Shri Paresh Nagjibhai Devani, JAMNAGAR V. The Dy. Commr. of Income Tax, Cen. Cir.-2, RAJKOT-GUJARAT

ITA 267/RJT/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2268 (ITAT-RAJKOT)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-12-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 09-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Assessee Lawyers: HARISH RANPURA
• Keywords: Unexplained investment; Unexplained expenditure; Document seized; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BEN CH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] (BEFORE SHRI RAJPAL YADAV, J.M. & SHRI ANIL CHATURV EDI, A.M.) ( ) ITA NO. 267/RJT/2015 (ASSESSM ENT YEAR: 2011-12) SHRI PARESH BALUBHAI DEVANI FLAT NO.301, SHANTI RESIDENCY, NEAR SAAT RASTA, VALKESHWARINAGARI, JAMNAGAR VS. THE DEPUTY COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-2, RAJKOT PAN NO. ADZPD4843J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARISH RANPURA, C. A. RESPONDENT BY : SHRI M. L. MEENA, D.R. DATE OF HEARING : 23 -12-201 5 DATE OF PRONOUNCEMENT : 01-03-2016 ( )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF CIT(A)-11, AHMEDABAD, DATED 24.03.2015 FOR THE ASSESSMENT YEAR 2011-12 . 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: ITA NO.267/RJT/15 A.Y. 2011-12 (SHRI PARESH BALUBH AI DEVANI VS. DCIT) 2 3. THE ASSESSEE IS AN INDIVIDUAL STATED TO BE HAVIN G INCOME FROM OTHER SOURCES, AGRICULTURAL ACTIVITIES AND REMUNERATION FROM THE F IRM. A SEARCH ACTION U/S.132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSE SSEE ON 25.08.2011. CONSEQUENT TO WHICH, PROCEEDINGS U/S.153A OF THE ACT WERE INITIAT ED BY ISSUING NOTICE DATED 31.12.2012, IN RESPONSE TO WHICH, ASSESSEE FILED TH E RETURN OF INCOME FOR A.Y. 2011- 12 ON 03.07.2013 SHOWING TOTAL INCOME OF RS.4,35,29 0/-. THE CASE WAS TAKEN UP FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S.1 53A R.W.S.143(3) OF THE ACT VIDE ORDER DATED 16.12.2013 AND THE TOTAL INCOME WAS DET ERMINED AT RS.8,95,290/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESS EE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 24.03.2015 (IN APPE AL NO. CIT(A)-11/553- R/CC.1/2014-15) DISMISSED THE APPEAL OF THE ASSESSE E. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND: 2.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S)-11, AHMEDABAD ERRED ON FACTS AS ALSO IN LAW IN RELATING ADDITION OF RS.4,60,000/ - MADE BY AO ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN GOLD ORNAMENTS. THE RETEN TION OF ADDITION IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW AND MAY KINDLY BE DELETED. 