95 THE GOLD JEWELLERY DECLAR ED WAS 1201 GMS. AND IN THE GOLD BOND ISSUED IN 1993 AND MATURE D IN 1998, THE GOLD WAS 1667 GMS. FURTHER, IN THE WEALTH TAX R ETURN OF HIS WIFE SMT. JAGRUTIBEN WEALTH TAX RETURN FILED FOR A. Y. 1994-95 THE GOLD JEWELLERY DECLARED WAS 584 GMS. AND IN THE VDIS SCHEME, 1997 GOLD DECLARED WAS 1939 GMS. IN VIEW O F THESE FACTS, THE JEWELLERY CANNOT BE TREATED AS UNEXPLAIN ED. HENCE, THE ADDITION MADE BY THE AO IS DELETED. IN THE CASE OF RAMESHCHANDRA D KABUTARWALA: I HAVE CONSIDERED THE FACTS AND SUBMISSIONS OF THE APPELLANT. THE APPELLANT HAS FILED THE DOCUMENTARY EVIDENCES I N THE FORM OF LEDGER ACCOUNT OF GOLD AND JEWELLERY, PURCHASE B ILLS OF JEWELLERY, COPY OF BALANCE SHEETS, WEALTH TAX RETUR NS, ETC. AS FURNISHED BEFORE THE ASSESSING OFFICER TO JUSTIFY T HAT THE ITEMS OF JEWELLERY FOUND DURING THE SEARCH PROCEEDINGS AR E ACCOUNTED AND FULLY EXPLAINED. IN THE WEALTH TAX RETURN FILED BY THE ASSESSEE FOR A.Y. 1994-95 THE GOLD JEWELLERY DECLAR ED WAS 673 GMS. AND IN THE GOLD BOND ISSUED IN 1993 AND MATURE D IN 1998, THE GOLD WAS 490 GMS. FURTHER, IN THE WEALTH TAX RE TURN OF HIS WIFE SMT. HEMLATABEN WEALTH TAX RETURN FILED FOR A. Y. 1994-95 THE GOLD JEWELLERY DECLARED WAS 533 GMS. AND IN THE VDIS SCHEME, 1997 GOLD DECLARED WAS 533 GMS. IN VIEW OF THESE FACTS, THE JEWELLERY CANNOT BE TREATED AS UNEXPLAIN ED. HENCE, THE ADDITION MADE BY THE AO IS DELETED. IN THE CASE OF ASUMATIBEN D KABUTARWALA: I HAVE CONSIDERED THE FACTS AND SUBMISSIONS OF THE APPELLANT. THE APPELLANT HAS FILED THE DOCUMENTARY EVIDENCES I N THE FORM OF LEDGER ACCOUNT OF GOLD AND JEWELLERY, PURCHASE B ILLS OF JEWELLERY, COPY OF BALANCE SHEETS, WEALTH TAX RETUR NS, ETC. AS FURNISHED BEFORE THE ASSESSING OFFICER TO JUSTIFY T HAT THE ITEMS OF JEWELLERY FOUND DURING THE SEARCH PROCEEDINGS AR E ACCOUNTED AND FULLY EXPLAINED. IN THE WEALTH TAX RETURN FILED BY THE ASSESSEE FOR A.Y. 1994-95 THE GOLD JEWELLERY DECLAR ED WAS 2808 GMS. FURTHER, IN THE WEALTH TAX RETURN OF HIS WIFE SMT. HEMLATABEN WEALTH TAX RETURN FILED FOR A.Y. 2006-07 THE GOLD JEWELLERY DECLARED WAS 3007 GMS. THE APPELLANT HAS ALSO FILED COPIES OF PURCHASE OF BILLS, PROOF PAYMENT THROUGH CHEQUE ETC. ITA NO.2617/AHD/2009 WITH CO & OTHER 4 APPEALS 5 FOR JEWELLERY PURCHASED IN LAST SIX YEARS. IN VIEW OF THESE FACTS, THE JEWELLERY CANNOT BE TREATED AS UNEXPLAINED. HE NCE, THE ADDITION MADE BY THE AO IS DELETED. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVE, WE HAVE GONE THROUGH THE RECORD CAREFULLY. AN IDENTICAL ISSUE I S INVOLVED IN ITA NO.2619/AHD/2009 IN THE CASE OF SHRI PRAVINCHANDRA D. KABUTARWALA. THIS APPEAL HAS ALSO BEEN HEARD ALONG WITH THESE AP PEALS, AND WE HAVE MADE THE FOLLOWING OBSERVATIONS IN THIS YEAR: 6. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVE, W E HAVE GONE THROUGH THE RECORD CAREFULLY. SECTION 69A OF THE I NCOME TAX ACT PROVIDES THAT WHERE IN ANY FINANCIAL YEAR THE ASSES SEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY, OR O THER VALUABLE ARTICLE AND SUCH MONEY, BULLION, JEWELLERY OR VALUA BLE ARTICLE IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINE D BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EX PLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THE M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, OR THE EXPLANA TION OFFERED BY HIM IS NOT, IN THE OPINION OF THE AO, SATISFACTORY, THE MONEY AND THE VALUE OF THE BULLION, JEWELLERY OR OTHER VALUAB LE ARTICLE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FI NANCIAL YEAR. WHILE CONSTRUING THIS PROVISION, THE LD.AO HAS OBSE RVED THAT THIS SECTION POSTULATE THREE CONDITIONS FOR TREATING THE SEIZED CASH, VALUABLE AS UNEXPLAINED INCOME OF THE ASSESSEE, VIZ . (A) THE ASSESSEE IS FOUND TO BE OWNER OF THE MONEY OR JEWEL LERY, (B) MONEY OR JEWELLERY IS NOT RECORDED IN THE BOOKS OF ACCOUNTS, IF ANY MAINTAINED, AND (C) EXPLANATION ABOUT THE NATUR E AND SOURCE OF ACQUISITION OF MONEY OR JEWELLERY OFFERED BY THE ASSESSEE IS NOT, IN THE OPINION OF THE AO, SATISFACTORY. 7. ADMITTEDLY, DURING THE COURSE OF SEARCH, JEWELLE RY WEIGHING 2052 GRAMS WAS FOUND. SO FIRST CONTENTION ENUMERATE D BY THE AO IS AVAILABLE IN THE PRESENT CASE. THE ASSESSEE HAS CONTENDED THAT THE JEWELLERY HAS ALREADY BEEN RECORDED IN THE BOOK S OF ACCOUNTS. THE LD.AO IN THE ASSESSMENT ORDER NOWHERE DEALT WIT H THIS ASPECT. HE SIMPLY OBSERVED THAT AT THE TIME OF SEARCH THE A SSESSEE COULD NOT GIVE ANY EXPLANATION AND SUBSEQUENT EXPLANATION AS TENDERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IS TO B E TREATED AS AN ATTEMPT TO EXPLAIN THE UNACCOUNTED ASSET. THE LD .AO FAILED TO APPRECIATE THAT TAX LIABILITY OF THE ASSESSEE IS TO BE DETERMINED BY WAY OF AN ASSESSMENT ORDER AND THIS IS THE PROPER S TAGE WHERE THE ASSESSEE WAS SUPPOSED TO GIVE EXPLANATION. AT THE TIME OF SEARCH, NO ADJUDICATION PROCEEDINGS WERE GOING ON. IT WAS THE ITA NO.2617/AHD/2009 WITH CO & OTHER 4 APPEALS 6 PROCESS OF UNEARTHING UNEXPLAINED INCOME OR PARTICU LARS DISCLOSING UNEXPLAINED INCOME OF THE ASSESSEE. THE ASSESSEE W AS NOT SUPPOSED TO EXPLAIN THE SOURCES, THEN AND THERE. T HERE IS NO SUCH REQUIREMENT IN THE PROCEDURE CONTEMPLATED IN T HE INCOME- TAX ACT. THE LD.FIRST APPELLATE AUTHORITY HAS OBS ERVED THAT THE ASSESSEE HAS FILED WEALTH-0TAX RETURN FOR THE ASSTT .YEAR 1994-95 AND DISCLOSED GOLD JEWELLERY OF 1010 GRAMS. HE HA S FURTHER DISCLOSED GOLD BOND ISSUED IN 1993 AND MATURED IN19 98 THE GOLD WAS WEIGHING 1659 GRAMS. THESE TWO DOCUMENTARY EVI DENCES COULD EASILY TAKE CARE OF THE GOLD JEWELLERY FOUND AT THE TIME OF SEARCH. THE LD.AO HAS CONVENIENTLY IGNORED THIS EV IDENCE WITHOUT ASSIGNING REASON IN THE ASSESSMENT ORDER. THE LD.F IRST APPELLATE AUTHORITY HAS TAKEN NOTE OF THE EVIDENCES SUBMITTED BY THE ASSESSEE. THIS EVIDENCE PERTAINS TO THE PERIOD PRI OR TO SEARCH. IT SUGGESTED THAT THE ASSESSEE HAS NOT FABRICATED ANY EVIDENCE AFTER THE SEARCH IN ORDER TO EXPLAIN THE GOLD JEWELLERY F OUND AT THE TIME OF SEARCH. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. 6. IN THE LIGHT OF THE ABOVE, IF WE EXAMINE THE FAC TS OF THE PRESENT CASES, THEN IT WOULD REVEAL THAT THE AO HAS BASICAL LY NOT ASSIGNED ANY REASON. THE AO IS OF THE OPINION THAT THE ASSESSEE S OUGHT TO HAVE GIVEN EXPLANATION ABOUT THE SOURCE OF ACQUISITION O F JEWELLERY AT THE TIME OF SEARCH. THE SECOND REASON ASSIGNED BY HIM IS THAT HEAD OF THE GROUP, SHRI JAYANTILAL THAKORDAS JARIWALA HAD MADE A DISCLOSURE OF RS.10 CRORES UNDER SECTION 132(4) OF THE INCOME TAX ACT. THIS DISCLOSURE OUGHT TO BE APPRECIATED WITH THE BACKGRO UND OF THE ASSETS FOUND IN THE FORM OF JEWELLERY WITH OTHER FAMILY ME MBERS. HE HAS MADE ADDITION IN ALL INDIVIDUAL CASES, BUT ULTIMATELY LI NKED THEM WITH THE DISCLOSURE OF SHRI JARIWALA. WE FIND THAT THE ASSE SSEES INDIVIDUALLY HAVE EXPLAINED THE SOURCE OF ACQUISITION OF THEIR JEWELL ERY. THE LD.FIRST APPELLATE AUTHORITY HAS NOTICED THE DETAILS OF GOLD JEWELLERY POSSESSED BY EACH ASSESSEE AND HOW IT WAS DISCLOSED IN THE WE ALTH-TAX RETURN IN THE SHAPE OF GOLD AS WELL AS IN VDIS 1997. THE LD. AO HAS IGNORED THESE EVIDENCES AND ASSUMED THAT THE JEWELLERY POSSESSED BY EACH ASSESSEE WAS UNDISCLOSED ONE, BUT HE HAS FAILED TO MAKE REFE RENCE TO ANY EVIDENCE OR FAILED TO REBUT THE EXPLANATION OF THE ASSESSEE SUPPORTED ITA NO.2617/AHD/2009 WITH CO & OTHER 4 APPEALS 7 WITH EVIDENCE. THE LD.AO WHILE CONSTRUING THE MEAN ING OF SECTION 69A, HAS OBSERVED THAT MONEY OR JEWELLERY IS NOT RECORDE D IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED AND THE EXPLANATION OF THE ASSESSEE ABOUT NATURE AND SOURCE WAS NOT TO THE SATISFACTION OF TH E AO, THEN MONEY OR VALUE OF JEWELLERY MAY TREATED AS INCOME OF THE ASS ESSEE, BUT IN THESE CASES, WHEN ASSESSEES HAVE SHOWN THE DETAILS OF JEW ELLERY IN RECORD THEN HE DID NOT REBUT THEM. IN OUR OPINION, THE LD .FIRST APPELLATE AUTHORITY HAS APPRECIATED THE FACTS IN RIGHT PERSPE CTIVE IN ALL THESE CASES, AND NO INTERFERENCE IS CALLED FOR IN THE ORD ER OF THE LD.FIRST APPELLATE AUTHORITY. 7. AS FAR AS CO FILED BY THE ASSESSEE IS CONCERNED, WE ARE OF THE VIEW THAT SUB-SECTION 4 OF SECTION 253 AUTHORISES T HE RESPONDENT TO FILE CROSS-OBJECTION ON RECEIPT OF NOTICE IN APPEAL. TH E CO IS REQUIRED TO BE FILED WITHIN 30 DAYS OF RECEIPT OF NOTICE AND IT IS TO BE VERIFIED IN THE MANNER AKIN TO AN APPEAL, BUT, THE CO IS TO BE FILE D AGAINST ANY PART OF THE ORDER IMPUGNED IN THE APPEAL. IN THE CO FILED BY THE ASSESSEE, HE HAS NOWHERE DEMONSTRATED HIS GRIEVANCES AGAINST ANY PART OF THE ORDER OF THE CIT(A), AS SUCH, THE CO IS NOT MAINTAINABLE IN THE PRESENT FORM. 8. IN THE RESULT, ALL THE APPEALS AS WELL AS CROSS- OBJECTIONS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 11 TH SEPTEMBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 11/09/2015