4. DURING THE COURSE OF SEARCH THAT WAS CARRIED OUT AT THE PREMISES OF ASSESSEE, CERTAIN MATERIALS/DOCUMENTS WERE SEIZED AS PER ANNE XURE A-1. ON VERIFICATION OF PAGE NOS.3 & 4 OF ANNEXURE A-1, IT WAS NOTICED THAT IT PERTAINED TO TRANSACTION FOR PURCHASE OF GOLD JEWELLERY. THE ASSESSEE DURING CO URSE OF ASSESSMENT PROCEEDINGS WAS ASKED TO EXPLAIN THE NATURE OF TRANSACTION AS W ELL AS SOURCE OF EXPENDITURE. THE ASSESSEE INTER ALIA SUBMITTED THAT THE TRANSACTIONS WERE IN RESPECT OF GOLD ORNAMENTS PURCHASED IN EXCHANGE OF OLD GOLD ORNAMENTS AND THE NET AMOUNT OF RS.55,000/- AND RS.60,000/- AFTER ADJUSTING THE PRICE OF OLD GOLD O RNAMENTS WERE PAID FOR THE SAID TRANSACTION AND THE AMOUNT PAID WERE OUT OF SAVINGS . THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O. HE ACCORDINGL Y CONSIDERED THE AGGREGATE AMOUNT OF RS.4,68,000/- PAID FOR PURCHASE OF JEWELL ERY AS UNEXPLAINED EXPENDITURE. ITA NO.267/RJT/15 A.Y. 2011-12 (SHRI PARESH BALUBH AI DEVANI VS. DCIT) 3 AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE THE LD. CIT(A) WHO UPHELD THE ADDITION MADE BY THE A.O. BY HOLDING AS UNDER: 5. THE THIRD GROUND OF APPEAL WAS RELATED TO ADDIT ION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN GOLD JEWELLERY. THE FACTS, IN BRIEF, ARE THAT THE SEARCH WAS CONDUCTED ON 29.08.2011 IN THE CASE OF THE ASSESSEE. HE COULD NO T EXPLAIN INVESTMENT MADE IN GOLD JEWELLERY WHICH WAS FOUND DURING THE SEARCH ACTION. DURING THE ASSESSMENT PROCEEDINGS, THE AO CALLED FOR EXPLANATION ABOUT THE SOURCE OF INVES TMENT IN JEWELLERY. THE ASSESSEE SUBMITTED THAT THE JEWELLERY SEIZED WAS PURCHASED I N EXCHANGE OF OLD GOLD ORNAMENTS VALUED AT RS.3,45,000/- BY HIS WIFE AND THE REMAINING DIFF ERENCE OF RS.1,15,000/- WAS PAID OUT OF HER ACCUMULATED SAVINGS. THE AO, AFTER EXAMINATION OF EXPLANATION OF THE ASSESSEE, TREATED THE ENTIRE INVESTMENT OUT OF UNEXPLAINED SOURCES ON THE GROUND THAT NO EVIDENCE WAS PRODUCED BY THE ASSESSEE IN SUPPORT OF HIS EXPLANAT ION. 5.1 IN THE APPEAL PROCEEDINGS, THE APPELLANT SUBMIT TED THAT NO ACCOUNTING WAS REQUIRED TO BE MADE FOR THE PURCHASE OF JEWELLERY IN EXCHANG E OF OLD ORNAMENTS. HE TRIED TO CONTACT THE GOLDSMITH BUT COULD NOT TRACE HIM DUE TO LONG P ASSAGE OF TIME. MOREOVER, NO BOOKS OF ACCOUNTS WERE REQUIRED TO BE MAINTAINED FOR PERSONA L ASSETS. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE FINDINGS OF THE AO, IT WAS DIFFICULT TO AVOID A CONCLUSION THAT THE ASSESSEE DID NOT FURNISH ANY EVIDENCE TO S UBSTANTIATE HIS EXPLANATION. IN FACT, THE CONTENTS OF THE SUBMISSION WERE QUITE ALLUSIVE WITH OUT DEALING WITH THE CORE OF THE ISSUE INVOLVED. THEREFORE, THE ACTION OF THE AO IS CONFI RMED. 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE I S NOW IN APPEAL BEFORE US. 5.1 BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND CIT(A) AND FURTHER POINTED TO THE CONTE NTS OF SEIZED DOCUMENT, THAT HAS BEEN REPRODUCED BY THE A.O. IN PARA 3, PAGE 2 OF TH E ORDER. FROM THE CONTENTS REPRODUCED, HE SUBMITTED THAT FROM THE TOTAL COST O F JEWELLERY, RS.1,72,500/- HAS BEEN REDUCED AND AGAINST WHICH THE DESCRIPTION IS STATED TO BE BHAGNA. HE SUBMITTED THAT BHAGNA IN GUJARATI MEANS MELTING. HE THE REFORE SUBMITTED THAT AGAINST THE COST OF NEW JEWELLERY AGGREGATING TO RS.4,60,000/- THE COST OF OLD JEWELLERY AS SHOWN IN THE DOCUMENT WAS ADJUSTED AND THE REMAINING AMOU NT AGGREGATING TO RS.1,15,000/- WAS PAID BY THE ASSESSEE AND ITS SOURCE WAS ACCUMUL ATED SAVINGS. HE FURTHER SUBMITTED THAT THE DOCUMENTS SEIZED ITSELF SHOWS TH E COST OF NEW GOLD ORNAMENTS AS WELL AS THE ADJUSTMENT OF COST ON ACCOUNT OF EXCHAN GE OF OLD GOLD ORNAMENTS. HE THEREFORE SUBMITTED THAT THE DOCUMENT HAS TO BE CON SIDERED IN ENTIRETY AND THE ITA NO.267/RJT/15 A.Y. 2011-12 (SHRI PARESH BALUBH AI DEVANI VS. DCIT) 4 REVENUE CANNOT ACCEPT PART OF THE DOCUMENT AND IGNO RE THE OTHER PART OF DOCUMENT. HE, THEREFORE, SUBMITTED THAT WHEN THE ENTIRE DOCUM ENT IS CONSIDERED IN TOTALITY, IT IS SEEN THAT AGAINST THE PURCHASE OF JEWELLERY OF RS.4 ,60,000/-, RS.3,45,000/- HAS BEEN ADJUSTED AGAINST THE OLD GOLD ORNAMENTS AND THE REM AINING AMOUNT OF RS.1,15,000/- HAS BEEN PAID IN CASH AND THE SOURCE OF WHICH ACCUM ULATED SAVINGS. HE, THEREFORE, SUBMITTED THAT SINCE THE ENTIRE PURCHASE HAS BEEN E XPLAINED, NO ADDITION IS CALLED FOR. LD. D.R., ON THE OTHER HAND, SUPPORTED THE ORDERS O F A.O. AND CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ADDITI ON ON ACCOUNT OF UNEXPLAINED EXPENDITURE MADE FOR PURCHASE OF GOLD ORNAMENTS. W E FIND THAT BASIS OF ADDITION IS ON THE BASIS OF DOCUMENT SEIZED AT THE TIME OF SEAR CH. ON PERUSING THE DOCUMENT, AS HAS BEEN REPRODUCED BY THE A.O. ON PAGE 2 OF THE O RDER, IT IS SEEN THAT THE DOCUMENT SHOWS PURCHASE OF JEWELLERY AND AGAINST THE COST O F JEWELLERY ADJUSTMENT OF RS.3,44,500/- TOWARDS BHAGNA HAS BEEN SHOWN AND T HE BALANCE AMOUNT AGGREGATING TO RS.1,15,000/- IS SAID TO HAVE BEEN PAID AND IS S TATED TO BE OUT OF THE ACCUMULATED SAVINGS. CONSIDERING THE FACT THAT THE EXCHANGE OF GOLD ORNAMENTS ALSO FINDS MENTION IN THE DOCUMENTS THAT WERE SEIZED AND WHICH IS THE BASIS OF IMPUGNED ADDITION, AND IN THE ABSENCE OF ANY CONTRARY MATERIAL PLACED ON RECO RD BY THE REVENUE WITH RESPECT TO THE ASSESSEES STAND OF SALE OF OLD GOLD JEWELLERY, WE ARE OF THE VIEW THAT THE CREDIT OF THE PRICE OF OLD GOLD NEEDS TO BE GIVEN AND ADJUSTE D AGAINST THE PURCHASE OF JEWELLERY. AS FAR AS THE SUBMISSION OF THE PAYMENT OF AGGREGAT E NET AMOUNT OF RS.1,15,000/- TO BE OUT OF ACCUMULATED SAVINGS IS CONCERNED, WE FIND THAT A.O. HAS NOTED THAT NO WITHDRAWALS FROM THE BOOKS OF ACCOUNT OF THE ASSESS EE IN THE RELEVANT ASSESSMENT YEAR WAS NOTICED. BEFORE US ALSO, NO MATERIAL HAS BEEN PLACED ON RECORD BY THE ASSESSEE TO DEMONSTRATE THE WITHDRAWAL OF CASH IN T HE CONCERNED ASSESSMENT YEAR AND THAT HAS GONE TOWARDS THE PAYMENT OF GOLD ORNAMENTS . IN SUCH A SITUATION, WE ARE OF ITA NO.267/RJT/15 A.Y. 2011-12 (SHRI PARESH BALUBH AI DEVANI VS. DCIT) 5 THE VIEW THAT THE ADDITION NEEDS TO BE RESTRICTED O NLY TO THE EXTENT OF RS.1,15,000/- WHICH HAS REMAINED UNEXPLAINED. WE THUS DIRECT ACC ORDINGLY. THUS, THE GROUND OF ASSESSEE IS PARTLY ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 01 - 03 - 201 6. SD/- SD/- ( RAJPAL YADAV) (A NIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT ME MBER AHMEDABAD: DATED 01.03.2016 TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT